Chesapeake Energy to repay revolver, notes with asset sale proceeds

By Sara Rosenberg

New York, Feb. 7 - Chesapeake Energy Corp. plans to reduce borrowings under its revolving credit facility and retire about $2 billion to $3 billion of shorter-dated senior notes using proceeds from asset sales, according to a news release.

The amount of senior notes retired will depend in part on the company's ability to purchase the debt in the market or through tender offers.

The company said that it has decided to sell all of its Fayetteville Shale assets, as well as its 25.8% ownership stake in Frac Tech Holdings LLC and 20% ownership stake in Chaparral Energy Inc.

If these sales are completed, Chesapeake anticipates that the combined pre-tax proceeds could exceed $5 billion.

Other funds for the debt reduction will come from the proposed Niobrara joint venture, under which CNOOC Ltd. will purchase 33.3% undivided interest in Chesapeake's 800,000 net oil and natural gas leasehold acres in the Denver-Julesburg and Powder River Basins in northeast Colorado and southeast Wyoming. The consideration for the transaction will be $570 million in cash at closing.

The three proposed asset sales and the Niobrara joint venture are all likely to be completed in the first half of this year.

Chesapeake Energy is an Oklahoma City-based producer of natural gas and a driller of new wells in the United States.

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