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Colorado oil and gas company to buy Chesapeake Energy assets for $385 million

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FourPoint Energy LLC said Wednesday that will buy about 3,500 wells in Oklahoma and Texas from Chesapeake Energy Corp. for $385 million.

The new deal by the Denver-based oil and gas company follows last July’s announcement of FourPoint‘s $850 million deal for assets in western Oklahoma owned by two subsidiaries of Oklahoma City-based Chesapeake (NYSE: CHK).

The deal announced Wednesday is for “all of Chesapeake Energy’s remaining Western Anadarko Basin oil and gas assets,” FourPoint said. It’s expected to close April 29.

The deal not only increases FourPoint’s holdings in the area, but also offers “decades” of growth potential, said George Solich, FourPoint’s president and CEO.

“The properties to be acquired create visibility into decades of development growth and closely overlap FourPoint’s current acreage footprint. By optimizing our position we enhance optionality in drilling inventory allowing us to target the best upside locations that achieve the most economic rates of return,” Solich said.

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Oil and gas companies around the country have been cutting budgets and selling assets in order to shore up balance sheets hammered by more than a year of low commodity prices.

Chesapeake executives on Wednesday said the company had reached deals to sell about $700 million worth of assets, including sales — such as FourPoint’s — that are expected to close by the end of the second quarter.

Chesapeake reported a 2015 loss of $14.86 billion, including charges of $14.53 billion — much of it from write-downs on the value of assets that are no longer economic to drill at market prices.

FourPoint said the nearly 3,500 active wells involved in the deal announced Wednesday are in a series of basins, including the Granite Wash, Missourian Wash, Upper and Lower Cleveland and Tonkawa formations.

The wells produce a mix of oil and gas, with about 67 percent of the production being natural gas and the remaining 33 percent being oil and natural gas liquids.

The deal includes assets that cover about 473,000 acres in 15 counties in western Oklahoma and the Texas Panhandle area, FourPoint said.

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The deal also made sense financially, said Tad Herz, FourPoint’s executive vice president and CFO.

“As the markets continue to remain volatile, acquiring an attractive producing asset that will significantly increase our current asset base while providing a stable cash flow profile should give FourPoint the financial flexibility to modify and adapt our development plan,” Herz said.

Including the wells and acres involved in the latest deal with Chesapeake, FourPoint said it will have 884,000 net acres of mineral rights with more than 7,600 wells producing the equivalent of about 435 million cubic feet of natural gas per day, with about 40 percent of that coming from oil and natural gas liquids.


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