Chesapeake Energy Corp. (NYSE:CHK) reports that Chesapeake Oilfield Operating LLC (COO), its wholly owned subsidiary, has filed a Registration Statement on Form 10 with the US Securities and Exchange Commission. COO currently conducts the operations of Chesapeake’s oilfield services division, Chesapeake Oilfield Services (COS).
The Form 10 contains a preliminary information statement about the potential terms and conditions of a spin-off of COO to Chesapeake Energy Corp. shareholders. It also provides initial information regarding COO as a stand-alone company, including financial, business, risk factor, and management information. Immediately prior to completion of the possible spin-off, COO will convert into a corporation and change its name to Seventy Seven Energy Inc.
Chesapeake intends for the spin-off to be tax-free to its shareholders for US federal income tax purposes, other than with respect to any cash received in lieu of fractional shares. To that end, Chesapeake has obtained a private letter ruling from the Internal Revenue Service and expects to obtain an opinion of tax counsel regarding the tax treatment of the spin-off.
Chesapeake has retained Morgan Stanley & Co. LLC as its financial advisor in connection with evaluating strategic alternatives for COS.