Chesapeake Energy Corp's (CHK.N) oilfield services unit filed to raise up to $862.5 million in an initial public offering of its Class A common stock as the U.S. natural gas company looks to fund its heavy spending.
Chesapeake and other energy companies that are grappling with decade-low natural gas prices are putting more capital toward drilling for oil and pricier liquids-rich natural gas.
The U.S. shale bonanza and soaring oil prices have boosted demand for oilfield services companies such Halliburton Co (HAL.N) and Schlumberger (SLB.N) and a host of other companies are looking to tap into the demand.
Chesapeake Oilfield Services provides Chesapeake and its partners services in the Eagle Ford, Utica, Niobrara and Marcellus shale plays, some of the most heavily drilled areas in the United States.
Chesapeake, which analysts estimate will have a funding gap of as much as $6 billion this year, formed the oilfield services unit in September and said it believes the business will be worth as much as $10 billion in 2012.
The company, which named Goldman Sachs and BofA Merrill Lynch underwriters to the IPO, currently operates 111 land drilling rigs, making it the fourth-largest active rig fleet in the United States, the filing said.
Chesapeake's filing comes after another oilfield services company Forum Energy Technologies (FET.N) made a strong stock market debut last week, even as other companies including private equity firm Oaktree Capital (OAK.N) struggled.
Last month, Chesapeake Chief Executive Aubrey McClendon said the company would likely announce a way to monetize its oil services business and its 30 percent stake in privately held oilfield service company Frac Tech International.
Frac Tech filed to raise up to $1.5 billion in an IPO in December. Goldman and BofA Merrill are also underwriting the Frac Tech's offering.
Chesapeake Oilfield Services, which intends to list its Class A common stock on the New York Stock Exchange under the symbol "COS", said its parent Chesapeake will own all of the company's Class B shares.
Chesapeake shares, which touched their lowest since July 2009 earlier on Monday, closed at $19.19 on the New York Stock Exchange.
The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.
(Reporting by Aman Shah and Jochelle Mendonca in Bangalore; Editing by Sriraj Kalluvila)