Tapstone gets OK to buy CHK assets
Chesapeake Energy's MidContinent assets will stay with an Oklahoma company that has deep ties to the seller, a U.S. Bankruptcy judge has decided.
Tap stone Energy, an Oklahoma City-based exploration and production energy company led by former Chesapeake Energy Corp. executive Steve Dixon, submitted a $130.5 million bid that ultimately was approved by the judge to acquire the assets.
Tapstone initially offered $85 million for the assets as a “Stalking Horse” bidder in the proceeding. Stalking Horse is a term used for the initial, usually low bidder for bankruptcy assets.
But Tapstone, backed by investors including Kennedy Lewis Investment Management, wasn't the only bidder for the properties with deep ties to the seller that was interested.
Oklahoma City-based Mach Resources, an energy company owned by Chesapeake cofounder and Tapstone founder Tom Ward and backed by private equity as well, was among more than 100 companies that bid for the asset and drove up its price.
Christopher Cottrell, who represented Ward in the bankruptcy auction, posted on Linked In afterwards that Ma ch Resources gave it “a good run, but as Kenny Rogers would Lawler say ,` You' ve
got to know when to hold `em, know when to fold 'em."
The auction, part of a 363 transaction that is part of Chesapeake's ongoing bankruptcy process, was held on Thursday.
Earlier this year, Chesapeake reported it held about 736,000 acres within its Mid-Continent operational area ( the Anadarko Basin in Oklahoma) that produced an average of about 14,000 barrels of oil (equivalent) daily.
In an email to Chesapeake Energy' s employees sent out Friday obtained by The Oklahoman, CEO Doug Lawler informed them of the sale.
“The decision to sell the asset is not a reflection of our talented Mid-Con colleagues, but instead the recognition that the asset is simply not competitive in our portfolio under the current market conditions,” he wrote. “I would like to personally thank our Mid-Con team for their tireless effort on behalf of our company and for their commitment to safely delivering our business.”
Lawler noted the sale is “an important step” in the process the oil and gas exploration and production company is following to fundamentally reset its business “to increase our competitiveness and sharpen our focus.”
Tapstone's Dixon, who left Chesapeake in 2013 after serving as it acting CEO, held various positions with the company previously where he oversaw operations and geo sciences and exploration and production activities.
He was named Tap stone' s CEO in December 2016, replacing Ward, who originally founded the operation after he decided to leave SandRidge Energy, which he also had founded, during a shareholder revolt.
Tap stone itself completed are set process related to its future in May, though it managed to complete that maneuver without going to court. The company exchanged outstanding debt for a new, fouryear secured loans worth about $ 150 million that gave creditors common equity in the company. It also obtained $50 million in new capital from Kennedy Lewis Investment Management.
It is likely that most field employees who work for Chesapeake's MidContinent business will transition to Tapstone's employment when t he deal closes next month. However, Tap stone could choose to let some employees go.
Dixon couldn' t be reached for comment on Friday.