Chesapeake Energy Corp. said Friday it has sold its 20 percent stake in Oklahoma City oil and natural gas company Chaparral Energy Inc. to an undisclosed buyer for $215 million.
The transaction closed Monday.
As a result of the sale, Domenic J. Dell'Osso, Chesapeake's chief financial officer, has resigned as a Chaparral director.
“This sale demonstrates the continued refinement and focus of our portfolio around core assets and continues our strategy of reducing financial complexity,” Dell'Osso said in a statement Friday.
Chesapeake paid $178 million in 2006 for the 20 percent stake in Chaparral. In April 2013, a Wells Fargo report valued the stake at $280 million.
This week's sales price of $215 million values Chaparral at more than $1 billion. Chaparral CEO Mark Fischer said he thinks the company is worth more than that.
“I would have loved to have bought it at that amount,” Fischer said. “That represents the strong desire by Chesapeake to sell. I can appreciate that. That value is relatively low as far as an enterprise or even equity value of the company.”
Still, Fischer said he is pleased the uncertainty is over two years after Chesapeake announced plans to sell the stake.
“For a couple of years now, Chesapeake has been marketing its interest as a noncore interest for Chesapeake. Given their cash needs, they felt it was a marketable asset,” Fischer said. “The party that bought it is generally construed to be a long-term player. We view them as being an excellent partner in the company.”
Chaparral previously has said it is considering an initial public offering, possibly this fall. Fisher said he has discussed the possibility with the new owner of the 20 percent stake.
“Their comment to me is that they would be very favorable toward an IPO,” Fischer said.
The IPO plans are dependent on the success of the company's production in the Burbank field in Osage County and the Marmaton play of the Oklahoma and Texas panhandles, he said.
“We believe the market is relatively strong. There have been a number of energy IPOs take place,” Fischer said.
“We believe we will have further proven them (the Burbank and Marmaton fields) to the point that the evaluations will be there,” Fischer said.
Chaparral promotes two
Chaparral Energy Inc. on Friday promoted two executives.
K. Earl Reynolds is now president and chief operating officer. He previously served as chief operating officer and executive vice president. Reynolds joined Chaparral after serving 10 years at Devon Energy Corp., where he was involved in strategic planning and internal operations.
“Earl has made significant contributions to our success and growth since joining the company in February 2011 and has been instrumental in transitioning the company to an active driller in horizontal resource plays,” CEO Mark Fischer said. “I have no doubt that his leadership will continue to serve as a springboard to facilitate continued growth in the years ahead.”
Also Friday, Richard Parma was named vice president of corporate reserves and GIS. He previously was associate vice president. Parma joined Chaparral in 2009 from Edge Petroleum Corp.
“Rich's knowledge base in petroleum engineering, reserves management and technology management has enhanced our capital allocation and reserve estimation processes,” Fischer said.