What significant asset has EXPAND ENERGY Corp (EXE) divested, and what were the terms?

EXPAND ENERGY Corp (EXE) has completed the sale of its Ohio acreage, comprising approximately 1.5 million gross (900,000 net) acres, including Utica Shale assets and producing wells. The initial purchase price was approximately $2.0 billion, with the company receiving net proceeds of about $1.868 billion in cash after post-closing adjustments. Additionally, there is potential for up to $100 million in contingent payments if natural gas prices meet certain thresholds by the end of 2019.

How is the company using the proceeds from the asset sale?

A significant portion of the proceeds from the asset sale is being used to redeem approximately $1.4 billion of the company's 8.00% Senior Secured Second Lien Notes due 2022. This indicates a strategic move to reduce debt and strengthen the company's financial position.

What is the significance of the $147 million price adjustment?

The $147 million adjustment to the purchase price is a post-closing adjustment agreed upon by the parties. It accounts for items such as revenues and expenses incurred after an effective date of January 1, 2018, and impacts the final cash received from the sale.

Are the contingent payments included in the reported net proceeds?

No, the net proceeds of approximately $1.868 billion do not include the potential contingent payments. These payments, up to $100 million, are dependent on future natural gas prices reaching specific levels for the years 2022 and 2023 by December 31, 2019.

EXPAND ENERGY Corp 8-K: Acquisitions & Dispositions

Summary

EXPAND ENERGY Corp (EXE), formerly Chesapeake Energy Corporation, has announced the completion of a significant asset disposition and a corresponding debt redemption. On October 29, 2018, the company finalized the sale of its Ohio acreage, encompassing approximately 1.5 million gross (900,000 net) acres, including assets prospective for the Utica Shale and numerous producing wells. This transaction generated net proceeds of approximately $1.868 billion in cash, after customary post-closing adjustments, which included a $147 million price adjustment. In conjunction with the asset sale, the company is utilizing a significant portion of the proceeds to redeem its 8.00% Senior Secured Second Lien Notes due 2022. Approximately $1.4 billion in aggregate principal amount of these notes will be called for redemption on the redemption date. This strategic move aims to deleverage the balance sheet by eliminating a substantial portion of its debt, funded primarily by the cash generated from the asset sale. Investors should note the potential for up to $100 million in contingent payments based on future natural gas prices, though these are not included in the current net proceeds.

Key Highlights

1Completion of sale of approximately 900,000 net acres in Ohio, including Utica Shale prospective acreage and producing wells, to Encino for approximately $2.0 billion.
2Received net proceeds of approximately $1.868 billion in cash from the asset sale after customary adjustments, including a $147 million price adjustment.
3Potential for up to $100 million in contingent payments based on future natural gas price thresholds for 2022 and 2023.
4Notice of redemption issued for approximately $1.4 billion aggregate principal amount of 8.00% Senior Secured Second Lien Notes due 2022.
5The debt redemption is expected to be funded primarily by proceeds from the asset sale, indicating a focus on balance sheet deleveraging.
6The transaction details are elaborated in the Form 10-Q for the quarter ended June 30, 2018.
7Pro forma financial information related to the transaction will be filed subsequently.

EXPAND ENERGY Corp 8-K Report, Acquisition Completed (Oct 29, 2018)

Summary

Key Highlights

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