Chesapeake Energy Corp.’s share price down, to spin off its oilfield-services operations in a separate entity

Chesapeake Energy Corp. made an official statement on Monday, revealing that the spin-off of its oilfield-services operations has been approved by the companys board. The spin-off will be done through a distribution to the shareholders of the company after the unit closes on June 30th. After the process is finalized, the oilfield-services operations of Chesapeake Energy Corp. will form a separate company, which is planned to be publicly traded.

The announcement of the final decision to divide the businesses comes less than a month after the company revealed that it is considering a variety of options, including a sale of the operations in question. As the company explained in a regulatory filing of its Oilfield Operating LLC division, separating the exploration and production business and oilfield services of Chesapeake will provide both of them with the chance to improve leverage opportunities and appeal to a wider combined investors base.

The company announced that shareholders of record at the close of business on June 19th will get one share of the new entity for every 14 shares they own of the common stock of Chesapeake Energy Corp. The new company is to be called Seventy Seven Energy Inc. and will trade on the New York Stock Exchange under the symbol SSE.

No ownership interest will be held by Chesapeake Energy in the new company, because it has recently been trying to repair its balance sheet and reduce costs. In May, the company revealed that it has decided to sell its natural gas compression divisions. Chesapeake also explained that it is looking for alternatives for its oilfield services unit, which also included a sale or a spin-off. The oilfield-services operations of Chesapeake generated 2.2 billion dollars in revenue in 2013.

Chesapeake Energy Corp. was 0.50% down to close at 29.72 dollars per share on Friday, marking a one-year change of +37.15%. According to the information published on CNN Money, the 23 analysts offering 12-month price forecasts for Chesapeake Energy Corp. have a median target of 30.00, with a high estimate of 38.00 and a low estimate of 24.00. The median estimate represents a +0.94% increase from the last price of 29.72.