OKLAHOMA CITY (AP) — Chesapeake Energy Corp. is following through on a previously announced plan to spin off its oilfield services business as part of a move to streamline its operation.
The Oklahoma City-based oil and natural gas company's shares slid at the start of trading Friday after it made the announcement.
Chesapeake said that the spinoff to Chesapeake shareholders should be completed next month and will eliminate about $1.1 billion in debt from its balance sheet. The company had said in February that it was considering the move.
The oilfield services business offers drilling, hydraulic fracturing, oilfield rentals, rig relocation, and fluid handling and disposal. It had 2013 revenue of about $2.2 billion.
Chesapeake said it is continuing to divest noncore assets so it can focus on businesses that generate the highest rate of return, simplifying its balance sheet and reducing debt. The company develops onshore oil and natural gas fields in the United States.
Chesapeake also said Friday, before its annual analyst meeting, that it will divest ownership in its CHK Cleveland Tonkawa LLC subsidiary. It also plans to sell noncore producing assets in Oklahoma and Texas, for which it will receive about $310 million.
Combined with the more than $925 million of asset sale proceeds received through May 7, the transactions would bring total value of sales and divestitures this year to more than $4 billion, Chesapeake said.
Company shares sank about 3.6 percent, or $1.04, to $27.95 after markets opened Friday. The Standard & Poor's 500 index, meanwhile, dropped slightly.