Chesapeake Energy Corp. has left the midstream space after selling the last of its gathering and processing goods. It's shedding its assets in three separate transactions totaling about $3 billion, the company announced. The deal helped wind down a year rich with midstream acquisitions.
The bulk of the sale, $2.7 billion worth owned by Chesapeake Midstream Development LP, is going to Global Infrastructure Partners (GIP). The sale includes gathering and processing systems in the Eagle Ford, Utica, Haynesville and Powder River Basin Niobrara shale plays. "The transaction with GIP would include new market-based gathering and processing agreements covering certain acreage dedication areas and also include one new volume commitment covering approximately 70% of the company's expected production volumes in the southern portion of our Haynesville shale area during 2013-17," Chesapeake said in a release.
Chesapeake also has plans to sell some Midcontinent midstream assets to two additional companies. It expects to enter a fourth agreement to sell Eagle Ford shale oil gathering assets. Altogether, those sales are expected to total $300 million in proceeds for Chesapeake.
The transactions are expected to close in third- and fourth-quarter 2012. When combined with the earlier sale of Chesapeake's general partnership interests in Access Midstream Partners LP for about $2 billion, Chesapeake stands to gain about $5 billion from its midstream exit.
All told, its asset sales were among the year's largest. One of the largest single midstream deals (not including drop-downs) of 2012 came from Energy Transfer Partners LP. In April 2012, Energy Transfer Partners announced it was entering into a merger agreement that would see it acquire Sunoco. The unit and cash transaction, valued about $5.3 billion, closed in October.
Across the border, Pembina Pipeline Corp. acquired Provident Energy Ltd. for $3.1 billion in a deal that helped form Canada's third-largest energy infrastructure company.
Of course, the largest deal to close in 2012 was Kinder Morgan's $38 billion acquisition of El Paso. See the related story on page 51.
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