Chesapeake Energy Corporation (NYSE:CHK), the second largest producer of natural gas in the United States announced that it might sell or spin-off its oilfield services unit to shareholders.
Chesapeake Oilfield Operating L.L.C., a wholly-owned subsidiary of the company, is managing the operations of Chesapeake Oilfield Services (COS). Its service offerings include drilling, hydraulic fracturing, oilfield rentals, rig relocation, and fluid handling and disposal. Last year, the subsidiary reported approximately $2.2 billion revenue.
Well-positioned to succeed
Chesapeake Energy Corporation (NYSE:CHK) is confident that Chesapeake Oilfield Services is well-positioned to succeed as a standalone company. The business is currently headed by Jerry Winchester, former CEO of Boots & Coots.
In a statement, Doug Lawler, chief executive officer of Chesapeake Energy Corporation (NYSE:CHK) said, “COS is an outstanding business with a talented management team that we believe will offer Chesapeake and its shareholders enhanced return opportunities as a stand-alone company.”
He also emphasized the Chesapeake Oilfield Services has provided and will continue to provide superior service to the upstream business of Chesapeake Energy Corporation (NYSE:CHK). Lawler added, “A separation of COS is aligned with our strategies of financial discipline and profitable and efficient growth from captured resources. We look forward to maintaining our close and valuable relationship with Jerry and his team as they pursue COS’ ventures outside of Chesapeake.”
Chesapeake COS assets
According to Chesapeake Energy Corporation (NYSE:CHK), its oilfield services unit owned or leased 115 land drilling rigs including 10 proprietary fit-for-purpose PeakeRigs with advanced drilling technology. It has 9 hydraulic fracturing fleets with a total of 360,000 horsepower, a diversified oilfield rentals business, an oilfield trucking fleet consisting of 260 rig relocation trucks; 67 cranes and forklifts used to move drilling rigs and other heavy equipment; and 246 fluid hauling trucks as of December 31, 2013.
The management of Chesapeake Energy Corporation (NYSE:CHK) believed that the oilfield services business will be able to maximize shareholders value if its operations is separated from its structure.
“We are very excited about this next chapter in COS’ evolution and the tremendous opportunity ahead to grow the company and expand our service offerings for the benefit of Chesapeake, our future shareholders, and each of our outstanding employees. We believe that our separation from Chesapeake Energy Corporation (NYSE:CHK) will position us to further capitalize on our expertise and capture additional third-party work,” said Winchester.