The company said that it had sold a volumetric production payment (VPP) to affiliates of Swiss financial services major UBS and Deutsche Bank-owned DB Energy Trading for proceeds of $1.1 billion.
The VPP entitles the purchaser to receive scheduled quantities of natural gas from Chesapeake’s interests in over 4,000 producing wells, free of all production costs and production taxes over a 15-year period. The transaction includes approximately 210 billion cubic feet of proved reserves and 55 million cubic feet per day of current net production.
Aubrey McClendon, Chesapeake’s CEO, said: The production from these assets was monetized at a discount rate of 6.3% and the proceeds will be redeployed into our low-risk drilling program at anticipated rates of return in excess of 30%.
