2011-04-29-2011-04-15-2011-06-06

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
315MM
Description

Bought company with 22 drilling rigs primarily operating in the Williston and Anadarko basins, including three under contract with Chesapeake.

Chesapeake Energy Corp., Oklahoma City, (NYSE: CHK) has successfully completed its tender offer for drilling services company Bronco Drilling Co. Inc. (Nasdaq: BRNC) for approximately $315 million, including debt, net working capital and outstanding warrants.

Chesapeake made a cash tender offer to acquire all outstanding shares of Bronco's common stock at a price of $11 per share. The $11 per share purchase price represents premiums of 6% and 24% over the closing price of Bronco's common stock on the Nasdaq on April 14, and the average closing price for the 90-calendar day period ending on April 14, respectively.

The acquisition enables Chesapeake to further its goal of owning approximately two-thirds of the rigs that it operates in its drilling program, a key aspect of its vertical integration strategy, at an attractive price per rig. Bronco currently owns 22 high-quality drilling rigs primarily operating in the Williston and Anadarko basins, including three that are under contract with Chesapeake. Chesapeake is currently Bronco's second-largest customer.

Chesapeake will integrate Bronco's 22 rigs into Chesapeake's subsidiary, Nomac Drilling LLC, which currently owns 95 drilling rigs available for service, of which 90 are currently drilling under contract for Chesapeake. The company is currently operating a total of 160 drilling rigs and plans to end 2012 utilizing approximately 200 drilling rigs. Chesapeake believes that the acquisition of Bronco should satisfy the vast majority of Chesapeake's anticipated rig investment needs through 2012.

Aubrey K. McClendon, Chesapeake chief executive, says, "The acquisition of Bronco is a great additional step in our vertical integration strategy and increases confidence in our plan to ramp up drilling activities in highly lucrative, liquids-rich unconventional resource plays. We look forward to working with Bronco's management team to quickly complete this transaction and integrate operations."

Johnson Rice & Co. LLC was financial advisor to Bronco and delivered a fairness opinion to its board. Thompson & Knight was legal counsel to Bronco. Jefferies & Company Inc. was financial advisor to Chesapeake. Commercial Law Group PC and Wachtell, Lipton, Rosen & Katz were legal advisors to Chesapeake.