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Friday, 05 December, 2008, 17:40 GMT | more >>

Chesapeake banks $1.1bn gas sale



By Upstream staff 

Chesapeake Energy said today it has sold some of its future natural gas production for $1.1 billion to UBS and Deutsche Bank and it plans to sell another $2 billion worth.

The sale, under a volumetric production payment, gives the buyers 210 million cubic feet equivalent of proven reserves and 55 MMcf of current gas production in Kentucky and West Virginia, or about 2% of Chesapeake's reserves and production.

Proceeds from the sale will be used to fund the company's drilling programme, which has a projected rate of return of more than 30%, Chesapeake chief executive Aubrey McClendon said.

Chesapeake said it planned similar sales of production from mature properties in 2008 and 2009 that would generate proceeds of at least $2 billion, Reuters reported.

The volumetric production payment entitles the purchaser to receive scheduled quantities of natural gas from Chesapeake's interests in more than 4000 producing wells, free of all production costs and production taxes over a 15-year period, the company said.


Wednesday, 02 January, 2008, 15:40 GMT  | last updated: Wednesday, 02 January, 2008, 15:45 GMT

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