Chesapeake closes capex gap with $1 billion asset sale to Exco
(Reuters) - Chesapeake Energy Corp (CHK.N) is selling assets in the Eagle Ford and Haynesville shales in the United States to Exco Resources Inc (XCO.N) for about $1 billion to shore up finances battered by years of low gas prices and heavy spending.
The sale is part of the No.2 U.S. gas producer's plan to sell up to $7 billion of its properties this year.
The sale helps Chesapeake repair its balance sheet and move into 2014 without relying on a perpetual asset sale program, said Global Hunter Securities analyst Mike Kelly.
The company's asset sales signed or closed year-to-date, including Wednesday's deal, stand at about $3.6 billion, enabling it to fully fund its capital expenditure budget of $7.6 billion for the year, Chesapeake Chief Executive Doug Lawler said.
Lawler took over from co-founder Aubrey McClendon, under whom Chesapeake spent heavily on large acreage positions in U.S. shale basins. McClendon left the company in April after a series of Reuters investigations triggered civil and criminal probes of Chesapeake.
Oil and gas producer Exco said it would buy 55,000 acres in Eagle Ford in Texas. The assets produced 6,100 barrels of oil equivalent per day (boe) in May.
Net daily output from the assets in the Haynesville shale - which spans Texas, Arkansas and Louisiana - was 114 million cubic feet of natural gas equivalent in the same month.
Sterne Agee & Leach analyst Tim Rezvan said the sale does not eat into Chesapeake's production stream as the assets represent about 4 percent of the company's first-quarter output.
Texas-based Exco, which has a market value of $1.62 billion, focuses on drilling on unconventional properties in the Haynesville shale, the Permian Basin in West Texas and New Mexico, and Appalachia's Marcellus shale.
Jefferies & Co Inc is advising Chesapeake on the deal, which Exco expects to close this month.
Chesapeake shares were up less than 1 percent at $21.11 in early trading on the New York Stock Exchange. Exco shares were up 1.5 percent at $7.55.
(Reporting By Garima Goel in Bangalore; Editing by Maju Samuel)