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Thursday, January 2, 2014

Chesapeake Paying Out Millions Because of Asset Sales

From the Wichita Business Journal:
The sales are helping Chesapeake (NYSE: CHK) to close a reported $25 billion gap between the company’s spending and cash flow from 2010 to 2012, but they also come at a price.
In selling off oil and gas properties, pipelines and, in some cases, royalties from wells, Chesapeake has gotten itself in situations where it is paying for services it isn’t using.
One example involves the sale of Chesapeake’s pipeline business to Access Midstream Partners LP for $2.16 billion in 2012.
With that sale, Chesapeake agreed to ship certain amounts of natural gas on that pipeline, but the company hasn’t been able to meet those obligations because it has cut back on drilling new gas wells.
Wall Street Journal analysis of regulatory filings found that Chesapeake would have to pay Access Midstream some $400 million over the next five years to cover the shipping shortfall.
Read the entire article here.

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