Saturday, March 2, 2013

Chesapeake To Sell Its Bakken Acreage -- Unconfirmed

Updates

April 15, 2013: there is still no confirmation that CHK has sold its Bakken acreage. This PN article from October 7, 2012, provides a bit more data, but still no confirmation. It will be interesting to listen to the 1Q13 earnings conference call which might be April 29, 2013. 
Several calls and emails over the last few weeks to Chesapeake’s media relations folks about the status of the company’s Williston Basin, yielded a single response: “We are not operating any drilling rigs in the Bakken.”
What we do know is this: Although the company has been aggressively selling assets elsewhere, there has been no announcement about it putting its Williston Basin 400,000 to 500,000 net acres up for sale. (The numbers come from 2012 presentations made by Aubrey K. McClendon, Chesapeake’s chief executive officer.)  
March 6, 2013: with no confirmation of the story that ran March 1, 2013, one starts to wonder about its veracity. However, this Bloomberg story might a) put it in perspective; and, b) explain what might be going on. 

March 4, 2013: the original story was posted late Friday night, March 1, 2013. Three days later no news anywhere in "mainstream media." In addition there are no comments at PowerPlay which, at least to me, calls all this into question.  It almost sounds like someone overheard some discussion somewhere suggesting a deal was done but in fact it was just that: a discussion. Time will tell. It's such a big story, I would think the original source would post an update, even to say "no news."

Original Post

Link here to Jay F. Marks/PowerPlay, getting information from Upstream.com.

Jay is reporting that CHK is selling its entire 427,000-acre Bakken prospect. If the report is accurate, my hunch is that we will be seeing Sinopec in North Dakota. Wow, with Chinese ceramics, it all fits, doesn't it?

SeekingAlpha mentioned Chesapeake and the Bakken in January, 2013, but no mention of possible sale. 

The story is not yet verified, but it would not be a bit surprising for CHK to sell its Bakken assets.

From MarketWatch, February 25, 2013:
Nonetheless, it (the Mississippi Lime/Sinopec deal) could prove a tough act to follow. The remaining $3 billion to $6 billion in Chesapeake’s asset sale program will have to be raised from the sale of mostly undeveloped acreage, analysts at UBS said in a note to clients Monday. 
Petroleum News had a nice report on this subject back in October, 2012.

Back-of-the-envelope calculations: 427,000 acres x $5,000/acre = $2 billion. Would Sinopec or anyone buy Bakken acreage outside the core area for a premium ($10,000/acre would net $4 billion)?