Chesapeake to sell, trade its assets in Permian Basin

Journal Record, The (Oklahoma City), Sep 23, 2002

OKLAHOMA CITY (JR) -- Chesapeake Energy has announced that it intends to sell or trade its Permian Basin assets.

The Oklahoma City-based company will sell the assets so that it can further tighten its focus on the Mid-Continent region, where 85 percent of its assets are presently located. In the Permian, Chesapeake produces 18 million cubic feet of gas equivalent per day.

In the Mid-Continent, Chesapeake is the region's largest producer with proved reserves exceeding 1.8 trillion cubic feet equivalent and daily production exceeding 450 million cubic feet of gas equivalent.

Chesapeake has hired Petrie Parkman & Co. to assist it with the Permian asset sale or trade process, said Aubrey K. McClendon, Chesapeake's chairman and CEO.

"Our planned exit from the Permian reflects the reality that while Chesapeake is the largest gas producer in the Mid-Continent, we are a minor player in the Permian," McClendon said. "We see many other companies in the reverse position and expect to execute a trade or series of trades that can be mutually beneficial for the companies involved."

Chesapeake Energy's board of directors has declared a quarterly dividend of 3 cents per share that will be paid on Oct. 15 to shareholders of record on Oct. 1.

Chesapeake has 166 million common shares outstanding. The expected annual cost of the common stock dividend will be about $20 million.

Chesapeake's board also declared a regular quarterly cash dividend on the 6.75 percent cumulative convertible preferred stock of 84.375 cents per share. The dividend for the preferred stock is payable on Nov. 15 to preferred shareholders of record on Nov. 1.

Chesapeake has 2,998,000 shares of preferred stock outstanding with a liquidation value of $150 million. The annual cost of Chesapeake's preferred stock dividend is about $10 million.