Chesapeake shares rally 15% after company sheds assets

SAN FRANCISCO (MarketWatch) -- Chesapeake Energy Corp. CHK, +17.11% shares rallied Thursday after the company said it sold 413,000 acres in shale formations in West Virginia and southwest Pennsylvania to Southwestern Energy Co. SWN, -7.59% for $5.38 billion. For Chesapeake, the deal could fuel a share buyback, debt reduction, and increased activity in oil-rich areas, analysts at Citi said in a note Thursday. Southwestern Energy shares fell 8.1%, the top decliner among energy companies in the S&P 500 index. Some analysts said the deal looked expensive for Southwestern, and the company announced it was using a $5 billion bridge loan from Bank of America Merrill Lynch to pay for the deal. Southwestern added it plans to tap debt and equity markets around the transaction's closing to raise the permanent financing.

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Chesapeake shares rally 15% after company sheds assets