Chesapeake Energy has sold a package of natural gas pipelines and related assets to Access Midstream Partners

Ultimately raising fewer funds than expected, Chesapeake Energy has sold a package of pipelines and related assets for US$ 2.16 billion.

Access Midstream Partners, which was a listed partnership that was spun off from Chesapeake and is now controlled by private equity firm Global Infrastructure Partners (GIP), bought Chesapeake’s assets, which include gas gathering and processing systems.

This announcement means that Chesapeake looks set to fall short of its plan to raise US$ 13 - 14 billion in 2012, unless it can agree another deal before the end of the year.

Earlier this Autumn, Chesapeake said it expected to raise US$ 2.7 billion from selling the assets to GIP. Including another small pipeline deal worth US$ 175 million, the company has raised less than US$ 12 billion from disposals so far in 2012.

However, Chesapeake has divulged it is close to further pipeline sales to bring in an additional US$ 425 million by the end of Q1, 2013.

In order to guarantee the sale to Access, Chesapeake also had to offer “new market-based gathering and processing agreements” – which translates as commitments to keep using and paying for the pipelines in the future.

As Chesapeake seeks to shift its production away from natural gas towards more lucrative oil, its financial position has been under pressure. The company has been helped by the recovery in US natural gas prices in recent months to about US$ 3.40/million Btu, but impaired by a fall in the prices of natural gas liquids such as ethane, used for chemicals manufacturing.

Amid concerns over its debts and corporate governance, the company’s shares have fallen 30% so far in 2012.

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.”

In a separate deal also announced recently, GIP has agreed to sell a 50% stake in the general partnership and 25% of the limited partner units of the Access group for US$ 2.4 billion to the third-largest US pipeline company, Williams Cos.

The Access agreement “allows us to get very large-scale positions in basins as opposed to having to go in and get struggling positions in basins and try to build those up,” Chief Executive Officer Alan Armstrong said during a recent conference call with analysts.

Williams’ other forays into shale regions this year have included a US$ 380 million investment in a Caiman pipeline network in Ohio’s Utica Shale in June.

Edited from various sources by Cecilia Rehn.

Read the article online at: https://www.worldpipelines.com/business-news/12122012/chesapeake_energy_has_sold_natural_gas_pipelines_and_related_energy_assets-416/