Coming on the heels of Chesapeake Energy Corp.’s Oneok asset acquisition announcement Wednesday, Standard & Poor’s Ratings Services (S&P) and Fitch Ratings commented on what the transaction’s impact might be on the Oklahoma City-based E&P company.

S&P said its ratings and outlook on Chesapeake (B+/Positive/–) would remain unchanged following the company’s acquisition announcement. Fitch followed in step as the agency affirmed the ‘BB-‘ rating of Chesapeake’s senior unsecured notes, the ‘BB+’ rating on Chesapeake’s senior secured bank facility and the ‘B’ rating on the convertible preferred stock. Fitch added that the rating outlook for Chesapeake is currently stable.

On Wednesday, Chesapeake revealed that it was the mystery buyer late last month of $300 million in Midcontinent gas reserves from Oneok subsidiary Oneok Resources (see Daily GPI, Nov. 26; Dec. 5). Chesapeake said the purchase included 200 Bcfe of proved gas reserves, 60 Bcfe of probable and possible gas reserves and current gas production of 47,000 Mcfe/d.

S&P noted that Chesapeake intends to finance the acquisition by issuing $150 million of new senior notes and about $150 million of new common equity. The agency added that Chesapeake could be the beneficiary of a one-notch upgrade if it exploits likely strong natural gas pricing to materially deleverage. “If the company fails to do so during the next year,” S&P said, “the outlook likely will be revised to stable.”

Fitch pointed out that the Oneok acquisition fits well with Chesapeake’s existing Midcontinent assets and business strategy of creating value by acquiring and developing low-cost, long-lived natural gas assets in the Midcontinent region. The transaction is also expected to increase Chesapeake’s proved reserves by 8% to almost 2.5 Tcfe and its production by 12% to over 565,000 Mcfe/d.

Fitch said it “expects Chesapeake to achieve synergies through its recent acquisition and to expand upon the current production from those properties.”

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