OKLAHOMA CITY, Okla., Thu May 24, 2012 – Chesapeake Energy Corp. has put 504,000 acres in the DJ Basin in Wyoming and Colorado up for sale, as the U.S. energy company scrambles to raise cash to close a $9 billion to $10 billion funding shortfall.
The deal includes oil and gas production from 29 wells that the company operates and Chesapeake’s interest in 24 nonoperated wells, according to a prospectus on the deal.
Chesapeake, the nation’s second-largest gas producer behind Exxon Mobil Corp and for years one the most active gas drillers, sold off a third of its holdings in the region – then around 800,000 acres – to China’s CNOOC Ltd for nearly $1.3 billion in 2011.
The company faces a 2012 funding shortfall as natural gas prices are the lowest in a decade.
It has already announced that it is looking to sell its 1.5 million acres of lease holdings in the oil-rich Permian basin as well as find a joint venture partner in another liquids-rich region, the Mississippi Lime basin, in order to raise cash.
Analysts and investors have also called for change at the company after Reuters reported that CEO Aubrey McClendon had taken out more than $1 billion in loans using his interest in thousands of company wells as collateral.
Chesapeake shares were down 1.8 percent at $14.82 on Thursday afternoon on the New York Stock Exchange.
NEW ORLEANS, Mon Mar 26, 2012 – Schlumberger Ltd., the world’s largest oilfield services company, said profits would be hurt by downward pricing pressure for hydraulic fracturing services, which had now reached North American liquids basins as well.
Chief Executive Paal Kibsgaard said on top of that price squeeze, already widely seen in natural gas areas due to weak gas prices, the shift of pressure pumping equipment to liquids-rich basins was reducing utilization while also adding to costs.
“Together these factors will have an impact on our results both in North America, and overall, in this and in the coming quarters,” Kibsgaard said in a speech to kick off the Howard Weil Energy Conference in New Orleans on Monday.
The use of hydraulic fracturing, or fracking, around the many U.S. shale basins has boosted natural gas production while stemming a decades-long trend of falling U.S. oil production.
“There is some slackening of demand in the gas plays and there has been migration to liquids plays. So there’s more supply coming online and it is normal that pricing would come down,” said David Vaucher, an analyst with IHS-Cambridge Energy Research Associates in Houston.
But supplies in many regions remain scarce in general, from rigs to frack crews, water, sand and synthetic proppants used to keep cracks in shale rock open to get the hydrocarbons out.