Chesapeake considers sale or spinoff of oilfield services unit
02/24/2014 12:01 PM
02/24/2014 12:02 PM
Chesapeake Energy, the second-biggest U.S. natural gas producer, said it’s looking at options including the sale or a spinoff to existing shareholders of the company’s oilfield services unit.
The unit, Chesapeake Oilfield Operating LLC, had sales of about $2.2 billion last year and is able to work as a stand-alone firm, the Oklahoma City-based energy producer said in a statement. The unit earns about 35 percent of its revenue from contracts with companies other than its parent.
The oilfield services business “will offer Chesapeake and its shareholders enhanced return opportunities as a stand-alone company,” said Doug Lawler, Chesapeake’s chief executive officer, in the statement. “A separation of COS is aligned with our strategies of financial discipline and profitable and efficient growth from captured resources.”
On Wall Street, investors bid up Chesapeake shares (ticker: CHK) 72 cents a share to $27.29.
Lawler, a former executive with Anadarko Petroleum, was named CEO at Chesapeake last May after co-founder and longtime CEO Aubrey McClendon was forced to step down. Major shareholders raised questions about the company’s finances and McClendon’s personal dealings, including loans from companies that also did business with Chesapeake.
Since he took over, Lawler has been cutting costs and selling assets to reduce debt. Chesapeake Energy, still the No. 2 producer in the Barnett Shale, is cutting capital spending by about 20 percent this year and pursuing further asset sales as it faces a funding gap of about $1 billion in 2014, the company said earlier this month.
The oilfield services unit owns nine hydraulic fracturing fleets, rents equipment for oilfields and operates 260 rig relocation trucks, as well as cranes and forklifts, according to Chesapeake Energy.
The article includes material from Star-Telegram archives.
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