By Christopher M. Matthews and Stephanie Yang
Tellurian Inc. is in talks to buy Chesapeake Energy Corp.'s Louisiana drilling fields as it seeks to become a producer as well as exporter of natural gas, according to people familiar with the matter.
Chesapeake, a pioneer of the shale boom, has been selling off some of the vast holdings assembled by its late co-founder Aubrey McClendon as it struggles with low energy prices and a mountain of debt it took on to lock up drilling rights for swaths of land.
Tellurian is the latest venture by Charif Souki, who developed the first terminals to liquefy natural gas and export it from the U.S. Gulf Coast as founder of Cheniere Energy Inc. The company, which has few assets, has said it is looking to acquire drilling fields near a coastal site where it plans to build an export facility, to sell fuel overseas.
Chesapeake's Louisiana fields, located in the Haynesville shale formation, are valued at about $2 billion, according to Jefferies analysts.
The talks to purchase Chesapeake's fields could fall apart and there is no guarantee of an agreement. Tellurian has offered to Chesapeake to take equity as a part of the asset sale, something Chesapeake isn't interested in doing, people familiar with the talks said.
Tellurian has also held talks with other producers with Haynesville assets to acquire more acreage, people familiar with the matter say. Tellurian's stock closed up 1.5%, at $8.55 per share, Thursday and is down about 25% on the year.
The advent of shale drilling has flooded the U.S. with cheap energy, including vast resources of natural gas that producers have sought to export to generate electricity and heat homes around the world.
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