Former Chesapeake Energy CEO Taking His Act to Australia

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After co-founder and former chairman of Chesapeake Energy Corp. (NYSE: CHK), Aubrey McClendon, was replaced in April 2013, he didn’t waste any time moving on. Just a few weeks later he was back, leading another energy exploration and production company, American Energy Partners.

McClendon’s new company has just signed a letter of intent and a three-month exclusivity agreement with Brisbane, Australia-based Armour Energy to acquire a 75% working interest in 21.5 million acres of drilling rights in the Northern Territory’s McArthur Basin southeast of Darwin.

In a press announcement Thursday morning, Armour said the deal requires American Energy Partners to make an upfront payment of $11 million and invest $100 million on drilling for oil and gas over the next five years. Armour would also receive a bonus payment of $7 million once the company grants American Energy licenses for 1 million acres.

Once the transaction is finalized, Armour will issue options equal to 5% of the then-current number of outstanding shares, which American Energy may exercise at 20 cents per share. The exercise period ends on December 31, 2016. The U.S. company will also nominate one director to Armour’s board once the U.S. firm has exercised the option and spent a minimum of $25 million on development.

American Energy Partners has acquired drilling rights in the Permian Basin, the Utica Basin in Ohio, the Marcellus shale play in West Virginia and the Woodford shale play in Oklahoma. Low natural gas prices have hobbled the firm because McClendon’s practice of gobbling up rights and selling some off for a profit later has not fared well under the low-price regime.

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