Chesapeake Energy Corp., Oklahoma City, (NYSE: CHK) reports Chesapeake Granite Wash Trust has commenced an initial public offering of 23.38 million common units at an undisclosed price per share and will trade on the New York Stock Exchange as CHKR. Morgan Stanley & Co. LLC and Raymond James & Associates Inc. are joint book-running managers and joint structuring advisors and Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Wells Fargo Securities LLC are joint book-running managers.
The IPO represents an approximate 50% beneficial interest in the trust. The trust has also granted the underwriters the option to purchase up to an additional 3.5 million common units. Prod forma, Chesapeake Energy will own 11.69 million common units and 11.69 million subordinated units in the trust, assuming no exercise of the underwriters' option, and the trust will have a total of 46,750,000 units outstanding.
The trust will own royalty interests conveyed to it by Chesapeake that will entitle the trust to a percentage of the proceeds received by Chesapeake from the production of hydrocarbons from 69 currently producing wells and 118 development wells to be drilled in the future by Chesapeake on approximately 45,400 gross acres (28,700 net) in the Colony Granite Wash play in Washita County in the Anadarko Basin of western Oklahoma.
As of June 30 and after giving effect to the conveyance of the PDP royalty interest and the development royalty interest to the trust, the total reserves estimated to be attributable to the trust were 44.3 million barrels of oil equivalent mmboe (47% oil and gas liquids). This amount includes 18.6 million barrels equivalent attributable to the PDP royalty interest and 25.7 million barrels equivalent attributable to the development royalty interest.
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