Chesapeake Energy Corp. has entered into an agreement to sell its interests in the Utica Shale operating area located in Ohio for approximately $2 billion to Encino Acquisition Partners, a private oil and gas company headquartered in Houston.
The transaction is expected to close in the fourth quarter of 2018.
“We are pleased with our updated 2018 Outlook reflecting our strong performance year to date, as well as adjustments assuming a 2018 fourth quarter close of the Utica sale,” said Doug Lawler, Chesapeake’s president and CEO. “While we are reducing our full-year natural gas and NGL volumes accordingly, we are raising our oil guidance by 500,000 barrels. We have also reflected the realized pricing and cost structure adjustments, resulting in a forecasted EBITDA level that is unchanged from our previous guidance that included the Utica for the full year. We are raising our capital expenditures slightly to reflect an accelerated capital program in the Utica on behalf of the buyer pre-closing, the cost of which will be settled in the post-closing adjustments, and increased drilling and completions activity in the PRB. Finally, we expect to seek a renewal and extension of our revolving credit facility in the 2018 third quarter. Pro forma collateral available for the new borrowing base, excluding the Utica assets, is expected to exceed $7 billion.”
As part of the transaction, Chesapeake has agreed to sell all of its acreage in Ohio, of which approximately 320,000 net acres are in the commercial window for Utica Shale development, 920 operated and non-operated wells that produced an average of approximately 107,000 boe per day (67 percent natural gas, 24 percent natural gas liquids and 9 percent oil) in 2017, on a net basis, and related property and equipment. Proved oil and natural gas reserves in the Utica Shale as of Dec. 31, 2017, were approximately 480 million boe (72 percent natural gas, 23 percent natural gas liquids and 5 percent oil).
