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Image courtesy of Chesapeake Energy.

Chesapeake Energy confirmed on Wednesday that it will exit its acreage in the Barnett shale play.

The Oklahoma-based company has entered into an agreement to convey its interests in the Barnett Shale operating area in North Texas to Saddle Barnett Resources, a company backed by First Reserve.

Chesapeake said it will also simultaneously terminate future commitments associated with the asset.

Properties in the proposed Barnett transaction include about 215,000 net developed and undeveloped acres and about 2,800 operated wells.

Those wells produced an average of 65,000 boe per day, with natural gas accounting for 96 percent of production and natural gas liquids accounting for 4 percent in the second quarter of this year.

The expected net production impact from the proposed transaction is about 62,000 boe per day.

Proved oil and natural gas reserves in the Barnett play were were 81 million boe as of December 31, with natural gas accounting for 96 percent of reserves and natural gas liquids accounting for 4 percent of reserves.

Chesapeake said that its operating income, before charges and other termination costs associated with the transaction, will increase by $200 to $300 million per year from 2016 through 2019 as a result of the deal.

The transaction will reduce Chesapeake’s remaining 2016 gathering, processing and transportation (GP&T) expenses by about $250 million, including $170 million for a projected minimum volume commitment (MVC) shortfall payment.

The transaction is expected to reduce projected 2017 GP&T expenses by about $465 million, including $230 million of projected MVC shortfall payments.

The deal will also eliminate $1.9 billion in future Barnett shale midstream and downstream commitments.

As part of the transaction, Chesapeake and Williams Partners have agreed to terminate their current gathering agreement, projected MVC shortfall payments and fees pertaining to the Barnett shale assets.

Chesapeake expects to pay $334 million in cash to Williams, with Saddle Resources expected to pay an additional undisclosed sum.

The transaction is subject to a number of closing conditions, including the receipt of third-party consents, and is expected to close in the third quarter of 2016.

In addition, the company announced it has renegotiated its gas gathering agreement with Williams in its Mid-Continent operating area in exchange for a payment by the company of $66 million.

Separately, Chesapeake also accelerated the value of a gas supply contract by selling its rights under a long-term gas supply agreement for $146 million in cash proceeds.

“The transformation of Chesapeake into a top-tier E&P company continues, and these transactions, along with our previously announced balance sheet and liquidity improvements, provide significant forward progress. We believe there are more positive moves to come,” Chesapeake Chief Executive Officer Doug Lawler said.