Summary
Chesapeake Energy Corporation (CHK) announced on February 3, 2004, the completion of significant acquisitions totaling $510 million in natural gas assets. These acquisitions include a $420 million purchase of assets from Concho Resources Inc. and $90 million for two smaller property packages. The acquired assets are located in the Mid-Continent, Permian Basin, South Texas, and onshore Gulf Coast regions, areas where Chesapeake has a strategic focus. These transactions are expected to substantially bolster Chesapeake's reserves, adding approximately 320 billion cubic feet of gas equivalent (bcfe) of proved gas reserves and 195 bcfe of probable and possible gas reserves. This move significantly strengthens Chesapeake's position as a major natural gas producer, with total proved reserves now exceeding 3.4 trillion cubic feet. The company also highlighted that 100% of the projected 2004 and 2005 gas production from these newly acquired assets has been hedged at favorable prices, aiming to ensure value creation for shareholders.
Key Highlights
- 1Chesapeake Energy completed acquisitions totaling $510 million in natural gas assets.
- 2The primary acquisition was from Concho Resources Inc. for $420 million, with an additional $90 million for two smaller property packages.
- 3Acquired assets are located in strategic regions: Mid-Continent, Permian Basin, South Texas, and onshore Gulf Coast.
- 4The company estimates acquiring approximately 320 billion cubic feet (bcfe) of proved gas reserves and 195 bcfe of probable and possible gas reserves.
- 5These acquisitions increase Chesapeake's total proved reserves to over 3.4 trillion cubic feet (tcfe).
- 6Current production from the acquired assets is estimated at approximately 70 million cubic feet of natural gas equivalent (mmcfe) per day.
- 7100% of projected 2004 and 2005 gas production from these assets has been hedged at prices favorable to current market conditions.