Chesapeake Partners buying Marcellus assets from Chesapeake Energy

OKLAHOMA CITY, Okla. - Chesapeake Midstream Partners, L.P. (NYSE: CHKM) on Dec. 28 announced it has agreed to acquire Appalachia Midstream Services, L.L.C. (NYSE: AMS), the wholly owned subsidiary of Chesapeake Midstream Development, L.P. that holds its Marcellus Shale midstream assets, for total consideration of $865 million.

Chesapeake Midstream Development, L.P. is a wholly owned subsidiary of Chesapeake Energy Corp. (NYSE: CHK).

The addition of the Marcellus assets makes CHKM the industry's largest gathering and processing master limited partnership as measured by throughput volume.

Through acquiring AMS, CHKM will own approximately 47 percent of an integrated system of assets that consist of approximately 200 miles of gathering pipeline in the Marcellus Shale, including the liquids-rich Marcellus South region. Throughput for these assets at Dec. 15, 2011, was just over one billion cubic feet per day. AMS operates the assets under 15-year fixed fee gathering agreements with leading Marcellus natural gas and liquids producers.

The gathering agreements include significant acreage dedications and annual fee redeterminations that target a mid-teens return on all invested capital in the acquired assets.

Chesapeake has committed to generating EBITDA of not less than $100 million in 2012 and $150 million in 2013 from the Marcellus assets for the benefit of CHKM.

The acquisition, which closed on Dec. 30, 2011, was financed by $600 million of cash drawn from CHKM's revolving credit facility and equity consideration of $265 million (9.8 million CHKM common units), increasing Chesapeake's limited partnership ownership of CHKM to 46.1 percent from 42.3 percent.

Chesapeake Energy launches pipeline company limited partnership

FORT WORTH, Texas - Oklahoma City-based Chesapeake Energy, which has a large regional office in Fort Worth, said late on Sept. 24 that it will raise $588 million in cash by selling half its natural gas pipelines in the Barnett Shale of North Texas, as well as properties in other petroleum basins.
Chesapeake, a major Barnett gas producer, said it has entered into a definitive agreement to form a joint venture with Global Infrastructure Partners, a New York-based private equity fund. Chesapeake will contribute the Barnett Shale pipelines and processing facilities, called "midstream assets," to the new Chesapeake Midstream Partners Llc.
GIP will pay $588 million for its 50 percent interest in CMP, and Chesapeake will retain the other half.
Chesapeake said in May that it was in talks with four potential bidders for a $500 million stake in its Barnett Shale midstream properties.
Chesapeake will contribute substantially all of its midstream assets in the Barnett Shale as well as most of the company’s nonshale midstream assets in the Arkoma, Anadarko, Delaware and Permian basins. The transaction is expected to close this month.
The deal will provide additional money for Chesapeake’s operations.
Chesapeake has large lease holdings in major shale gas plays such as the Barnett, the Haynesville in Louisiana and the Marcellus in the Appalachian area in the eastern United States.