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Chesapeake Energy to acquire Chief E&D Holdings for $2 billion in cash and about 9.44 million shares

Chesapeake Energy Corp. (CHK) said Tuesday it has signed an agreement to acquire Chief E&D Holdings LP from Tug Hill Inc. for $2 billion in cash and about 9.44 million common shares. Based on Monday's closing price, the share portion comes to $599 million. "Chief and Tug Hill hold high quality producing assets and an inventory of premium drilling locations in the prolific Marcellus Shale in Northeast Pennsylvania," Oklahoma City-based Chesapeake said in a statement. The deal is expected to close by the end of the first quarter. Chesapeake said it has also agreed to sell its Powder River Basin assets in Wyoming to Continental Resources Inc. (CLR) for about $450 million in cash, in a deal also expected to close in the first quarter. Proceeds of that deal will be used to pay for Chief E&D. The company expects the deal to immediately boost production, operating cash flow per share, free cash flow per share and free cash flow yield. It will increase Chesapeake's five-year free cash flow outlook to a cumulative more than $9 billion based on current commodity strip prices. The company expects its portfolio to generate about 75% of 2022 projected cash flow from natural gas assets and 25% from oil assets, once the deal closes. The company expects to increase its annual base dividend by about 14% to $2.00 a share from $1.75 staring in the second quarter. It expects to recognize $50 million to $70 million in annual synergies. Shares were flat premarket and are down 1.2% in the year to date.

-Ciara Linnane


(END) Dow Jones Newswires

01-25-22 0723ET

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