Chesapeake Energy Corporation (NYSE:CHK) revealed on Wednesday that it had entered into an agreement with Saddle Barnett Resources LLC to sell its Barnett Shale interests. Subject to regulatory requirements, the completion of the transaction is expected by the third quarter.

Key Factors from the Agreement

The company’s Barnett Shale interests, which have been priced at $66 million, include about 215,000 net developed and undeveloped acres and about 2,800 operated wells.

According to the terms of the said agreement, Chesapeake Energy and Williams Partners (NYSE:WPZ) will terminate the current gathering agreement. The company will also renegotiate its gas gathering agreement with the latter.

Doug Lawler, Chesapeake Energy CEO, elaborated that this move signifies a milestone toward the company’s transformation. As a result of the agreement, Lawler said that Chesapeake Energy is anticipating a surge in operating income from this point forward over the next three years. He specified that operating income is projected to jump about $200 million to $300 million annually.

Q2 Financial Highlights

Chesapeake Energy has issued its earnings report for the second quarter last week, posting a year-over-year revenue decline of 54%.

For the period, the company had an average daily production (ADP) rate of roughly 73,200 barrels of natural gas liquids (NGL), 657,100 barrels of oil equivalent (boe), and 2.96 billion cubic feet (bcf) of natural gas.

Given an upbeat ADP rate during the first half of the fiscal year (FY) 2016, Chesapeake Energy has given a new ADP rate guidance for the FY of between 625,000 boe and 650,000 boe.

In terms of expenses, the company has also reported year-over-year declines. Average Production expenses were seen at $3.05 per boe while General and Administrative Expenses (G&A) expenses were seen at $1.02 per boe, amounting to $4.07 per boe overall. This indicates a sequential and year-over-year drop of 2% and 25%, respectively.

The company ended the period with $456 million in total capital expenses, which is nearly down by 50% from the same period in 2015.