Newspaper article THE JOURNAL RECORD

Oklahoma City-Based Chesapeake Energy Announces Venture with Equity Fund

Newspaper article THE JOURNAL RECORD

Oklahoma City-Based Chesapeake Energy Announces Venture with Equity Fund

Article excerpt

Officials with Chesapeake Energy said Friday the company has entered into a new joint venture valued at more than $500 million with a New York City-based private equity fund.

In a media release, Chesapeake CEO Aubrey McClendon said his company formed a joint venture with Global Infrastructure Partners, an equity fund that targets its investments in power and utilities, natural resources and other infrastructure. The pair would create a new entity, Chesapeake Midstream Partners LLC.

To form the new company, McClendon said Chesapeake would contribute "substantially all of its midstream assets in the Barnett Shale and the majority of the company's nonshale midstream assets in the Arkoma, Anadarko, Delaware and Permian Basins," along with gas processing assets.

Officials from GIP said they would purchase a 50-percent interest in CMP for $588 million in cash. Chesapeake will retain the remaining 50 percent.

McClendon predicted the new entity would become an industry leader.

"We are pleased to announce the first step in unlocking the embedded value in our midstream assets and further execute on our asset monetization program," he said. "More importantly, we believe CMP will become one of the premier natural gas gathering businesses in the industry and serve as an attractive vehicle for monetizing additional Chesapeake gathering systems as they become more fully developed."

He said CMP would "continue to generate substantial synergies" with Chesapeake's upstream operations, adding that someday CMP would become "one of the largest public midstream companies in the nation."

J. Mike Stice, Chesapeake's senior vice president for Natural Gas Projects, was named to head CMP. In a media release, Stice said he was honored by the appointment.

"The new joint venture with GIP capitalizes on the financial strength and discipline of this premier financial partner and also the extraordinary growth opportunities within one of the nation's leading natural gas producers," he said. …

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