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Chesapeake to sell natgas compression units for $520 million
February 28, 2014 / 2:46 PM / 4 years ago

Chesapeake to sell natgas compression units for $520 million

Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, April 17, 2012. REUTERS/Steve Sisney

(Reuters) - Chesapeake Energy Corp (CHK.N) said it would sell 437 natural gas compression units and related assets in two separate deals to Access Midstream Partners LP ACMP.N and Exterran Partners LP EXLP.O for a total of $520 million.

The No.2 U.S. natural gas producer is selling assets to plug a $1 billion gap between operating cash flow and capital expenditure and said earlier this month that it would cut spending by 20 percent this year.

Access Midstream Partners has agreed to purchase 103 compression units, which service gathering systems in Ohio, Pennsylvania and West Virginia, for $160 million.

The 334 compression units Exterran Partners has agreed to buy for $360 million service gathering systems in Arkansas, Louisiana, Oklahoma, Texas and Wyoming.

Both deals are expected to close before the end of the second quarter.

Doug Lawler, who became CEO last June, said on a post-earnings conference call on Wednesday that the company no longer needed to divest assets to survive or fund its drilling capital program.

Chesapeake shares rose 1 percent to $26.20 in early trading on Friday. They have risen about 26 percent in the past year.

Reporting by Swetha Gopinath in Bangalore; Editing by Savio D'Souza and Sriraj Kalluvila

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