Chesapeake sells $2.6 billion worth of assets in three deals

April 9 (Bloomberg) -- Chesapeake Energy Corp., the second- largest U.S. natural-gas producer, announced three separate deals for its oil and gas assets, raising about $2.6 billion to help fund development and cut debt.

The company sold shares in a new subsidiary to an investment group led by a Blackstone Group LP affiliate and including TPG Capital and EIG Global Energy Partners LLC, Oklahoma City-based Chesapeake said in a statement today. The agreement gives the buyers a share of royalties from wells in the Cleveland and Tonkawa plays in Oklahoma.

The company also agreed to sell to Morgan Stanley future production from wells in the Anadarko Basin Granite Wash for about $745 million. In a separate agreement, it will sell Exxon Mobil Corp. 58,400 net acres of land in Oklahoma’s Texoma Woodford play for about $590 million in cash before certain costs and adjustments.

Chief Executive Officer Aubrey McClendon plans to sell $17.5 billion in assets by the end of 2013 to plug a cash-flow gap aggravated by a North American gas glut that drove prices for the fuel to a 10-year low. Chesapeake also is shifting its focus from gas to crude oil, which commands higher prices.

McClendon visited potential investors from South Korea, India, Japan, China and Singapore last month to tout the company’s access to gas that is 85 percent cheaper than competing supplies from the Middle East. In a March 6 interview in Oklahoma City, McClendon said he sensed no unease among potential investors about Chesapeake’s $10.3 billion in net debt, more than twice Exxon Mobil’s burden.

McClendon told a New Orleans energy conference on March 26 that he expects gas prices to begin rebounding by the end of this year as momentum for U.S. gas exports gathers among commodity traders.

Exxon, based in Irving, Texas, is the largest U.S. gas producer, according to the Natural Gas Supply Association, a Washington-based industry group whose members produce about one- third of the nation’s gas.

Bloomberg News

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