Chesapeake Plans To Raise $5B Through Asset Sales

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Chesapeake Energy, the second-largest U.S. natural gas producer, said it plans to raise $5 billion by selling its assets in the Fayetteville Shale in Arkansas along with investments in two companies in an effort to raise to reduce its debt burden. The sale of the Fayetteville acreage could be worth up to $4.6 billion.

Oklahoma-based Chesapeake (CHK) probably will not struggle to find a buyer for the Fayetteville assets. The company has been a willing seller of shale acreage over the past several years and has announced two shale asset sales to China's Cnooc (CEO) in less than six months.

Exxon Mobil (XOM), the largest U.S. natural gas producer, recently spent $650 million to acquire assets in the Fayetteville Shale. Chesapeake said on Jan. 6 it planned to cut debt 25 percent in two years by selling assets while increasing production 25 percent, according to Bloomberg News. The company currently has about $14 billion in debt.

Chesapeake also plans to sell stakes in privately held firms Frac Tech Holdings LLC and Chaparral Energy Inc. Chesapeake owns 26 percent of Frac Tech, a hydraulic-fracturing contractor that in December filed for an initial public offering, Bloomberg reported.