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Chesapeake Energy sells assets worth $2.6 billion

Written by Amy Friedenberger on . Posted in Archives

Chesapeake_rig
A Chesapeake Energy Corp. natural gas rig in the North Texas Barnett Shale deposit. (Matt Nager / Bloomberg)
In an effort to bring in some cash to deal with its debt and low natural gas prices, Oklahoma City-based Chesapeake Energy Corp. has sold assets worth $2.6 billion.

BloombergBusinessweek has a breakdown of the transaction and the reasons behind it:

The company sold shares in a new subsidiary to an investment group led by a Blackstone Group LP-led affiliate that includes TPG Capital and EIG Global Energy Partners LLC, Oklahoma City-based Chesapeake said in a statement today. The agreement gives the buyers a share of royalties from oil wells in the Cleveland and Tonkawa plays in Oklahoma and a 6 percent annual distribution.

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Chesapeake Chief Executive Officer Aubrey McClendon plans to sell $17.5 billion in assets by the end of 2013 to plug a cash-flow gap aggravated by excess supply that drove prices for the fuel to a 10-year low. Chesapeake also is shifting its focus from gas to crude oil, which commands higher prices.