Chesapeake completes $2B midstream sale
Chesapeake Energy Corp. has completed the sale of former subsidiary Chesapeake Midstream Partners, which will be getting a new name in the near future.
Chesapeake Midstream Partners soon will be no more.
The pipeline partnership will get a new name now that former parent company Chesapeake Energy Corp. no longer has a stake in it, CEO Mike Stice said Monday.
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“We're busily searching for that now,” he said.
The new name will come with a new trademark, ticker symbol and board of directors, Stice said, so there are plenty of logistics to be worked out before it is unveiled.
Chesapeake sold its interest in Chesapeake Midstream to Global Infrastructure Partners LP in a $2 billion deal that closed Monday.
The private equity firm that helped form the partnership in 2009 also is negotiating with the cash-strapped oil and gas producer to acquire subsidiary Chesapeake Midstream Development LLC.
Chesapeake Midstream Partners is talking to Chesapeake about acquiring some of its natural gas gathering and processing assets in the Mid-Continent region.
Those deals could net more than an additional $2 billion for Chesapeake, which has been looking to sell assets to overcome a budget shortfall estimated to be as much as $22 billion.
“The midstream asset divestitures will enable Chesapeake to fund a portion of the cash flow shortfall that it is experiencing,” Standard & Poor's credit analyst Scott Sprinzen said. “We don't view these assets as being of vital strategic importance to the company.”
Sterne Agee analyst Tim Rezvan said the Chesapeake Midstream sale gives the company some flexibility in case its other planned asset sales do not go as scheduled.
“It provides a big cushion for them, but shows that they desperately need cash to fund their drilling obligations,” Rezvan said.
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