George Solich is stomping his old grounds again as FourPoint Energy LLC made a sizeable footprint July 1 by buying two subsidiaries of Chesapeake Energy Corp. (CHK) for $840 million in the Anadarko Basin.

The deal is the largest disclosed transaction by a private, independent E&P in 2015. And it further entrenches Solich in a basin where his previous companies have sold billions of dollars in assets.

FourPoint, based in Denver, agreed to purchase subsidiaries Chesapeake Exploration LLC (CEX) and CHK Cleveland Tonkawa LLC, whose preferred interest owners are funds managed by GSO Capital Partners LP as well as other third party preferred holder investors.

FourPoint’s agreement includes acquiring interest in about 1,500 producing wells and more than a quarter-million acres primarily in the Cleveland, Tonkawa and Marmaton formations. Most of the acreage is located in Roger Mills and Ellis counties, Okla.

It isn’t clear how much parent company Chesapeake will receive in proceeds since its interests in the subsidiaries is unclear. GSO is one of the largest credit-focused alternative asset managers, providing leveraged loans and mezzanine financing and plays a strong role in providing rescue financing to companies experiencing liquidity problems.

“Given the subsidiaries' preferred interest owners are funds managed by third parties, it is unclear how much [if any] of the $840 million proceeds will be directed to CHK,” said David Kistler, co-head of E&P research, Simmons & Co. International.

At the end of March, Chesapeake reported the capitalization of CHK Cleveland Tonkawa at more than $1 billion, according to a May press release. In a May 2014 presentation, Chesapeake said CHK Cleveland Tonkawa and other noncore assets in East Texas, South Texas and Southwestern Oklahoma could reduce about $160 million in overriding royalty interest obligations and generate aggregate proceeds of $225 million.

“Ultimately, should any of the proceeds flow through to CHK, we believe this transaction is likely a marginal positive as it will help close CHK's dramatic outspend in FY 2015 by divesting a portion of a noncore asset,” Kistler said.

Chesapeake’s estimated 2015 outspend is $1.47 billion and $831 million in 2016, according to Wells Fargo Securities. Among large cap companies analyzed, Chesapeake has the second largest outspend in 2015.

In anticipation of the deal, Chesapeake has not operated a rig in the area since the first quarter of 2015. Since 2012, the company has drilled 190 horizontal wells across the assets.

The transaction is valued at about $39 thousand barrels of oil equivalent per day (boe/d) or $3,360 per acre.

“While not specifically comparable, CHK currently trades at about $28,700 per boe/d,” Kistler said.

FourPoint’s $840 million purchase would be paid out in three related transactions, with preferred holder investors receiving a distribution of cash on hand and working capital from CHK Cleveland Tonkawa.

Solich, president and CEO of FourPoint, said the acquisition complements FourPoint’s current acreage footprint and boosts its inventory by adding significant operated, oily locations in formations largely unrepresented in the company’s current portfolio.

“The assets to be acquired include a large base of production which strengthens our cash flow profile in this uncertain commodity price environment,” Solich said. “The acquired assets will be instrumental in our ongoing efforts to build a world class portfolio of oil and gas assets in the Western Anadarko Basin.”

Previously, Solich has flourished in the Anadarko and the Granite Wash, Tonkawa, Cleveland and Marmaton plays in western Oklahoma and Texas. In 2012, Solich’s Cordillera Energy Partners III LLC sold about 254,000 net acres of mineral to Apache Corp. (APA) for $2.85 billion.

After closing the Chesapeake acquisition FourPoint’s Western Anadarko footprint will exceed an estimated 400,000 net acres and net production of 260 million cubic feet equivalent per day. The company has 4,600 gross wells and half of its production is from oil and NGL.

FourPoint would assume full operations of the assets at closing which is anticipated to be August 31, 2015.

Since Chesapeake halted its development plans and eliminated active rigs working in the area, FourPoint plans to build back up to its previous momentum and continue to reduce drilling and completion costs while maximize ultimate recoveries.

“FourPoint is eager to leverage the knowledge that Chesapeake has developed through their drilling program with our extensive technical expertise in the area to position the company to grow production and cash flow,” said Kamil Tazi, FourPoint executive vice president and COO added.

FourPoint will fund the acquisition with $619 million in FourPoint Holdings equity issued to funds managed by GSO and cash drawn from existing FourPoint Energy credit facilities.

Tad Herz, executive vice president and CFO, said the structure of this transaction strengthens FourPoint’s balance sheet and provides significant liquidity to pursue future development and acquisition activity.

“The new equity issued to GSO Capital Partners as consideration for the transaction allows FourPoint to maintain a balanced debt to equity capital structure and allows for GSO to share in future upside potential on the assets,” Herz said.

FourPoint’s financial adviser was Jefferies LLC and Andrews Kurth LLP acted as legal adviser in connection with the transactions.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.