Chesapeake Energy Corp. said Monday it is moving forward with plans to turn its oil-field services subsidiary into a stand-alone company.
Chesapeake Oilfield Operating LLC oversees the operations of Chesapeake’s oil-field services division, which includes companies offering drilling, hydraulic fracturing, oil-field rentals, rig relocation and fluid handling and disposal. It has about 5,200 employees, with operations in a dozen states.
The new Oklahoma City-based company would be called Seventy Seven Energy Inc. Officials intend to apply to have its stock listed on the New York Stock Exchange under the ticker symbol “SSE.”
Chesapeake intends for the spinoff to be tax-free for its shareholders, although some may have to pay income tax on any cash they receive instead of fractional shares in the new company.
Chesapeake’s stock dropped 34 cents Monday to $24.69 a share.
Chesapeake will not own any stake in Seventy Seven Energy if the spinoff is completed. Each company will have its own board and management team.
The move is being eyed as a way to enhance the flexibility of both companies while making it easier for the Chesapeake subsidiary to attract other exploration and production companies as customers, according to Monday’s filing.
The filing details the operations of the new stand-alone service company, although many aspects of its separation from Chesapeake have not been worked out yet.
“We believe we are the only U.S. land-based oilfield service company that can leverage its asset base to provide an integrated, single-source drilling and completion solution for companies focused on unconventional resource plays,” the filing states.