The asset sale continues at Chesapeake Energy Corp. as the cash-poor oil and natural gas company looks to fill its budget gap.
Chesapeake is looking to unload 1.5 million acres in west Texas' oil-rich Permian Basin, find a joint venture partner in the emerging Mississippian oil play in northern Oklahoma and southern Kansas and sell off other properties in Texas, Michigan and Ohio.
One asset that seems to have been largely overlooked during the company's quest for cash is its stake in Chaparral Energy Inc.
Chaparral is a private oil and natural gas company formed by CEO Mark Fischer in 1988 as he began acquiring producing assets in the Mid-Continent region.
The company got a $200 million cash injection from Chesapeake in September 2006, allowing Chaparral to complete the $500 million acquisition of Calumet Oil Co. The deal boosted Chaparral's oil-field holdings in Oklahoma, particularly in Osage County and parts of southern Oklahoma.
Fischer said Chesapeake currently owns about 20 percent of Chaparral, which specializes in injecting carbon dioxide into wells for enhanced oil recovery.
Chesapeake's shareholder agreement with Chaparral prevents it from selling its stake in the company until October, but Fischer said he has been working with Chesapeake to facilitate the sale.
He said Chaparral wants to be able to choose its new shareholder, ideally an entity that understands the oil and gas industry and appreciates companies involved in enhanced oil recovery.
Fischer said he hopes to identify one shareholder interested in acquiring all of Chesapeake's stake in Chaparral.
“We would like to place it all in a single entity,” he said.
Chesapeake declined to comment on the company's plan for its holdings in Chaparral, but the company said last year it would sell its stake as it tries to decrease debt while increasing production.
Spokesman Michael Kehs said Chesapeake, which owns a lot of great assets, is in the midst of prioritizing its holdings to determine which ones could be sold.