Chief Oil & Gas, based in Dallas, has been bought out by Chesapeake Energy for a sum of $2.6 billion in cash and stock options.
This will be Chesapeake’s second multibillion-dollar purchase since coming out of bankruptcy last year. They also struck an agreement with Continental Resources Inc. to sell their Powder River Basin assets in Wyoming for around $450 million.
Chesapeake is expected to acquire 113,000 acres in the Marcellus Shale of Pennsylvania. This land will be used to produce 835 million cf/day in net gas for nine months in 2022 and will bring in approximately $500 million for the year.
Nick Dell’Osso, the chief executive officer at Chesapeake, said the acquisition will achieve the company’s goal of refocusing and high grading their portfolio around core assets, which positions them to generate meaningful returns for the shareholders. The company has also said that this transaction is expected to improve its greenhouse gas emissions.
According to Chesapeake, the deal will immediately increase their operating and cash flow while simultaneously growing their gas production capacity in the Marcellus Shale by up to 200 million cf/day.
Last year, Chesapeake announced that it also acquired a rival gas driller, Plano-based Vine Energy Inc., for $2.7 billion. Both the Chief and Vine deals have positioned the company to increase output, which was a big push since coming out of bankruptcy in February 2021.
Chief Oil & Gas was founded in 1994 by Trevor Rees-Jones, utilizing horizontal drilling technology to extract natural gas reserves. Although this was considered an unconventional move, Rees-Jones became a pioneer in Barnett Shale in North Texas because of it.
The company moved into the Marcellus Shale in Appalachia in 2007. Rees-Jones was on the cover of Forbes magazine in 2016, which highlighted the businessman’s seven deals in seven years for $7 billion. His net worth today is $4.5 billion.
