In a series of deals announced Wednesday, Chesapeake Energy Corp has agreed to sell off another batch of assets as part of its ongoing effort to pay off more than $13 billion in debt.
The latest transactions, which will bring Chesapeake roughly $6.9 billion, include selling most of the company’s properties in the Permian Basin of West Texas to other oil companies for $3.3 billion; unloading $2.7 billion in midstream assets to a private equity firm; and selling another $900 million in other midstream and leasehold assets to six companies that were not identified in the Chesapeake press release announcing the deals.
Royal Dutch Shell subsidiary SWEPI LP, Chevron USA, and Houston-based EnerVest combined to buy the Permian properties, which Chesapeake estimates produced about 5.7 percent of its oil and gas output in the second quarter of this year. Only Shell disclosed the value of its piece of the transaction, which the company pegged at $1.9 billion. Chesapeake expects all three sales to be completed within a month.
Meanwhile, private equity firm Global Infrastructure Partners (GIP) agreed to buy the larger part of Chesapeake’s midstream assets, including gathering and processing systems, for $2.7 billion.
So far this year, Oklahoma City–based Chesapeake, has shed $11.6 billion in assets in order to deal with its debts, The New York Times reports.
M&A partner C. Ray Lees of the Commercial Law Group in Oklahoma City advised Chesapeake on all the deals, while Wachtell, Lipton, Rosen & Katz corporate partner David Katz advised the company’s board.
Both lawyers have advised Chesapeake in the past. In February 2011 Katz led a team of Wachtell lawyers that worked on Chesapeake’s sale of shale interests to BHP Billiton. Chesapeake also relied on Lees in that deal. The Am Law Daily named Lees a Dealmaker of the Week for his work on the matter.
Bracewell worked with The Commercial Law Group in advising Chesapeake on the $2.7 billion sale to GIP, led by energy partners G. Alan Rafte in Houston and New York and corporate securities partner Michael Telle in Houston.
The firm advised Shell on its $1.9 billion purchase in the Permian Basin. Energy partner W. James McAnelly III in Houston led that team, which worked with in-house Shell counsel Melanie Samadi, formerly a senior counsel at Bracewell.
Bracewell also advised on a Chesapeake deal that closed in July, when the company sold $2 billion in limited and general partnership interests in Chesapeake Midstream Partners (now Access Midstream Partners). Telle and Rafte led the firm’s team on that deal, too. The buyer in that deal was also GIP.
Texas law firm Burleson worked with EnerVest’s in-house team on the company’s purchase of Permian assets. Partner Gary Johnson in Houston, who specializes in oil and gas, led the Burleson team, supported by corporate and securities partner Philip Kinkaid.
GIP and Chevron would not disclose whether they relied on outside counsel in connection with the deal. Joseph Blum, a former Latham & Watkins partner, is GIP’s general counsel. GIP turned to Latham earlier this summer for its $4 billion purchase of pipeline assets from Chesapeake. M&A partners Edward “Ted” Sonnenschein and Eli Hunt led the Latham team working on that deal.
Other firms that have worked on Chesapeake’s asset sales include Wilmer Cutler Pickering Hale and Dorr and Bracewell & Giuliani. A team of Bracewell lawyers advised Chesapeake on the $4 billion pipeline sale to GIP, while Wilmer lawyers took the lead on the deal with BHP Billiton.
Fabené Welch, a former partner at Haynes and Boone and Akin, Gump, Strauss, Hauer & Feld, is general counsel for Houston-based EnerVest. Chesapeake does not have a general counsel.