Chesapeake Energy Corporation (NYSE:CHK) is up over 15% today on news that the oil company is selling off a good chunk of its East Coast shale assets. Oklahoma City-based Chesapeake announced plans to sell its Pennsylvania and West Virginia natural gas and oil shale fields to Southwestern Energy Company (NYSE:SWN) for $5.4 billion on Thursday. The deal represents Chesapeake’s largest divestment in the firm’s effort to maximize shareholder value after overextending itself a few years ago.

Chesapeake Energy Corporation Soaring on Shale Field Divestment News

“Today’s announcement marks a major step in Chesapeake’s transformation and a dramatic improvement in our financial strength as we seek to maximize value for our shareholders,” Chesapeake CEO Doug Lawler said in Thursday’s statement.

More details on Chesapeake’s shale asset divestment

The transaction, which is expected to finalize before the end of the year, will not impact Chesapeake’s production growth targets. Chesapeake Energy Corporation (NYSE:CHK), which before today had lost 31% of its value in 2014, was up as high as $20.44 for the biggest intraday gain in almost six years.

Southwestern on the other hand was down almost 10% at $32.15 for its largest intraday slump since September 2011 as many shareholders bailed out after the Houston-based firm paid premium that UBS Securities LLC said was 54% than Chesapeake’s assets were anticipated to sell for.

The transaction is contingent on Southwestern finalizing financing before closing the transaction. The Bank of America Corp (NYSE:BAC) advised Southwestern and has also agreed to put up a $5 billion bridge loan.

Southwestern also noted Statoil ASA(ADR) (NYSE:STO), which is the co-owner of some of the shale assets being sold, has 30 days to buy the stake at the agreed price.

Analysts say is “win-win” deal

The deal will be the first major move into the shale sector as the firm has been almost exclusively focused on gas production. The wells involved in the deal produce around 56,000 barrels of crude a day, just less than half  of which is oil and gas liquids such as propane. The deal also represents Southwestern’s largest-ever acquisition, according to Bloomberg.

The new assets will up Southwestern’s reserves by more than 30% to the equivalent of 890 million barrels of crude at a cost of about $24 per barrel.

“We think the sale is transformational for both parties,” said Scott Hanold, an analyst at RBC Capital Markets, in a letter to clients Thursday.