Natural gas company Chesapeake Energy Corporation (CHK) said Monday that it will sell a 25% stake in its upstream Barnett Shale assets in a join venture with France-based oil and gas company Total S.A. (TOT).
The joint venture will be worth some $2.25 billion U.S., with Total paying $800 million U.S. in cash and picking up $1.45 billion U.S. of Chesapeake's drilling and completion costs. Those costs should be accrued by the end of 2012.
The transaction is expected to close by the end of January.
Chesapeake CEO Aubrey McClendon said in a statement that "This brings our combined shale joint venture proceeds, including upfront cash payments and drilling carries, during the past 18 months to approximately $10.8 billion (U.S.), which compares very favorably against a cost basis in the assets sold of approximately $2.7 billion (U.S.)."
Chesapeake shares rose $1.42 U.S., or +5.5%, in pre-market trading Monday, while Total shares rose $1.86 U.S., or +2.9%.
The Bottom Line
Shares of CHK from some "recommended" lists last Aug.4, when the stock traded at $45.25 U.S. The company has a 1.16% dividend yield, based on Friday's closing stock price of $25.88 U.S. The stock has technical support in the $22-$25 U.S.price area. If the shares can firm up, there could be some overhead resistance around the $28 U.S. price level. Many experts would remain on the sidelines for now.
Chesapeake Energy Corporation (CHK) is not recommended at this time, holding a Dividend.com DARS Rating of 3.3 out of 5 stars. Total S.A. (TOT) is a "recommended" dividend stock
