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December 12, 2012 8:07 am
Chesapeake Energy, the US gas producer, has sold a package of pipelines and related assets for $2.16bn, but raised less than it had hoped from the deal.
The assets, which include gas gathering and processing systems, are being bought by Access Midstream Partners, a listed partnership that was spun off from Chesapeake and is now controlled by Global Infrastructure Partners, the private equity firm.
In a separate deal also announced on Tuesday, GIP agreed to sell a 50 per cent stake in the general partnership and 25 per cent of the limited partner units of the Access group for $2.4bn to Williams, the gas pipeline company.
Chesapeake looks set to fall short of its plan to make disposals worth $13bn-$14bn in 2012, unless it can agree another deal before the end of the year.
When it discussed the pipeline sale in September, Chesapeake said it expected to raise $2.7bn from selling the assets to GIP.
Counting another small pipeline deal worth $175m, Chesapeake has raised less than $12bn from disposals so far this year.
However, the company says it is close to further pipeline sales to bring in an additional $425m by the end of the first quarter.
In order to secure the sale to Access, Chesapeake also had to offer “new market-based gathering and processing agreements” – effectively commitments to keep using and paying for the pipelines for years to come.
Chesapeake’s financial position has been under pressure as it seeks to invest to shift its production away from natural gas towards more lucrative oil.
It has been helped by the recovery in US natural gas prices in recent months to about $3.40 per m Btu, but hurt by a fall in the prices of natural gas liquids such as ethane, used for chemicals manufacturing.
The company’s shares have fallen 30 per cent so far this year amid concerns over its debts and corporate governance.
Aubrey McClendon, Chesapeake’s chief executive, said: “We look forward to completing additional asset sales and achieving our goals of strengthening our balance sheet, tightening our asset focus and increasing returns to shareholders.”
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