Wednesday Morning Links; Details -- Shell, Chevron Buy Chesapeake's Permian Assets; Coal-Fired Plants Mothballed

Off To Vegas! Mideast spiraling out of control (not to suggest that it's ever been in control)? and hardly a ripple in the oil price. At least for the moment (9:56 am). Ambassador to Libya suffocated to death; no indication the president attended any security/intelligence briefing the prior week; the president condemns the attack; body paraded; Egyptians storm US-evacuated embassy; same folks who are being promised $1 billion bailout from US; Israel on its own or so it appears; will he or won't he? [links provided to non-headline stories]

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From Yahoo! In Play

Chesapeake Energy to sell permian, midstream and certain other assets for net proceeds of ~$6.9 bln; Chevron and Royal Dutch Shell buyers in deal; co will repay $4 bln in loans during Q4: Co announced it has entered into multiple agreements to sell the vast majority of its Permian properties, substantially all of its midstream assets and certain noncore leasehold for total net cash proceeds of ~$6.9 bln. The company will use a portion of the proceeds from these asset sales to fully repay its $4.0 bln of term loans during the 2012 fourth quarter. Chesapeake has entered into purchase and sale agreements with three companies covering the vast majority of its Permian Basin assets for total net proceeds of ~$3.3 bln. The Permian Basin assets being sold produced ~21,000 barrels of liquids and 90 mln cubic feet of natural gas per day during the 2012 second quarter, or ~5.7% of Chesapeake's production during the quarter. Chesapeake has entered into a purchase and sale agreement to sell its assets in the southern Delaware Basin portion of the Permian Basin to SWEPI, a subsidiary of Royal Dutch Shell. Additionally, Chesapeake has entered into a purchase and sale agreement to sell its assets in the northern Delaware Basin portion of the Permian Basin to Chevron U.S.A. Inc., a subsidiary of Chevron Corporation. Following these transactions, Chesapeake will continue to own ~1.3 mln net acres of leasehold in the Utica Shale, in which its cost basis, net of various sales and its joint venture with Total, will be ~$200 per net acre (including all drilling carries in the Total joint venture).

Royal Dutch Shell confirms it acquired acreage in Texas from Chesapeake Energy (CHK) for $1.935 bln. 

It looks like all Permian assets, not Eagle Ford (see below: undisclosed amount of Utica acreage).

This is the Bloomberg link and data points:

• Chevron, Shell, and EnerVest: will buy Permian Basin acreage for $3.3 billion (CVX has at least $20 billion in cash as reported elsewhere)
• "The Permian Basin holdings were the most-valuable of several assets...[that were] put up for sale this year to raise cash, avoid a credit-rating downgrade, ...
• Global Infrastructure Partners will pay $2.7 billion for most of Chesapeake's pipeline and processing operations
• two unnamed companies will buy additional oil-gathering pipelines in the Eagle Ford for $300 million
• Chesapeake is also selling Utica shale acreage to an undisclosed buyer for $600 million 

WSJ also reports same story.

Another WSJ story on this deal; hints abound that one might see Shell in the Bakken before this is all over.

MDW comments. 

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Americans paid more for imported oil in July; first time in five months the price has gone up. Despite all the American shale oil. Hmmm.... can only be seen as good news for Bakken-centric companies. Go Bakken! Related: "Bulls ousting commodity bears in fastest turnaround since 2008..." [Disclaimer: this is not an investment site; make no financial decisions based on what you read here.]

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Google coal-fired plants mothballed by gas glut for WSJ story, p. B1.

Coal has been losing ground to natural gas ever since a boost in shale-gas production sent the price of natural gas tumbling four years ago. But now the natural-gas price advantage is beginning toaffect the coal units that seemed most protected from the shift. Many of these plants have the latest environmental upgrades and are often close to coal deposits.  

The reason: with natural gas priced below $3 per million  British therman units, down from about $8 in 2008, many gas-fueld plants an make electricity for about two cents a kilowatt hour less than half what it costs to run many coal units....

Google how public unions became so powerful, WSJ, op-ed, p. A15.

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Recession? What recession?

I try to get to Starbucks up the street, here in Belmont, at Cushing Square by 8:30 (or earlier if possible). There's always a short line, but manageable. Today, at 9:05 the line stretches to the door, and it's a fairly large Starbucks, perhaps one of the larger ones of which I am aware (the Starbucks at Cambridge/Harvard Square is larger but that's because of its upper floor. The space on the first floor is actually smaller than this Starbucks on Cushing Square. A Starbucks line stretching to the door: about 1 of every 15 door-openers turns around and leaves when he/she sees they line. But it is amazing how fast the line moves; Dunkin' Donuts csannot move a line this quickly. Starbucks has it down to a science, and it's the manager that keeps the line moving this quickly. It's really something.