Chesapeake recently announced plans to divest all of its Fayetteville shale assets with expectations that it will capture in excess of US$5 billion in pre-tax proceeds from the sale. Proceeds are expected to be used to retire senior notes and borrowings under a revolving bank credit facility.
The assets include its 487,000 net acres in the play plus its equity interests in Frac Tech Holdings, LLC (25.8%) and Chaparral Energy (20%).
BHP Billiton agreed to acquire Chesapeake's Fayetteville assets for US$4.75 billion. It should be noted that Chesapeake has agreed, as part of the deal, to "provide essential services for up to one year for BHP Billiton's properties" for an unspecified fee. BHP Billiton also announced an A$5 billion share repurchase program.
The rest of this article discusses the Chesapeake assets including key operational parameter estimates and the economics of the BHP Billion acquisition and is reserved for premium subscribers...