Argonaut buys $412m in natural gas reserves

Chesapeake Energy has sold natural gas reserves, with a production value of 98 billion cubic feet of gas, to the US private equity firm Argonaut in a volumetric production payment transaction.

Massachusetts-based Argonaut Private Equity has purchased proved natural gas reserves from Chesapeake Energy for $412 million, in a volumetric production payment (VPP).

This is Chesapeake’s fourth VPP transaction. Typically VPPs are set to expire after a specific length of time or once the value of the commodity has been delivered. Chesapeake, which is based in Oklahoma, retained drilling rights on the reserves during production intervals.

Under the terms of the VPP agreement, Argonaut has purchased a gas production value of 98 billion cubic feet equivalent from the reserves based in the Anadarko and Arkoma Basins in the US. This is expected to produce the equivalent of approximately 60 million cubic feet of gas per day. The expiration date has not been disclosed.

The purchase was financed by GS Loan Partners, an affiliate of the Goldman Sachs Group.

Argonaut has $3.5 billion under management and invests in sectors including alternative energy, technology, financial services, retail and healthcare.