Chesapeake Energy Corporation Announces It is Pursuing Strategic Alternatives for Its Oilfield Services Division
February 24 2014 - 1:01AM
Business Wire
Chesapeake Energy Corporation (NYSE:CHK) announced today that it
is pursuing strategic alternatives for its oilfield services
division, Chesapeake Oilfield Services (COS), including a potential
spin-off to Chesapeake shareholders or an outright sale. COS’
operations are currently conducted through Chesapeake’s wholly
owned subsidiary, Chesapeake Oilfield Operating, L.L.C. COS had
revenues in 2013 of approximately $2.2 billion, and its service
offerings include drilling, hydraulic fracturing, oilfield rentals,
rig relocation, and fluid handling and disposal.
Led by Chief Executive Officer Jerry Winchester, who previously
served as CEO of publicly traded oilfield services company Boots
& Coots, Inc., and an experienced management team, COS is well
positioned to succeed as a stand-alone company. As of December 31,
2013, COS owned or leased 115 land drilling rigs, including 10
proprietary, fit-for-purpose PeakeRigs™ that utilize advanced
electronic drilling technology. Also as of December 31, 2013, COS
owned nine hydraulic fracturing fleets with an aggregate of 360,000
horsepower; a diversified oilfield rentals business; an oilfield
trucking fleet consisting of 260 rig relocation trucks; 67 cranes
and forklifts used to move drilling rigs and other heavy equipment;
and 246 fluid hauling trucks.
Chesapeake management believes that COS can maximize its value
to Chesapeake shareholders outside of the current ownership
structure by, among other things, optimizing the allocation of
capital and corporate resources in a manner that focuses on
achieving the strategic priorities of Chesapeake and COS. In
addition to services performed for Chesapeake, approximately 35% of
COS’ marketable drilling rigs are currently working for third-party
operators and COS intends to grow its third-party customer base as
an independent provider of oilfield services.
Doug Lawler, Chesapeake’s Chief Executive Officer, commented,
“COS is an outstanding business with a talented management team
that we believe will offer Chesapeake and its shareholders enhanced
return opportunities as a stand-alone company. It has provided, and
will continue to provide, superior service to Chesapeake’s upstream
business, and we look forward to maintaining our close and valuable
relationship with Jerry and his team as they pursue COS’ ventures
outside of Chesapeake. A separation of COS is aligned with our
strategies of financial discipline and profitable and efficient
growth from captured resources.”
Winchester added, “We are very excited about this next chapter
in COS’ evolution and the tremendous opportunity ahead to grow the
company and expand our service offerings for the benefit of
Chesapeake, our future shareholders, and each of our outstanding
employees. We believe that our separation from Chesapeake will
position us to further capitalize on our expertise and capture
additional third-party work.”
Chesapeake Energy Corporation (NYSE:CHK) is the
second-largest producer of natural gas and the 11th largest
producer of oil and natural gas liquids in the U.S. Headquartered
in Oklahoma City, the company's operations are focused on
discovering and developing its large and geographically diverse
resource base of unconventional natural gas and oil assets onshore
in the U.S. The company also owns substantial marketing,
compression and oilfield services businesses. Further information
is available at www.chk.com where Chesapeake
routinely posts announcements, updates, events, investor
information, presentations and news releases.
Any separation of COS is subject to satisfaction of several
conditions, some of which are beyond our control, including market
conditions, board approvals, consents, regulatory review and
approvals, among others. There can be no assurance that the
proposed separation will lead to a sale or spin-off or any other
transaction, or that if any transaction is pursued, that it will be
consummated.
This news release includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are statements other than statements of historical fact
that give our current expectations or forecasts of future events
and include statements about the potential spin-off or sale of our
oilfield services division, the anticipated management of the
business to be spun off or sold, and the outlook for COS as a
separate business, among others. Forward-looking statements are
based upon Chesapeake management's expectations and beliefs
concerning future events. There can be no assurance that any
transaction or future events will occur as anticipated, if at all,
or that actual results will be as expected. Although
management believes the expectations and forecasts reflected in the
forward-looking statements are reasonable, we can give no assurance
they will prove to have been correct. They can be affected by
inaccurate assumptions or by known or unknown risks and
uncertainties. For a description of certain factors that could
negatively impact the oil and gas exploration and production
business and the oilfield services business, and potentially a
transaction to separate COS, see "Risk Factors" in Item 1A of
Chesapeake's Annual Report on Form 10-K for the year ended December
31, 2012 filed with the U.S. Securities and Exchange Commission on
March 1, 2013 and in Chesapeake Oilfield Operating, L.L.C.’s
Registration Statement on Form S-4 filed with the SEC on May 30,
2013. We caution you not to place undue reliance on our
forward-looking statements, which speak only as of the date of this
news release, and we undertake no obligation to update any of the
information provided in this release, except as required by
applicable law.
Chesapeake Energy CorporationInvestor Relations:Gary T. Clark,
CFA, 405-935-8870ir@chk.comorMedia Relations:Gordon Pennoyer,
405-935-8878media@chk.com
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