Global Infrastructure Partners buys Chesapeake Energy’s GP and LP interests
OKLAHOMA CITY -- Chesapeake Midstream Partners (CHKM) announces that Global Infrastructure Partners has agreed to acquire all of Chesapeake Energy Corp.’s ownership interest in CHKM for $2.0 billion. The acquisition, which is expected to close by June 29, 2012, will result in GIP''s ownership of 100% of CHKM''s general partner interest and 69% of CHKM''s limited partner units. Concurrent with this announcement, GIP signed a letter agreement to acquire certain midstream assets from Chesapeake Midstream Development (CMD), Chesapeake''s wholly owned midstream subsidiary, and CHKM signed a letter agreement to acquire from Chesapeake certain Mid-Continent gathering and processing assets.
CHKM says its existing business model and strategic assets continue to provide a leading platform of organic and inorganic growth opportunities and the transaction supports an enhanced strategic emphasis on expanding services to additional third party producers. The letter agreements provide further opportunities with respect to growth assets in Chesapeake''s portfolio for years to come. CHKM remains committed to executing on an unchanged best-in-class business model.
CHKM benefits from a contractual structure that contains fixed fee revenue terms, long-term acreage dedications, minimum volume commitments, fee redeterminations and annual fee escalations, each of which contributes to generating predictable, stable and growing cash flows. CHKM''s existing assets are located in leading basins and have over $1.2 billion of organic growth capital requirements during 2012 and 2013. Also unchanged is CHKM''s commitment to maintaining a conservative balance sheet and investment grade credit metrics. The management team remains unchanged and will continue to leverage all of these business strengths to deliver best in class investor returns with a low risk business platform.
CHKM affirms ebitda (income before interest, taxes, depreciation and amortization) guidance for the twelve months ended December 31, 2012 of $475 million with expansion capital expenditures of $660 million and maintenance capital expenditures of $74 million. In addition, CHKM is projecting organic ebitda for the twelve months ended December 31, 2013 of $550 to $575 million with expansion capital expenditures of $550 to $600 million and maintenance capital expenditures of approximately $74 million.
J. Mike Stice, Chesapeake Midstream Partners'' CEO, comments, "I''m excited that GIP has made this commitment to acquire a larger ownership stake in CHKM. GIP has been an outstanding sponsor and partner for CHKM over the past three years and I look forward to the opportunity to continue that relationship. This new ownership structure creates an independent MLP and enhances CHKM''s ability to execute on its low-risk business model and industry leading growth opportunities."
Matthew Harris, GIP Partner, commented, "GIP is pleased to be able to make a new investment in CHKM. We believe in the best in class business model, the strategic asset base and the outstanding management team. CHKM has demonstrated industry leading performance since our initial investment and the business is a strong fit for our portfolio. We think the new ownership structure provides a stable platform for executing on the vast growth opportunities in the business."
Chesapeake Midstream Partners, L.P. CHKM -2.06% is the industry''s largest gathering and processing master limited partnership as measured by throughput volume and owns, operates, develops and acquires natural gas gathering systems and other midstream energy assets. Headquartered in Oklahoma City, CHKM''s operations are focused on the Barnett Shale, Haynesville Shale, Marcellus Shale and Mid-Continent regions of the U.S.