Williams Cos. announced a South Texas bankruptcy judge has signed off on a global resolution reached last month with Chesapeake Energy as part of Chesapeake’s Chapter 11 bankruptcy process.
Williams received a $112 million payment from Chesapeake in fulfillment of Chesapeake’s obligations to Williams before the filing of the bankruptcy case. The obligations were for shipment of Chesapeake’s products according to the Williams announcement.
The agreement also provided that Chesapeake will not attempt to reject Williams’ gathering agreements in the Eagle Ford, Marcellus or Mid-Con. Chesapeake will pay all pre-bankruptcy petition and past due receivables related to midstream expenses as part of the existing contracts.
In turn, Williams agreed to reduce its gathering fees in the Haynesville in exchange for gaining ownership of part of Chesapeake’s South Mansfield assets which are about 50,000 net mineral acres.
Chesapeake also agreed to a long-term gas supply commitment of between 100 Mdth/d and 150 Mdth/d for the Transco Regional Energy Access (REA) pipeline under development.
“Chesapeake is a valuable customer, and this transaction will both strengthen Chesapeake and allow Williams to enhance the value of our significant midstream infrastructure by bringing adequate capitalization to these low-cost gas reserves,” said Alan Armstrong, Williams president and CEO.
