Chesapeake Energy Corp. closed its 2013 funding gap Wednesday by working out a $1 billion deal to sell some of its holdings in Louisiana and south Texas to Dallas-based EXCO Resources Inc.
“Today's announcement brings our year-to-date asset sales signed or closed to approximately $3.6 billion, which, combined with forecast net operating cash flow, enables Chesapeake to fully fund its 2013 capital expenditure budget,” CEO Doug Lawler said Wednesday in a news release.
Chesapeake's stock rose 9 cents in limited trading Wednesday, closing at $21.01 a share.
EXCO will pay $680 million for about 55,000 acres in south Texas' Eagle Ford Shale and $320 million for about 9,600 acres in Louisiana's Haynesville Shale.
Chesapeake will get about 90 percent of that money up front when the deal closes.
Sterne Agee analyst Tim Rezvan said it was another “underwhelming” sale for Chesapeake, but the Oklahoma City-based company reached its asset sale target without sacrificing much of its production stream.
He noted the assets Chesapeake is selling accounted for less than 4 percent of its first-quarter production.
“This sale was a large, long-awaited component of the company's stated $4 billion low-end target this year,” Rezvan wrote in a note for clients, but he added that Chesapeake still needs to worry about 2014.
Rezvan estimated Chesapeake could be facing a $2.9 billion funding shortfall next year, although Lawler, who took Chesapeake's CEO post last month, has not announced the company's growth strategy for 2014.
Chesapeake, which had said it would sell as much as $7 billion in assets this year, has not ruled out future deals.
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