Chesapeake Energy Corporation (CHK) is looking at its Chesapeake Oilfield Services for a potential spin-off to CHK stock shareholders or a sale.
The Oklahoma-based company’s operations are conducted through Chesapeake’s subsidiary, Chesapeake Oilfield Operating.
Chesapeake Energy is the second-largest producer of natural gas in the United States.
Chesapeake Oilfield Services (COS) had revenues in 2013 of approximately $2.2 billion, and its service offerings include drilling, hydraulic fracturing, oilfield rentals, rig relocation, and fluid handling and disposal.
Doug Lawler, Chesapeake’s Chief Executive Officer said that COS would offer Chesapeake and its shareholders enhanced return opportunities as a stand-alone company.
“It has provided, and will continue to provide, superior service to Chesapeake’s upstream business, and we look forward to maintaining our close and valuable relationship with Jerry (Winchester) and his team as they pursue COS’ ventures outside of Chesapeake,” Lawler said. “A separation of COS is aligned with our strategies of financial discipline and profitable and efficient growth from captured resources.”
Chesapeake has been struggling to recover from years of aggressive capital spending by the company under former CEO and co-founder Aubrey McClendon. Under Mr. McClendon, Chesapeake habitually spent more than the cash it brought in from its operations during a period of explosive growth. But a glut of gas sent prices tumbling, eroding Chesapeake’s revenue and prompting it to sell assets in 2012 to raise more than $11 billion to pay for its operations.
Mr. McClendon left the company in April 2013 under pressure by large shareholders.
Chesapeake is scheduled to release its 2014 Q4 and full-year operational update and financial results prior to the opening bell on Wednesday.
Chesapeake had revenue of $4.87 billion and profit of $156 million for Q3.
CHK stock is down 2% year to date.
