Another Chesapeake Asset Sale Jolts Shale Stocks (CHK, BHP, CEO, TOT, ERF, CNX, DVN)
Natural gas futures have endured a multi-year slide, but the picture is far rosier for shares of shale gas stocks, which are bouncing today thanks in part to some more asset sales in the sector. The Shale Gas Stocks Index is higher by 0.3% and has jumped 15% in the past three months.
Chesapeake Energy (CHK), the second-largest U.S. natural gas producer, is surging 8% after announcing the sale of Fayetteville Shale assets to BHP Billiton (BHP), the world’s largest mining company, for $4.75 billion. The assets include 487,000 acres which produce 400 million cubic feet of natural gas per day. BHP, the Anglo-Australian mining giant, has previously said it is targeting acquisitions in the oil and gas market.
Oklahoma-based Chesapeake has been shedding gas assets to raise cash to reduce its debt load and to increase its exposure to oil. In January, the company sold shale assets in Colorado and Wyoming to CNOOC (CEO), China’s third-largest oil producer, for over $500 million. That deal followed a shale deal in Texas in October between the two companies worth over $1 billion. Chesapeake also sold over $2 billion in shale assets to Total SA (TOT), Europe’s third-largest oil company, in early 2010.
Investors can track the Shale Gas Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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