Chesapeake Energy Corp. (CHK) said Tuesday, Jan. 25, it will buy the assets of Pennsylvania gas producer Chief Oil & Gas LLC for $2.6 billion and sell its assets in Wyoming’s Powder River Basin to Continental Resources Inc. (CLR) for $450 million.

The first of the two deals, which was rumored to be nearing announcement last week, calls for Chesapeake to acquire Chief E&D Holdings LP and associated nonoperated interests held by affiliates of Tug Hill Inc. for $2 billion in cash plus 9.44 million common shares valued at about $600 million as of Monday’s close.

Meanwhile, Continental, which has been bolstering its positions in its core drilling regions since November, will pay cash for about 172,000 net acres and 350 operated wells in southeastern Wyoming.

Oklahoma City-based Chesapeake will pay for the Chief acquisition with cash on hand, some of which it will pull from proceeds of the Continental acreage deal, and funds from its revolving credit facility. As of Sept. 30, Chesapeake had $849 million of cash on hand and roughly $1.73 billion of aggregate unused borrowing capacity available under its credit facilities, according to securities filings.

Together, the two deals will bring Chesapeake’s net debt to $2.9 billion in 2022 from a previously expected $1.3 billion. The moves come just less than a year after Chesapeake Energy emerged from bankruptcy having shed $7.7 billion in debt.

The natural gas assets purchase also comes as commodity prices continue to slide back off of multiyear highs hit in late 2021 amid a supply crunch. Natural gas futures traded on the New York Mercantile Exchange climbed above $6 per million British thermal units in early October but have hovered just below $4 per million BTU for most of January.

On the Chief acquisition, RBC Capital Markets provided financial advice, while Shearman & Sterling LLP provided legal counsel to Chesapeake.

Chief tapped JPMorgan Securities LLC for financial advice and Gibson, Dunn & Crutcher LLP for legal counsel. Tug Hill engaged Akin Gump Strauss Hauer & Feld LLP for legal counsel.

Editor’s note: The original version of this article, including advisers and other details, was published earlier on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.