Chesapeake Energy Corp.’s board has signed off on plans to spin off its oil-field services company into a new company called Seventy Seven Energy.
Chesapeake first indicated in February that it was looking at alternatives for subsidiary Chesapeake Oilfield Services, which brought in about $2.2 billion in revenue last year.
About a month later, officials settled on a plan to turn the subsidiary into a separate standalone company. That plan now has been approved by Chesapeake’s board, the company announced Monday morning.
Seventy Seven Energy stock will be distributed to Chesapeake shareholders before the end of the month, according to Monday’s announcement, leaving Chesapeake with no interest in the new publicly traded entity.
Chesapeake expects the transaction will be tax-free for its shareholders, based on a ruling it has received from the Internal Revenue Service.
The new company will be led by CEO Jerry Winchester. It offers drilling, hydraulic fracturing, oilfield rentals rig relocation, and fluid handling and disposal. Companies like Nomac Drilling LLC, Performance Technologies LLC, Great Plains Oilfield Rental LLC and Hodges Trucking LLC operate under its umbrella.