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Monday, February 17, 2014

Chesapeake Likely To Be Sold?

From Business First (emphasis ours):
The Utica shale play’s most-active driller could cut more jobs and be sold to a major oil and gas company, weakening its ability to seize opportunities in Ohio, according to a new report from the shale oil and gas team at Benesch Friedlander Coplan & Aronoff LLP
In looking at shale activity in the fourth quarter of 2013, the report says that Chesapeake Energy Corp., which cut 1,200 jobs last year, probably will shed more assets this year and likely be sold to an international player such as ExxonMobil (NYSE:XOM). 
The report, however, highlights much of the positive goings-on in the industry.
Read more here.

 So is this just speculation, or will Chesapeake be sold to the highest bidder?  Many feel that this has been corporate raider Carl Icahn's end game since the moment he got involved with Chesapeake.  The ouster of Aubrey McClendon, aggressive asset sales to reduce debt, mass layoffs...it all fits with trying to make a company more attractive to a business that may be interested in buying it.  And it has been thought by some for quite a while that a sale of Chesapeake was the eventual end, regardless of what other moves the company made.

So, we'll continue to watch it play out and see what happens next.

Meanwhile, another article focuses on the opportunity Chesapeake has in the Utica shale if the company does continue to focus on it.  From The Motley Fool:
After discovering the play back in 2010, Chesapeake was one of the first companies to recognize its potential. Today, it is the most active driller and largest leasehold owner in the Utica, with approximately 1 million net acres under its belt. 
According to recent data from Ohio's Department of Natural Resources, the comapny produced 372,212 barrels of oil, and 10.1 million mcf of natural gas from the play last year, and lay claim to five of the top 10 producing Utica oil wells in the third quarter. Not surprisingly, Chesapeake's third-quarter net Utica production surged 91% year over year to average approximately 164 million cubic feet of natural gas equivalent per day. 
While that's a truly impressive rate of growth by any measure, it could have been even higher. One of the main impediments to the company's production growth in the Utica has been infrastructure constraints. For instance, the company reported that it still had a total of 208 wells that were in various stages of completion as of the end of the third quarter, with many awaiting a pipeline connection.
Read that whole article here. 

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