Chesapeake Energy Corp. and Bronco Drilling Company Inc. announced that they have entered into a definitive agreement in which Chesapeake will acquire Bronco for approximately $315 million, including debt, net working capital and outstanding warrants.
Per the agreement, Chesapeake will acquire all outstanding shares of Bronco common stock at a price of $11 per share, which represents premiums of 6% and 24% over the closing price of Bronco’s common stock on the NASDAQ on April 14, 2011.
Chesapeake expects that the acquisition will contribute to its goal of owning about two-thirds of the rigs that it operates in its drilling program, which is comprised of 160 drilling rigs. Chesapeake plans to end 2012 utilizing approximately 200 drilling rigs, and said it believes that the acquisition of Bronco should satisfy the vast majority of Chesapeake’s anticipated rig investment needs through 2012.
Bronco currently owns 22 high-quality drilling rigs primarily operating in the Williston and Anadarko basins, including three that are under contract with Chesapeake.
Chesapeake plans on integrating Bronco’s 22 rigs into Chesapeake’s wholly owned subsidiary, Nomac Drilling, L.L.C. Nomac currently owns 95 drilling rigs available for service, of which 90 are currently drilling under contract for Chesapeake.
“We have known and admired Bronco’s management team and assets for years and we are especially pleased to announce this transaction today. The acquisition of Bronco is a great additional step in our vertical integration strategy and increases confidence in our plan to ramp up drilling activities in highly lucrative, liquids-rich unconventional resource plays. We look forward to working with Bronco’s management team to quickly complete this transaction and integrate operations,” Aubrey K. McClendon, Chesapeake’s CEO, stated in the press release.
D. Frank Harrison, Bronco’s chairman and CEO, noted Chesapeake’s position in the industry and said he expects the transaction to widely benefit Bronco.
“We are excited about this transaction with Chesapeake, one of the premiere and most innovative energy companies in the world. Chesapeake’s visionary and people-centric approach is highly admired. We view this as a great opportunity and in the best interests of Bronco, our shareholders and our employees,” Harrison stated.
For more information visit www.broncodrill.com or www.chk.com
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