Friday, April 15, 2011

Chesapeake (CHK) Acquires Bronco (BRNC) for $316 Million

Shares of Bronco Drilling (NASDAQ:BRNC) were up above 6 percent in trading today on the news Chesapeake Energy Corp. (NYSE:CHK) bid $316.8 million to acquire the company in an all-cash deal.

The acquisition will add a minimum of 22 onshore oil rigs to Chesapeake, boosting its oil production as it waits for natural gas prices to rebound.

Chesapeake Chief Executive Officer Aubrey McClendon said his goal is to expand the company's oilfield services business as a way to control costs on the exploration and production side of the business.

Chesapeake will pay $11 a share for all of Bronco's outstanding stock, a 6 percent premium over Thursday's closing price.

The premium was unusually small, but the rigs Bronco operates are not newer ones, probably the reason for the lower bid, which values the rigs at about $13 million to $14 million each.

Chesapeake was trading at $32.73, up $0.08, or 0.25 percent, as of 1:55 PM EDT. Bronco was trading at $10.99, gaining $0.59, or 5.67 percent.

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