Global Infrastructure Partners (GIP) has completed its first multi-asset transaction with Chesapeake Energy Corp. to acquire the profitable midstream businesses, closing Monday on the $2 billion acquisition of Chesapeake Midstream Partners LP (CHKM).
The sale, which is expected to result in a pretax gain of around $1 billion to Chesapeake Energy, gives GIP 100% of CHKM’s general partner interest and 69% of its limited partner units. GIP had been Chesapeake Energy’s original funding partner in forming the midstream business before it was launched as a public company.
Last month Chesapeake Energy sold its midstream businesses to GIP in three separate packages for more than $4 billion in cash (see Shale Daily, June 11). On Monday it said negotiations were continuing between the parties for the sale of additional Midcontinent gathering and processing assets to CHKM, as well as a separate transaction to sell stakes in Chesapeake Midstream Development LP to GIP.
Proceeds from the transactions are part of Chesapeake Energy’s 2012 asset sales program, which is supposed to generate cash proceeds of $11.5-14 billion, according to CEO Aubrey McClendon. Including the sale of the CHKM assets and midstream businesses, announced asset sales for the year to date total around $6.6 billion.
Meanwhile, Reuters reported on Monday that the U.S. Department of Justice is “probing” allegations that Chesapeake and Encana Corp. plotted in 2010 to avoid bidding against each other in some Michigan public land auctions and several private land owner transactions.
Michigan officials had told NGI’s Shale Daily that they were reviewing the allegations after Reuters reportedly obtained rival executives’ emails from two years ago indicating that they had “repeatedly” discussed the land deals (see Shale Daily, June 26).
The Justice Department source is “not authorized to speak publicly,” Reuters stated. The “probe could last for months, if not longer,” the report indicated.
The companies declined to comment, as did the Justice Department.
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