Summary
Chesapeake Energy Corporation (CHK) announced on December 4, 2002, a significant agreement to acquire approximately $300 million of Mid-Continent natural gas reserves from ONEOK, Inc. This strategic move is expected to add roughly 200 billion cubic feet of equivalent (bcfe) in proved gas reserves and boost daily production by approximately 47,000 thousand cubic feet of gas equivalent (mcfe). The acquisition, targeted to close by January 31, 2003, is highly synergistic, with 87% of the acquired properties located in areas where Chesapeake already has existing holdings, promising operational efficiencies and enhanced drilling opportunities. Complementing this acquisition, Chesapeake also announced a proposed public offering of 20 million shares of common stock. The proceeds from this offering are intended to partially finance the ONEOK acquisition and, if necessary, for general corporate purposes, including future acquisitions. This dual announcement underscores Chesapeake's aggressive growth strategy focused on consolidating high-quality, low-cost natural gas assets in the Mid-Continent region, aiming to further solidify its position as a leading independent natural gas producer and deliver strong investor returns.
Key Highlights
- 1Chesapeake Energy to acquire $300 million in Mid-Continent gas assets from ONEOK, Inc.
- 2Acquisition expected to add approximately 200 bcfe of proved gas reserves and increase production by 47,000 mcfe/day.
- 3Properties are highly synergistic, with 87% overlapping existing Chesapeake acreage, enabling operational efficiencies.
- 4Acquisition cost per mcfe of proved reserves is projected at $1.38 after allocating $25 million for unevaluated leasehold.
- 5Transaction is subject to customary closing conditions and is expected to close on January 31, 2003.
- 6Chesapeake announces a proposed public offering of 20 million shares of common stock.
- 7Proceeds from the stock offering are earmarked to finance the ONEOK acquisition or for general corporate purposes.