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Ohio Utica Shale

Chesapeake sells shares in new subsidiary

By Bob Downing Published: April 10, 2012

Oklahoma-based Chesapeake Energy Corp. on Monday announced a $2.6 billion asset sale that will cut debt and fund drilling after slumping natural gas prices eroded its cash flow.

The energy giant sold shares in a new subsidiary to an investment group led by a Blackstone Goup LP-led affiliate that includes TPG Capital and EIG Global Energy Partners LLC.

The agreement gives the buyers a share of royalties in the Cleveland and Tonkawa drilling areas in Oklahoma and a 6 percent annual distribution.

Chesapeake also agreed to sell Morgan Stanley 10 years worth of future gas output from the Anadarko Basin Granite Wash for about $745 million.

In a third deal, Chesapeake is selling Exxon Mobil Corp. 58,400 net acres of leases in Oklahoma's Texoma Woodford play for about $590 million in cash before certain costs and adjustments.

The moves appear to part of Chesapeake's plan to sell $17.5 billion in assets by the end of 2013 to plug a cash-flow problem aggravated by low prices for natural gas.

 

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