Chesapeake rumoured to be selling Barnett position

 

If a long-rumoured sale of Chesapeake Energy's Barnett Shale assets comes to fruition, thousands of producing Texas wells could change hands to the tune of US$1.4 billion. Our Lower 48 upstream analysts discuss the numbers and review Chesapeake's historical gas production.

Chesapeake Energy is rumoured to be selling its position in the Barnett Shale for up to US$1.4 billion to Saddle Operating, a privately held company. If confirmed, the transaction will perpetuate the US Lower 48 trend of upstream operators divesting assets to private equity in a stubborn low-price market.

Chesapeake currently holds approximately 200,000 net acres in the Barnett, primarily in Johnson and Tarrant Counties. With 2,730 gross producing wells there, our models estimate Chesapeake's net gas production in the Barnett to be 365 million cubic feet per day (mmcfd).

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As the company has slowed its capital investment, its operated production has declined nearly 15% annually since 2014, with only nine wells and two recompletions having been permitted in the last 18 months. Chesapeake is focusing its capital in the Haynesville, where it's running three rigs to fulfil its midstream commitment of bringing the volume equivalent of 140 wells online by the end of 2017.

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You can purchase our full US Upstream Week In Brief on demand to read this week's top stories in the North America Upstream sector, including continuing Lower 48 M&A activity; Shell's announcement of its Fort Sumpter GoM discovery; EnLink and NGP expanding midstream activity in the Delaware with a new JV; numerous asset sales; an environmental review of Greater Mooses Tooth–2 on Alaska's North Slope; and our latest supply update and rig-count dashboard.

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