Chesapeake Energy Corp. is selling some of its midstream compression assets for more than $500 million, the company announced Friday.
“Chesapeake continues to streamline its overall portfolio to focus on our core assets,” Chief Financial Officer Domenic Dell’Osso said in a news release. “These sales are consistent with this strategy and will generate more than $500 million towards improving our balance sheet, while having minimal impact on our 2014 cash flow guidance.”
Chesapeake subsidiary MidCon Compression LLC has agreed to sell 103 compression units serving gathering systems in Ohio, Pennsylvania and West Virginia to Access Midstream Partners LP for $160 million.
Access, which used to be known as Chesapeake Midstream Partners, has been leasing those units from MidCon.
“We are pleased to announce this attractive bolt-on acquisition of compression assets in the Utica and Marcellus regions,” Access CEO Mike Stice said. “These assets fit the Access Midstream business model extremely well. Internalizing a portion of our compression expense is consistent with maintaining strong visibility to our cash flows.”
Houston-based Exterran Partners LP is buying 334 units serving gathering systems in Oklahoma, Texas, Arkansas, Louisiana and Wyoming from MidCon for about $360 million.
Access has agreed to seven-year compression service arrangements with Exterran in those areas.
“This agreement is consistent with our previous contracts with MidCon, supports our low-risk business model and will allow us to continue to provide excellent service to our customers,” Stice said.