Chesapeake Energy Corp. will receive $1.4 billion through the sale of its shale oil assets in Texas to Ineos Group AG. As per the terms of the deal, Ineos Group will acquire all the oil assets in the South Texas-based Eagle Ford shale basin.
Ineos Group’s forays into the energy sector
According to the latest information available with BNN News Network on Tuesday, the deal allows the UK-based chemical manufacturer, Ineos Group AG, to foray into gas and oil production in the US. Brian Gilvary, Chairman of Ineos Energy, commenting on the takeover of shale oil assets, said the company can satisfy the needs of external and internal customers. It also strengthens Ineos Group in the energy sector. Jim Ratcliffe, a British billionaire, holds a majority stake in Ineos Group. He also bid on Manchester United, a soccer team, last week. The deal gives Ineos Group access to 2,300 wells in the Eagle Ford and produces 36,000 barrels of oil daily.
Chesapeake Energy, which is based in Oklahoma, announced its plans to sell Eagle Ford shale-based oil assets and concentrate on natural gas assets based in the Haynesville basin of Louisiana, the Marcellus gas field of Appalachia, and East Texas. The company will focus on exporting LNG.
Chesapeake Energy will focus on premium rock and natural gas assets
According to a communiqué, Nick Dell’Osso, CEO of Chesapeake Energy, said the sale of shale oil assets is an important step in its endeavor to allocate capital to premium rocks. It will also strengthen its operations in Haynesville and Marcellus-based natural gas assets. After announcing the deal on Tuesday, the shares of Chesapeake Energy declined to $78.04 (down 2.6%).
In the previous month, Chesapeake Energy also announced plans to divest the first batch of Eagle Ford oil assets for $1.4 billion to WildFire Energy I LLC. With the present deal, Chesapeake Energy will net $2.8 billion. According to the latest BNN breaking news, Chesapeake Energy is also considering selling more natural gas assets in the southern region.
Chesapeake Energy’s active investor, Kimmeridge, pressed the gas producer to focus on low-cost gas wells by divesting crude assets. Kimmeridge Energy Management’s managing partner, Mark Viviano, lauded the efforts of Chesapeake Energy in selling shale oil assets. He keeps on saying that these efforts will enhance the value for shareholders of Chesapeake Energy.
In the latest breaking world news on Wednesday, Chesapeake Energy, the natural gas producer, said it would limit drilling operations amid a slump in natural gas prices compared to the summer of last year. The company will halt operations at two rigs based in the Haynesville region, which covers parts of Louisiana, Arkansas, and Texas. It will also suspend operations at one rig based in West Virginia and Pennsylvania.
Commenting on the sluggish natural gas prices, Nick Dell’Osso said it is prudent to pull back capital because of thin margins. He keeps on saying that other private firms engaged in natural gas production in the region are also taking similar measures. Comstock Resources Inc. announced earlier this month that it would reduce operations from nine rigs to seven.