Chesapeake Energy Corp. has agreed to sell 413,000 acres in the southern Marcellus and eastern Utica shale plays in West Virginia to Southwestern Energy Co. for $5.375 billion. Pending approval, the transaction is expected to close by the end of the year.
In addition to the acreage, the sale includes approximately 1,500 wells in northern West Virginia and southern Pennsylvania, of which 435 are in the Marcellus and Utica formations, along with related property, plant and equipment. Average net daily production from these properties was approximately 56,000 barrels of oil during the month of September, consisting of 184 million cubic feet (MMcf) of gas, 20,000 barrels of natural gas liquids and 5,000 barrels of condensate. As of Dec. 31, 2013, net proved reserves associated with these properties were approximately 221 million barrels of oil.
Chesapeake has promised to unlock the value of its assets in the Marcellus and Utica, said CEO Doug Lawler. The Oct. 16 announcement marked the company’s biggest divestment of shale assets.
“It’s important to note that this transaction has no impact on our expected growth profile or on our views around maintaining a disciplined capital program,” Lawler added. “We expect our full-year production guidance for 2015 to remain in the range of 7 to 10 percent growth from 2014 levels adjusted for asset sales.”
Lawler said the proceeds of the sale will go toward driving “even greater shareholder value.”