CADIZ - Oklahoma City-based Chesapeake Energy wants to shed 337,481 acres worth of Utica shale leases in Eastern Ohio to help reduce the company's $9.5 billion debt.
In the company's most recent presentation to investors, Chesapeake officials state they believe the liquids-rich Utica shale gas leaseholdings should be worth $13,000 to $17,000 per acre. If Chesapeake gained even $10,000 per acre from a buyer for this Ohio acreage, it would yield more than $3.37 billion.
Company information also shows completing this deal may allow Chesapeake to focus its operations in Ohio counties such as Jefferson, Harrison, Columbiana and Carroll because the acreage in these counties is not in the package for sale.
"The company has altered its plans to develop all of its highly prospective acreage and instead will focus its development on those counties where its land ownership is more concentrated than the land ownership in the counties being offered for sale," Chesapeake states on the sale listing as a "rationale for selling."
Chesapeake spokesman Pete Kenworthy declined further comment, referring to the listing by acreage marketer, Meagher Energy Advisors.
This information shows the company would like to complete the sale by Aug. 17.
Chesapeake notes most of the acreage for sale lies in the wet gas or oil window. These are areas that should yield ethane, propane, butane and pentane, in addition to the methane dry gas.
The leases for sale are in two contiguous bands of counties. In northeast Ohio, acreage in Huron, Ashland, Lorain, Wayne, Summit, Portage, Geauga, Ashtabula and Trumbull counties is listed. To the south, parts of Licking, Fairfield, Hocking, Vinton, Meigs, Athens, Perry, Muskingum, Morgan and Washington counties are listed for sale.
As part of the ongoing effort to reduce the company's debt, Chesapeake previously announced plans to sell more than 500,000 acres of leases in Colorado and Wyoming and reduce director compensation. The company also needs to pay back a $4 billion loan it took from Goldman Sachs.
Chesapeake also will soon have four new board members and a new chairman, a step officials hope will help give the driller lasting stability.
Many concerns investors have regarding Chesapeake stem from worries over Chairman and Chief Executive Office Aubrey McClendon's personal business dealings with local Chesapeake leaseholdings. These dealings saw McClendon take a 2.5 percent personal interest in Chesapeake operations in Brooke, Ohio, Marshall and Wetzel counties. This left some investors concerned because Chesapeake is a publicly traded company, while McClendon's firms - Larchmont Resources and Jamestown Resources - are his own businesses.
McClendon has since agreed to end this practice by June 30, 2014 - and to eventually relinquish his chairmanship of the company. According to the letter to shareholders, the company is taking other measures to reduce debt, including eliminating the use of company aircraft for personal travel, replacing annual cash bonuses with performance-based awards, establishing minimum stock ownership guidelines and retaining an independent compensation adviser.
The information shows that Chesapeake is classifying its West Virginia acreage in the same category as the Ohio acreage under the Utica shale banner. It shows the company having significant holdings in Jefferson, Harrison, Columbiana and Carroll counties in Ohio, along with some holdings scattered throughout Belmont County.
For West Virginia, Ohio, Marshall, Wetzel and Brooke counties all have very large amounts of acreage leased to Chesapeake, while the company has some holdings in Hancock and Tyler counties.
