WASHINGTON (dpa-AFX) - Chesapeake Granite Wash Trust, a royalty trust formed for natural gas producer Chesapeake Energy Corp.'s (CHK) assets in Oklahoma's Anadarko Basin, said Thursday it plans to raise up to $583.63 million in an initial public offering. The trust will apply to list its common units on the New York stock exchange under the symbol 'CHKR'.
Unit holders will receive quarterly distributions of cash from the proceeds that Chesapeake Granite Wash Trust receives from the sale of oil, natural gas and natural gas liquids from the wells in the Granite Wash basin.
The trust plans to issue 25.38 million common units through the IPO and will have 38.06 million common units as well as 12.69 million units outstanding after the offering.
The trust's underlying properties are located in the Colony Granite Wash play in western Oklahoma's Washita County. The Colony Granite Wash is a subset of the greater Granite Wash plays of the Anadarko Basin.
Chesapeake began drilling horizontal wells in the Colony Granite Wash in 2007. The company is the largest leaseholder in the Colony Granite Wash, with about 61,100 net acres, of which 28,700 net acres will be subject to the trust's royalty interests.
The trust was formed in June 2011 to own royalty interests to be conveyed to the trust by Chesapeake in 60 horizontal wells producing from the Colony Granite Wash play, and royalty interests in 122 horizontal development wells to be drilled exclusively in the Colony Granite Wash.
Chesapeake Energy will convey a 90 percent royalty interest in the producing wells and a 50 percent royalty interest in its development wells around closing of the IPO. Chesapeake Energy will receive all proceeds from the offering in exchange for the royalty interests. The company intends to use to repay proceeds from the offering to pay debt and for corporate purposes, including capital expenditures for land and drilling.
CHK closed Thursday's trading at $30.51, up $0.33 or 1.09 percent on a volume of 9.41 million shares.
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© 2011 AFX News
