Cash-strapped Chesapeake gets a break

One month after the company said it would dramatically curtail natural gas drilling for the year, Chesapeake Energy Corp. announced Wednesday that it is selling $6.9 billion worth of land and other assets, much of it in the Permian Basin.

The sales include separate deals involving Shell Oil Co. and Chevron Corp.

Global Infrastructure Partners will acquire most of Chesapeake’s midstream assets, valued at $3 billion. Chesapeake spokesman Michael Kehs said that is in addition to a $2 billion deal between the two companies announced in June.

Analysts said the company got a good price overall for the assets as it tries to lower its debt load.

“It was good, not great,” said Jason Wangler, an analyst with Wunderlich Securities.

He said the interest by the major oil companies was a good sign for the Permian Basin.

Chesapeake CEO Aubrey McClendon said in announcing the sale that the deal brings the company within about 85 percent of its divestiture goal for the year.

It previously had sold $4.7 billion in assets and hopes to sell between $13 billion and $14 billion this year.

That puts the company on track, although Wangler said that it still is several billion dollars short of its goal.

“So far, so good, if you will,” he said.

The Oklahoma City-based company said it would use a portion of the proceeds from the latest sales to fully repay $4 billion of term loans during the fourth quarter.

It said it expects all three transactions announced Wednesday to close within the next 30 days and to receive 87 percent of the proceeds in cash at closing.

The deals “give them a little more confidence,” said Mark Hanson, an analyst with Morningstar. “They’re getting closer to the edge of the woods, but they’re not out yet.”

McClendon told analysts in early August that low natural gas prices had caused the company to rethink its strategy and focus on oil, rather than natural gas.

But Hanson noted that a new board was seated in mid June and could prompt a change in direction.

“I’d say 2013 is a total wild card,” he said.