Published: February 2, 2022 |

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Chesapeake Energy Corporation has made 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 and associated non-operated interests held by affiliates of Tug Hill for $2 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 in the prolific Marcellus Shale in Northeast Pennsylvania. 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 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.

“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,” said Nick Dell’Osso, Chesapeake’s president and chief executive officer.

“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,” added Dell’Osso.

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. 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 percent of which was crude oil and natural gas liquids.

About Chesapeake Energy
Headquartered in Oklahoma City, Chesapeake Energy Corporation’s operations are focused on discovering and responsibly developing its large resource base of unconventional oil and natural gas assets onshore in the United States.

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