PR Newswire
OKLAHOMA CITY, Jan. 25, 2022
OKLAHOMA CITY, Jan. 25, 2022 /PRNewswire/ -- Chesapeake Energy Corporation (NASDAQ:CHK) ("Chesapeake") today announced significant transactions designed to strengthen its asset portfolio, deliver higher free cash flow, and increase its projected annual dividend payments.
The company signed definitive agreements to acquire Chief E&D Holdings, LP ("Chief") and associated non-operated interests held by affiliates of Tug Hill, Inc. ("Tug Hill"), for $2.0 billion in cash and approximately 9.44 million common shares. Chief and Tug Hill hold high quality producing assets and an inventory of premium drilling locations(1) in the prolific Marcellus Shale in Northeast Pennsylvania. The cash portion of the transaction will be financed with cash on hand and the use of the company's revolving credit facility. The transaction, which is subject to customary closing conditions, including certain regulatory approvals, is expected to close by the end of the first quarter of 2022.
Chesapeake also signed an agreement to sell its Powder River Basin assets in Wyoming to Continental Resources, Inc. (NYSE:CLR) for approximately $450 million in cash. The transaction, which is subject to certain customary closing conditions, is expected to close in the first quarter of 2022. At closing, net proceeds from the sale will go toward the purchase price of the Chief acquisition.
Highlights:
(1) | Greater than 50% rates of return at $2.50 NYMEX gas. |
(2) | A non-GAAP measure as defined in the concurrent presentation available on the company's website at www.chk.com |
Nick Dell'Osso, Chesapeake's President and Chief Executive Officer, said, "We're pleased to announce concurrent, transformative transactions that meet the high bar set by our acquisition non-negotiables and clarify our portfolio, allowing our talented team to focus on our highest rate of return assets. We know the importance of scale and the Chief and Tug Hill assets fit like a glove with our existing position in the northeast Marcellus Shale. The acquisition checks all the boxes: it lengthens our premium inventory, further focuses our capital allocation, provides operational efficiencies, is accretive to free cash flow per share, allows us to grow our base dividend, preserves our balance sheet strength and improves our GHG emissions metrics."
"In less than a year, we have achieved our goal of refocusing and high-grading our portfolio around our core assets, positioning us to generate meaningful returns for shareholders today while embracing lower carbon energy production for tomorrow. Having centered Chesapeake around our highest performing assets, our team can now integrate these assets into our portfolio, achieve the valuable synergies available to us and enhance cash flows through executing our business. Upon closing of these transactions, Chesapeake will benefit from a high-quality portfolio focused on three premier U.S. hydrocarbon basins – the Marcellus, Haynesville, and Eagle Ford. By combining the great rock and scale of these premium assets, with our disciplined capital investment strategy and narrower, more logical focus, we are in a better position to enhance returns and build sustainable value for our shareholders. I would like to thank our employees who helped us advance the Powder River asset and further position Chesapeake as a responsible provider of reliable, affordable, and low carbon energy."
Under the terms of the Chief and Tug Hill agreements, which were unanimously approved by Chesapeake's Board of Directors and also approved by Chief and Tug Hill, Chesapeake will acquire approximately 113,000 net Marcellus acres (>90% held by production). Assuming an April 1, 2022 closing date, the asset is currently projected to produce approximately 835 million cubic feet of net gas per day for nine months in 2022 and generate about $500 million in 2022 projected adjusted EBITDAX (including acquired hedges) at current commodity strip prices.
The company's Powder River Basin assets include approximately 172,000 net acres and 350 operated wells in southeastern Wyoming. Fourth quarter 2021 Powder River Basin volumes are expected to average approximately 19,000 barrels of oil equivalent per day, approximately 58% of which was crude oil and natural gas liquids.
Preliminary 2022 Pro Forma Outlook
Upon closing of the transactions, Chesapeake plans to operate two rigs on the acquired properties during 2022, resulting in a total of 9 – 11 gas-focused rigs and 2 – 3 oil-focused rigs. The company will maintain a disciplined capital reinvestment strategy, anticipating a 2022 reinvestment rate of approximately 47%. At current commodity strip prices, this preliminary capital program is anticipated to generate $3.4 – $3.6 billion in total adjusted EBITDAX.
| 2022E Previous(1) | | 2022E Adj. for | | 2022E New PF (assumes 9 months |
Total production: | | | | | |
Oil – mmbbls | 20.0 – 22.0 | | 18.0 – 20.0 | | 18.0 – 20.0 |
Natural gas – bcf | 1,095 – 1,125 | | 1,085 – 1,115 | | 1,315 – 1,345 |
Total daily rate – barrel of oil equivalent (boe) per day | 575 – 595 | | 560 – 580 | | 665 – 685 |
Operating costs per boe of projected production: | | | | | |
Production expense | $1.65 – $1.95 | | $1.65 – $1.95 | | $1.50 – $1.80 |
Gathering, processing and transportation expenses | $3.90 – $4.40 | | $3.75 – $4.25 | | $3.75 – $4.25 |
General and administrative(3) | $0.55 – $0.75 | | $0.55 – $0.75 | | $0.45 – $0.65 |
Interest expense ($ in millions) | $120 – $130 | | $120 – $130 | | $125 – $135 |
Cash taxes ($ in millions) | $100 – $160 | | $20 – $80 | | $60 – $120 |
Adjusted EBITDAX, based on 1/11/22 strip prices ($ in billions)(4) | $3.2 – $3.4 | | $2.9 – $3.1 | | $3.4 – $3.6 |
Total capital expenditures ($ in billions) | $1.3 – $1.6 | | $1.3 – $1.6 | | $1.5 – $1.8 |
Reinvestment rate | ~44% | | ~48% | | ~47% |
Enterprise value ($ in billions)(2) | ~$9.9 | | ~$10.5 | | ~$13.2 |
Net debt ($ in billions)(4) | ~$1.3 | | ~$0.9 | | ~$2.9 |
Fully diluted shares (in millions) | ~137.5 | | ~139.3 | | ~148.7 |
| | | 2022E | | 2022E New PF (assumes 9 months of Chief/TH)(2) |
Cash Flow per Share | | | ~$20.65 | | ~$22.65 |
FCF per Fully Diluted Share | | | ~$9.85 | | ~$10.95 |
FCF Yield | | | ~14% | | ~16% |
Net Debt(5)/Adjusted EBITDAX | | | ~0.3x | | ~0.8x |
| |
(1) | Based on 10/29/2021 strip prices and CHK stock price. |
(2) | Based on 1/11/2022 strip prices and1/21/2022 10-day VWAP for CHK stock price and assumes the transactions close 4/1/2022. |
(3) | Includes ~$0.07/boe of expenses associated with stock-based compensation, which are recorded in general and administrative expenses in Chesapeake's Condensed Consolidated Statement of Operations. |
(4) | A non-GAAP measure as defined in the company's presentation materials found on www.chk.com. Werbung Mehr Nachrichten zur Chesapeake Energy Aktie kostenlos abonnieren
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