This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chesapeake Sells $4B of Assets in Biggest Cash Push of 2012 (Update 1)

Updated to reflect shareholder votes and added CEO comments

NEW YORK ( TheStreet) -- Chesapeake Energy (CHK - Get Report) sold its midstream assets to privately held Global Infrastructure Partners for $4 billion in its biggest deal of 2012 as a cash crunch looms.

The deal confirms previous speculation that amid an over $10 billion cash shortfall, Chesapeake Energy would look to sell the unit to raise much needed money. The move, which is Chesapeake's largest sale since questions emerged about CEO Aubrey McClendon's stewardship of the nation's second-largest gas driller, also comes amid a board shakeup that will give investors, including activist Carl Icahn, representation on its board.

In two separate deals, the Oklahoma City-based driller agreed to sell its stake in Chesapeake Midstream Partners and another subsidiary, Chesapeake Midstream Development, for a total of $4 billion. While the sales will help Chesapeake Energy to repair its finances, investors and analysts still expect billions more in asset sales.

"The proceeds of these transactions are an important part of our 2012 asset sales program that is on track to generate cash proceeds of $11.5-14.0 billion," said McClendon in a statement Friday.

McClendon stressed that the move brings Chesapeake's divestiture total to $6.6 billion for the year, with its Permian asset sale and Mississippi Lime joint venture among other businesses that will be sold in the second half of 2012.

"Importantly, the sale of [Chesapeake Midstream] will also reduce previously planned capital expenditures by approximately $3.0 billion over the next three years," noted McClendon.

Earlier in June, Chesapeake Energy said that following "extensive discussions" with its two largest shareholders, Southeastern Asset Management and Icahn, it had agreed to add four new independent directors to replace four existing independent directors who will resign from Chesapeake's board. Three of the new independent directors will be proposed by Southeastern and the fourth will be proposed by Icahn.

Friday's asset sale also coincides with Chesapeake's June 8 annual meeting, where several large pension funds submitted proposals for shareholder representation on the board, and the New York City comptroller had specifically asked for the removal of Oklahoma State University President Burns Hargis and former Union Pacific Chairman Richard K. Davidson as directors.

At Chesapeake's annual shareholder meeting on Friday, board directors Hargis and Davidson, who were part of the company's audit committee, offered their resignation after receiving less than 30% of shareholder support for their seats. Chesapeak said it would review the offers "in due course," in a statement on Friday.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CHK $7.54 -3.40%
AAPL $107.76 -4.40%
FB $87.23 -2.50%
GOOG $598.06 -3.30%
TSLA $238.68 -4.20%

Markets

Chart of I:DJI
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASDAQ 4,636.1050 -140.4030 -2.94%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs