Chesapeake Energy opens up sharply on plans to sell stake in Fayetteville Shale

NEW YORK - Natural gas and oil producer Chesapeake Energy Corp. (NYSE: CHK) opened up more than $2 per share on Feb. 7 after it announced plans to sell its stake in the prolific Fayetteville Shale. The stock closed on Feb. 7 at 32.17, up $1.21.

Chesapeake announced before the market open that it will sell its stakes in the Fayetteville natural-gas field and two private energy companies in hopes of reducing its debt by as much as $3 billion.

The divestitures, expected to net $5 billion before tax, are part of a continuing push at the Oklahoma City energy producer to trim its long-term debt by 25 percent over the next two years while simultaneously boosting its oil and gas output by 25 percent. The company will likely spend some of the proceeds in its ambitious drilling program.

The announcement, in which Chesapeake said it will sell all of its assets in Arkansas's Fayetteville shale formation, further underscores the top U.S. natural-gas producer's shift away from natural gas to more lucrative oil exploration.

The stock is up 19.5 percent since Chesapeake said on Jan. 6 that it would pare debt.

Besides the Fayetteville divestiture, the plans announced call for the sale of minority positions in oilfield-service company Frac Tech Holding LLC and Oklahoma City oil and gas producer Chaparral Energy Inc.

Construction begins on Fayetteville Express Pipeline

DALLAS & HOUSTON - Fayetteville Express Pipeline, L.L.C., announced on March 8 that construction has begun on the Fayetteville Express Pipeline (FEP), a 50/50 joint venture between Energy Transfer Partners, L.P. and Kinder Morgan Energy Partners, L.P.
The pipeline will cost $1.25 billion.
The approximately 185-mile, 42-inch natural gas pipeline will serve the Fayetteville Shale producing region in Arkansas with an initial capacity to transport up to two billion cubic feet per day.
FEP will originate in Conway County, Ark., continue eastward through White County, Ark, and terminate at an interconnection with Trunkline Gas Co. in Panola County, Miss.
Contracts have been awarded to Houston-based Willbros Group, Inc. and Tulsa-based Sheehan Pipe Line Construction Co. for the construction of the pipeline. Additionally, Houston-based EMS-USA, Inc. is constructing the Russell Compressor Station near Russell, Ark. Energy Transfer Partners is managing the construction of FEP and will operate the pipeline. The pipeline is expected to be in service by late 2010.