8-KOther EventsExhibits & Filings

EXPAND ENERGY Corp 8-K Report, Corporate Update (Jul 1, 2014)

Filed July 1, 2014For Securities:EXEEXEELEXEEWEXEEZ

Summary

Chesapeake Energy Corporation (Chesapeake) announced the completion of the spin-off of its oilfield services business, formerly Chesapeake Oilfield Operating, L.L.C. (COO), into a new, independent publicly traded company named Seventy Seven Energy Inc. (SSE). This separation was executed through a stock distribution where Chesapeake shareholders received one share of SSE for every fourteen shares of Chesapeake common stock held as of June 19, 2014. Key agreements governing the separation, including a Master Separation Agreement, Tax Sharing Agreement, and Employee Matters Agreement, have been finalized. These agreements define the terms of the spin-off and outline the future relationship between Chesapeake and SSE. Additionally, SSE, independently, secured $500 million in 6.5% Senior Notes due 2022 and entered into asset-backed lending and term loan facilities, relieving Chesapeake of any obligations related to these new SSE debt arrangements.

Key Highlights

  • 1Completion of spin-off of oilfield services business into Seventy Seven Energy Inc. (SSE).
  • 2Shareholders received 1 share of SSE for every 14 shares of Chesapeake held as of June 19, 2014.
  • 3Definitive agreements (Master Separation, Tax Sharing, Employee Matters) finalized between Chesapeake and SSE.
  • 4SSE independently issued $500 million of 6.5% Senior Notes due 2022.
  • 5SSE entered into asset-backed lending and term loan facilities.
  • 6Chesapeake is absolved of all obligations related to SSE's new debt arrangements.
  • 7The spin-off aims to create a stand-alone, publicly traded entity for the oilfield services segment.

Frequently Asked Questions

The primary event is the completion of the spin-off of Chesapeake Energy Corporation's oilfield services business into a new, independent company called Seventy Seven Energy Inc. (SSE).

Shareholders who owned Chesapeake Energy stock as of June 19, 2014, received one share of Seventy Seven Energy Inc. (SSE) common stock for every fourteen shares of Chesapeake Energy stock they held.

Chesapeake Energy Corporation and its subsidiaries have no ongoing obligations or liabilities related to the $500 million of Senior Notes and other credit facilities that Seventy Seven Energy Inc. has independently secured.

The key agreements include a Master Separation Agreement, a Tax Sharing Agreement, and an Employee Matters Agreement, which define the terms of the spin-off and the ongoing relationship between the two entities.