Chesapeake up on Total deal, production hike

AP News
Posted: Jan 04, 2010 4:37 PM

Shares of Chesapeake Energy Corp. jumped on Monday after the natural gas producer raised its 2011 production outlook in conjunction with its sale of shale gas assets to France's Total SA and expectations for outperformance.

Shares of Chesapeake rose $2.11, or 8.2 percent, to $28 in afternoon trading.

Chesapeake said it will sell a 25 percent stake in its Barnett Shale play to Total for $2.25 billion.

The asset sale cuts into Chesapeake's production volumes, but production gains from "ongoing outperformance" of drilling programs will cancel out the loss in 2010, the company said, holding to its 2010 outlook of 2,650 million cubic feet equivalent per day (mmcfe/d).

But in 2011, Chesapeake's strengthening production output will push volumes above earlier expectations. The company, which is based in Oklahoma City, raised its production outlook by 50 mmcfe/d to 3,050 mmcfe/d.