In an effort to raise funds to offset its cash shortfalls, Chesapeake Energy Corporation (NYSE:CHK) decided to sell 3,300 acres in the Barnett Shale, in North Texas to raise $100 million. Chesapeake Land Development, the real estate unit of the company handles the sale of the land parcels.
Barnett Shale is considered as “grand daddy” of the company’s urban drilling operations. The Barnett Shale formation is the largest onshore natural gas fields in North America, covering 20 counties in North and Central Texas. Chesapeake has already produced 4.8 trillion cubic feet of natural gas from its Barnett Shale drilling operations, and it was able to create 99, 726 jobs in Texas. Due to its current financial situation, the company axed 8 percent of its employees in Barnett Shale.
The company also plans to sell its Forth Worth Office tower. The natural gas and oil producer is accepting offers from interested buyers.
In June, Chesapeake announced that it is selling its stakes in Chesapeake Midstream Partners LP (NYSE:CHKM) to Global Infrastructure Partners (GIP). Its plan is to sell its assets in three separate transactions, to raise more than $4 billion.
The company closed the deal with GIP, and agreed to sell 69 percent of its limited partner and its entire general partner interests in Chesapeake Midstream Partners for $2 billion. In a separate transaction, Chesapeake also sold its interests in Chesapeake Midstream Development for another $2 billion. Chesapeake Midstream Partners owns 3,700 miles of gas pipelines, while Chesapeake Midstream Development owns 1,950 miles of natural gas pipelines. Chesapeake sold its properties above its book value.
Chesapeake will also sell 1.5 million acres of its leasehold land in Permian basin, Mississippi Lime JV, and company assets by end of 2012. Chesapeake already announced the sale of its assets worth $6.6 billion cash.
The company is pressured to sell some of its assets, in order to reduce its $12.6 billion long-term debts. Its target is to sell a total of $14 billion assets this year.
In May 2012, Chesapeake borrowed $3 billion from Goldman Sachs Group, Inc. (NYSE:GS) and from Jefferies Group Inc. (NYSE:JEF), to repay its obligations based on its corporate revolving credit policy.
JPMorgan Chase & Co. (NYSE: JPM) avoided entering into a business transaction with Chesapeake, due to the quality of its credit status.
Chesapeake’s estimated fund shortage is $18.6 billion until 2013. It is also under investigation by the Securities and Exchange Commission (SEC) and the Department of Justice, in connection with business transaction anomalies.