US shale gas producer Chesapeake Energy is reportedly mulling the sale of its oil-producing assets in South Texas.
The company has engaged two banks to help it execute the potential sale, which could yield returns of $2bn, reported Reuters, citing two undisclosed sources having knowledge about the development.
However, the company could delay launching the formal sale process given that its CEO Doug Lawler had just resigned from his position earlier this week. Mike Wichterich, the company’s board of directors’ chair, has been named interim CEO.
Chesapeake Energy had come out of Chapter 11 bankruptcy in February 2021. The company had equitized nearly $7.8bn of debt at the time of emerging from bankruptcy.
It had filed for bankruptcy in June 2020 to facilitate a restructuring of its balance sheet.
The assets, which are likely to be offloaded, span more than 220,000 acres in the Eagle Ford shale basin. The company had production of 84,000 barrels of oil equivalent per day from the assets in Q4 2020, of which 26% was natural gas.
Overall, the company’s average daily production for Q4 2020 was around 435,000 barrels of oil equivalent (boe), of which nearly two-thirds was natural gas. The company expects its full year 2021 average daily production to be nearly 427,000boe.
For Chesapeake Energy, the sale of the South Texas oil assets will help the company move its focus again on natural gas, as per the publication, based on a previously held interview with Lawler.
The company had bolstered its presence in Texas through the $4bn acquisition of WildHorse Resource Development in 2019. The deal enabled it to increase its acreage in the Eagle Ford Shale and Austin Chalk formations.
