By Anya Litvak / Pittsburgh Post-Gazette
Chesapeake Energy Corp. announced Thursday that it will shed its liquids-rich Marcellus Shale acreage in a $5.38 billion deal with Southwestern Energy Co.
Oklahoma-based Chesapeake, whose leasing appetite in the Marcellus made it among the top companies holding claim to the land here, said the area being sold — mostly in West Virginia and in the western part of Pennsylvania’s Washington County — wasn’t being properly valued by the market and was near the bottom of Chesapeake’s priority list.
Jason Ashmun, vice president of the Appalachian North Business Unit for Chesapeake, said the company has been “on the bubble” about its southern Marcellus acreage, which includes about 14,000 acres in southwestern Pennsylvania.
As is common among energy exploration companies, Chesapeake’s teams in the company’s various operation territories compete for capital allocations, which have been on the decline since CEO Doug Lawler replaced Aubrey McClendon at the helm last year. Mr. Lawler’s arrival signaled a shift in the company’s spending strategy and a greater focus on efficiency.
“Chesapeake’s very aggressive historical push for growth necessitated investment that substantially outstripped operating cash flow,” said analysts from Standard & Poor’s in a note Thursday morning that upgraded the company’s outlook from stable to positive on news of the Marcellus deal.