Chesapeake Energy Corp., which has been offering some area landowners about $2,500 or more an acre for natural gas and oil drilling leases, announced a deal Thursday to sell part of the land for $15,000 an acre.
Chesapeake, which said it holds leases on about 1.5 million acres in the Utica Shale area, chiefly in eastern Ohio, said the deal will bring in about $2.14 billion.
The Oklahoma City-based company also announced a stock deal that will bring it another $1.25 billion, bringing the total of the two transactions to nearly $3.4 billion.
The transactions came as Chesapeake ran into investor resistance on the spending Friday after reporting third-quarter earnings of $879 million.
The company, which earned $1.23 per share on revenue of $3.98 billion, saw its shares fall $1.96, or 6.8 percent, to close at $27.07 Friday on spending and debt worries.
The company has paid roughly $11.1 billion for 5 million acres, while signing deals on 3.6 million acres for $16.4 billion in cash and drilling costs, according to published reports.
"We will come up with all the cash we need to run the business," Chesapeake's Chief Executive Officer Aubrey K. McClendon said on a conference call with analysts.
McClendon said the deal with an unnamed global energy company will allow it to recover more than its total leasing investment in the entire Utica Shale, while selling only about 142,500 net acres of its 1.5 million acres.
The letter of intent sets up a joint venture allowing the partner to acquire an undivided 25 percent interest in about 570,000 of Chesapeake's leased acres in 10 eastern Ohio counties.
Roughly another 80,000 acres is owned by Houston-based EnerVest, Ltd. and its affiliates for a total of 650,000 acres in the joint venture.
Some $640 million will be paid in cash, with about $1.5 billion as a drilling and completion cost carry, which Chesapeake said it expects to receive fully by the end of 2014.
The company said it will do all leasing, drilling, completion, operations and marketing for the project.
The deal, which is expected to close in mid-December, allows the partner to acquire more acreage and participate in production-related infrastructure, Chesapeake said.
In the financing agreement with EIG Global Energy Partners, Chesapeake said it has completed the sale of $500 million of perpetual preferred shares of the new CHK Utica LLC.
It said it expects to sell up to $750 million of additional CHK Utica preferred shares to other investors, including limited partners of EIG, by Nov. 30.
CHK Utica owns about 700,000 leased acres within an area of mutual interest in the Utica Shale play in 13 counties primarily in eastern Ohio, the company said.
Chesapeake said it kept all the common interests in CHK Utica.
The financial deal almost fully funds the drilling program of the company's CHK Utica unit for the foreseeable future.