Chesapeake Energy Corporation (CHK) is stepping ahead for more joint ventures for its properties, according to management.
Chesapeake holds the industry’s leading position in U.S. acreage. In addition to significant holdings in several other fields, Chesapeake has the rights to drill nearly 3 million acres in four of the most prolific shale gas fields − Haynesville, Marcellus, Barnett and Fayetteville.
Since the last few years, the company has been expanding its asset base by aggressively buying properties in these shale gas plays. It has also made several joint ventures with large oil integrated companies.
Chesapeake’s latest joint venture was finalized in January with Total (TOT) for the development of Barnett Shale assets. Total acquired a 25% interest for $2.25 billion in Chesapeake’s upstream assets in this area.
This was Chesapeake’s fourth joint venture in the Big 4 shale plays. The other partners include world-class companies such as Plains Exploration & Production Company (PXP), BP America (BP) and Statoil ASA (STO).
Though natural gas accounts for over 90% of Chesapeake’s reserves and production, management is quite confident about the company’s portfolio of assets that would help drive growth, even with the current weakness in natural gas prices.
We think Chesapeake’s concentrated focus on shale gas plays should provide the impetus to monetize these assets more effectively, boosting returns. Our Neutral recommendation for the stock remains unchanged at this stage.
Price of Chesapeake shares fell 4.01% to $23.24 at Monday’s closing.
Read the full analyst report on “CHK”
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Read the full analyst report on “PXP”
Read the full analyst report on “BP”
Read the full analyst report on “STO”
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