The Chesapeake Energy Corp. plan for a net-profits-interest package of Appalachian assets will likely go to a financial player-"and it will go"-a source familiar with the deal says. Jefferies Randall & Dewey is marketing the nonoperated minority interest in certain Chesapeake-operated producing assets in Kentucky and West Virginia.
The assets are 1.5% of Chesapeake's proved reserves and production. They are expected to attract bids from an upstream MLP due to the assets' low-risk, long-reserve-life and low-decline-rate nature. Production is 30 million cubic feet of gas equivalent per day. Proved reserves are 145 billion equivalent. If sold as a straight-up sale, the package would go for an estimated $300- to $400 million.
Meanwhile, St. Mary Land & Exploration Co., Denver, has retained Albrecht & Associates Inc. to sell certain properties in the Rockies, Midcontinent, Ark-La-Tex, Gulf Coast and Permian Basin separately or in one package.
The offering is expected to draw interest from upstream MLPs. St. Mary believes the properties in the offering are small for St. Mary to found an upstream MLP of its own. Instead, it is offering it to the MLP market, which is paying a premium for producing properties.
The assets include 1,504 producing, 10 proved developed nonproducing, and 175 proved undeveloped properties. Net proved developed producing reserves are estimated to be 5.5 million barrels of oil and 23.5 billion cubic feet of gas.
And, Dallas-based Helios Capital Management LLC, the general partner to Helios Energy Partners I LP and Helios Royalty Partners I LP, has retained Merrill Lynch Petrie Divestiture Advisors, Richardson Barr & Co. and Morgan Stanley as financial advisors to assist with the possible sale of the oil and gas assets of the partnerships.
The assets, owned and operated by Aethon I LP, are in Texas and Oklahoma and consist of long-lived, stable production, a majority under successful water flood.
Helios Capital Management is a joint venture of privately held, Dallas-based Hyperion Energy and Morgan Stanley Commodities, New York, to invest in onshore oil and gas properties in the U.S.
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