U.S. natural gas producer Chesapeake Energy Company (CHK) will sell its gas pipelines and related assets to Global Infrastructure Partners (GIP for short) through three separate transactions; the whole deal will be worth more than $4 billion. According to estimates, Chesapeake Energy’s current financing gap reaches $9 billion to $10 billion.
Chesapeake Energy is the U.S. second-largest producer of natural gas; the sharp fall in natural gas prices have significant impacts on its earnings, the company is forced to sell assets and reduce investment, so as to raise funds to repay debt. On the other hand, Chesapeake Energy’s corporate governance level is also questioned by investors.
Chesapeake Energy said it will sell the limited partnership interests and general partnership interests in Chesapeake Midstream Partners LP for $2 billion to GIP. At the same time, Chesapeake has also reached an agreement with Chesapeake Midstream Partners to sell Mid-Continent asset, and signed an agreement with GIP to sell its wholly-owned subsidiary Chesapeake Midstream Development LP. Chesapeake Energy expected the latter two deals would bring in revenues of more than $2 billion.
Boosted by this news, Chesapeake Energy stock price increased 2.86%, or $0.51, to close at $18.36 on Friday. Over the past 52 weeks, the highest level of Chesapeake Energy stock price was $35.75, and the latest closing price is 48.64% off the peak.