Chesapeake Energy To Buy Bronco Drilling For $315 Million

Chesapeake Energy Corp. (CHK) said it will buy Bronco Drilling Co. (BRNC) for about $315 million as it looks to increase its rig count.

Under the terms of the deal, Chesapeake will pay $11 for each Bronco outstanding share. That's a 5.8% premium to Thursday's closing price.

Chesapeake--the No. 2 U.S. natural-gas producer after Exxon Mobil Corp. (XOM)--said two of Bronco's biggest shareholders, collectively owning about 32% of the company's stock, have agreed to tender their shares to the offer.

Buying Bronco, which provides contract land drilling to oil and natural-gas exploration companies, will help Chesapeake get closer to its goal of owning about two-thirds of the rigs it operates in its drilling program, a philosophy it said was a key aspect of its strategy. Bronco currently owns 22 drilling rigs operating mostly in the Williston and Anadarko basins, including three under contract with Chesapeake.

The acquisition "increases confidence in our plan to ramp up drilling activities in highly lucrative, liquids-rich unconventional resource plays," said Chesapeake Chief Executive Aubrey McClendon.

The deal, which is expected to close in the second quarter, was unanimously approved by both companies' boards of directors, and Bronco said it recommends that shareholders accept the Chesapeake offer.

Chesapeake has had improved results in recent quarters. In February, it said it swung to a fourth-quarter profit, though revenue declined on lower prices.

Shares of Chesapeake and Bronco closed at $32.65 and $10.40, respectively on Thursday. Friday, Chesapeake shares were inactive premarket and trading in Bronco shares have been halted.

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; [e-mail]