Chesapeake Midstream To Buy Chesapeake Energy Marcellus Assets

Chesapeake Midstream Partners LP (CHKM) agreed to buy midstream assets in the Marcellus Shale ultimately owned by Chesapeake Energy Corp. (CHK) for $865 million.

This year, Chesapeake Energy--the second-largest U.S. producer of natural gas behind Exxon Mobil Corp. (XOM) and the country's biggest gas well driller--has worked to sell assets and curtail spending as part of a strategy to cut long-term debt by a quarter.

Chesapeake Midstream said it will buy a unit that holds Marcellus Shale midstream assets from a subsidiary of Chesapeake Energy. The acquired unit gives Chesapeake Midstream a 47% holding of an integrated system of assets consisting of about 200 miles of gathering pipeline in the Marcellus Shale.

Chesapeake Midstream said in a release that the purchase makes it the industry's largest gathering and processing master limited partnership by throughput volume.

It expects the deal to close Friday.

Chesapeake Midstream was formed by Chesapeake Energy and private investment fund Global Infrastructure Partners to operate gas gathering systems and other midstream energy assets. It went public last year.

The latest deal comes a little more than a year after Chesapeake Midstream Partners bought Louisiana pipelines from a Chesapeake Energy subsidiary for $500 million.

Neither Chesapeake Energy nor Chesapeake Midstream stock was moving after hours, after the former closed down 86 cents at $22.66 and the latter closed up 29 cents at $27.12.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [e-mail]