Looks like Sinopec (SNP) is looking real hard at Chesapeake's unconventional oil and gas play offerings.
Sounds like funding is somewhat of a challenge for them as they are already 'leveraged' significantly in the eyes of their backers.
Check it out.
What's your read / opinion ?
Kindest way for me to describe it would be as a real 'good news - bad news' story.
(Link Not Working - Apologies) But, if you do a search for Sinopec, Chesapeake you'll be presented with sites reporting these current events.
Sinopec would have a tough time buying Chesapeake in its entirety so I suppose the next best thing is to buy some of their assets. Most of the stuff they're selling is not terribly attractive. It's in unproven areas and, more importantly, it isn't blocked up like their best positions (which are in the Total JV). Buying their assets outside of the JV lines would be a good foot in the door for any company but it isn't on its own a great package. Whomever ends up owning it will have to do some major work to get it ready for a big drilling commitment.
CHK has been lucky over the last 5 yrs selling %s and gas assets. Unfortunately they plowed it all back in, question now is that game up for now? Abrey is a great salesman, they need it now more than ever.
If I were an acquirer, I would go for their PA Marcellus or nothing at all.
Economics are tremendous, doubt they would sell that except in Chap 11.
And of the total , even in PA, only a % is truly prospective, maybe 30-40% max.
PA Marcellus economics are a disaster at these gas prices. At $7MCF they're good, but not today and not anytime soon. If they can survive these next few tough years they'll have a shot at making enough money to cover their debts.