Chesapeake spins off oilfield division
Chesapeake Energy Corp. announced Monday that it will spin off its wholly owned oilfield division, Chesapeake Oilfield Operating LLC, as it looks to streamline its operations.
The spinoff will create the separate, publicly traded company Seventy Seven Energy Inc., with its own board of directors and management team. Chesapeake will not retain any ownership of the new company.
COO provides well-site services and equipment to land-based exploration and production companies in the United States’ most-active drilling plays, including the Utica Shale.
It generated $2.2 billion in revenue last year, up from $1.9 billion in 2012.
As a part of Chesapeake, COO provided drilling, hydraulic fracturing, oilfield rentals, rig relocation and water transport and disposal to Chesapeake and its partners. But its dependence on the parent company waned in past quarters, as COO diversified its portfolio in regards to drilling.
According to Monday’s filing with the U.S. Securities and Exchange Commission, COO’s drilling revenues attributable to Chesapeake fell from about 93 percent in 2011 to 80 percent in 2013. Meanwhile, the number of COO’s rigs contracted by Chesapeake fell from a peak level of 100 in April 2012 to 50 by the end of 2013.
By March 1, 35 percent of COO’s active fleet was under contract with third parties, and the company said it would continue to expand its customer base as Seventy Seven Energy.
Once the spinoff is complete, the newly formed Seventy Seven Energy will trade on the New York Stock Exchange under the ticker symbol SSE.