Chesapeake’s second sale of Haynesville acreage to net $465 million

Chesapeake Energy Corp., Oklahoma City, has agreed to sell a portion of its acreage and producing properties in its Haynesville shale operating area in northern Louisiana to an affiliate of Dallas-based Covey Park Energy LLC for $465 million.

The sale includes 41,500 net acres and 326 operated and nonoperated wells currently producing 50 MMcfd of gas net to Chesapeake. The deal is expected to close in first-quarter 2017.

"Upon closing, this strong bid for our second Haynesville package, along with our recent new issue and tender, will position Chesapeake with significant liquidity as we begin a new year,” said Doug Lawler, Chesapeake chief executive officer.

Announced earlier this month, the first deal comprised Chesapeake agreeing to sell 78,000 net acres with 250 wells producing 30 MMcfd of gas net to Chesapeake to Indigo Minerals LLC, a Houston-based firm created in 2006 that’s backed by Martin Cos., Yorktown Partners LLC, Trilantic Capital Partners LLC, and Indigo management (OGJ Online, Dec. 6, 2016).

Chesapeake says it has now exceeded its 2016 asset sales goal by $500 million, bringing total gross proceeds from divestitures either signed or closed in the year to $2.5 billion.

Covey Park was formed in June 2013 with $300 million of financial sponsorship from energy and resources private equity firm Denham Capital Management LP. In November, Covey Park said it agreed to acquire 90,000 net acres with average net production of 35 MMcfd in Panola, Nacogdoches, and San Augustine counties in Texas; and DeSoto, Bossier, and Sabine Parishes in Louisiana from an undisclosed seller.

At the time, the firm said it owned 321,000 gross and 218,000 net acres of leasehold in Texas and Louisiana, with expected fourth-quarter net production of 325 MMcfd and total proved reserves of 2.5 tcf.