Chesapeake’s $2bn shale sale boosts investor fervour

Bloomberg

Chesapeake Energy Corp’s agreement to sell shale assets in Ohio for about $2 billion boosted the natural gas producer’s shares as it moves to whittle down debt. The deal announced with closely held Encino Acquisition Partners is Chief Executive Officer Doug Lawler’s biggest in 3 1/2 years. After Chesapeake said almost all of the proceeds will be used to pay debt, its shares surged as much as 13 percent, the most in intraday trading since May 21.
America’s third-largest gas producer has seen rough times as prices for the heating and power-plant fuel plummeted.
The company, once valued at almost $40 billion and now worth just one-tenth of that, has been punished by investors for a debt load amassed by late founder Aubrey McClendon.
The company has “under-performed because of legacy debt, legacy complexity and heavy gas-weighting,” Lawler said in a telephone interview.
Now, it has “transformed and is emerging as a very competitive growth story that no one expected would power through these difficult commodity price environments.” The Utica Shale assets in Ohio was the best asset to divest, Lawler said. The deal is expected to close in the fourth quarter.
Encino is a 2017 creation of the Canada Pension Plan Investment Board and a Houston-based management team led by Hardy Murchison.