Exhibit 5.1
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| 609 Main Street Houston, TX 77002 United States
+1 713 836 3600
www.kirkland.com | Facsimile: +1 713 836 3600 |
June 22, 2021
| Chesapeake Energy Corporation 6100 North Western Avenue Oklahoma City, Oklahoma 73118 |
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are issuing this opinion letter in our capacity as special counsel to Chesapeake Energy Corporation, an Oklahoma corporation (the “Company”) and the subsidiary guarantors named in Schedule I hereto (the “Subsidiary Guarantors”, and each such Subsidiary Guarantor formed under the laws of the State of Delaware or State of Texas, a “Covered Guarantor”), in connection with the preparation of the Registration Statement on Form S-3 (as amended or supplemented, the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”) on May 17, 2021 under the Securities Act of 1933, as amended (the “Securities Act”), relating to securities that may be issued and sold by the Company and the Subsidiary Guarantors. The Registration Statement relates to the sale from time to time, pursuant to Rule 415 of the General Rules and Regulations promulgated under the Securities Act, of up to $1,500,000,000 of the Company’s securities, including its common stock, par value $0.01 per share (the “Common Stock”), preferred stock (the “Preferred Stock”), debt securities (the “Debt Securities”), guarantees of the Company’s debt securities (the “Guarantees”) by the Subsidiary Guarantors, new warrants (the “New Warrants”), depositary shares (the “Depositary Shares”), share purchase contracts (the “Share Purchase Contracts”) and units (the “Units”) to be sold by the Company and 36,809,310 shares of Common Stock, 1,017,201 shares of Common Stock underlying the Warrants (as defined below), 1,188,341 Class A warrants to purchase common stock (the “Class A Warrants”), 1,236,148 Class B Warrants to purchase common stock (the “Class B Warrants”) and 1,485,091 Class C Warrants to purchase common stock of the Company (the “Class C Warrants”, collectively with the Class A Warrants and Class B Warrants, the “Warrants,” and the Warrants collectively with the Common Stock, Preferred Stock, Debt Securities, Guarantees, New Warrants, Depositary Shares, Share Purchase Contracts, Units, Class A Warrants and Class B Warrants, the “Securities”) to be sold by certain stockholders of the Company (the “Selling Stockholders”).
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Chesapeake Energy Corporation
June 22, 2021
Page 2
In connection with the registration of the Securities, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including: (i) the corporate and organizational documents of the Company, (ii) the corporate, limited liability company, limited partnership or operating agreements or organizational documents, as the case may be, of each Covered Guarantor, (iii) minutes and records of the corporate proceedings of the Company and Covered Guarantors with respect to the issuance of the Securities and (iv) the Registration Statement and the exhibits thereto.
For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and Covered Guarantors and the due authorization, execution and delivery of all documents by the parties thereto other than the Company and Covered Guarantors. We have not independently established or verified any facts relevant to the opinions expressed herein, but have relied upon statements and representations of the officers and other representatives of the Company and Covered Guarantors.
We have also assumed that:
| (i) | the Registration Statement and any amendment thereto (including post effective amendments) will have become effective under the Securities Act and will comply with all applicable laws at the time the Securities are offered or issued as contemplated by the Registration Statement; |
| (ii) | if applicable, a prospectus supplement or term sheet (“Prospectus Supplement”) will have been prepared and filed with the Commission describing the Securities offered thereby and will comply with all applicable laws; |
| (iii) | all Securities will be offered, issued and sold in compliance with applicable federal and state securities laws and in the manner stated in the Registration Statement and, if applicable, the appropriate Prospectus Supplement; |
| (iv) | the Board of Directors of the Company (or, to the extent permitted by applicable law and the governing documents of the Company, a duly constituted and acting committee thereof) (the “Board”) and the board of directors (or equivalent thereof) of each Covered Guarantor and the stockholders of the Company will have taken all necessary corporate, limited partnership or limited liability company action to authorize the issuance of the Securities and any other Securities issuable on the conversion, exchange, redemption or exercise thereof, and to authorize the terms of the offering and the issuance and sale of such Securities and related matters; |
Chesapeake Energy Corporation
June 22, 2021
Page 3
| (v) | a definitive purchase agreement, underwriting agreement, warrant agreement, unit agreement or similar agreement with respect to any Securities offered will have been duly authorized and validly executed and delivered by the Company, the Covered Guarantors, if applicable, and the other parties thereto (each, a “Purchase Agreement”); |
| (vi) | any securities issuable upon conversion, exchange, redemption or exercise of any Securities being offered will be duly authorized, created and, if appropriate, reserved for issuance upon such conversion, exchange, redemption or exercise; |
| (vii) | all Securities, and any certificates in respect thereof, will be delivered either (i) in accordance with the provisions of the applicable Purchase Agreement approved by the Board upon payment of the consideration therefor provided for therein or (ii) upon conversion, exchange, redemption or exercise of any other Security, in accordance with the terms of such Security or the instrument governing such Security providing for such conversion, exchange, redemption or exercise as approved by the Board, for the consideration approved by the Board; |
| (viii) | in the case of Debt Securities, (i) the Board will have taken all necessary corporate action to designate and establish the terms of such series of Debt Securities in accordance with the terms of the indenture under which such Debt Securities will be issued, and such Debt Securities will be governed by New York law and will not include any provision that is unenforceable; (ii) the board of directors (or equivalent thereof) of each Covered Guarantor, if applicable, will have taken all necessary action (corporate or other organizational) to authorize and establish the terms of the Guarantee included in such Debt Securities, and to authorize the terms of the offering and sale of such Guarantee and related matters; (iii) the indenture under which such Debt Securities will be issued will have become qualified under the Trust Indenture Act of 1939, as amended; and (iv) forms of Debt Securities complying with the terms of the indenture under which such Debt Securities will be issued and evidencing such Debt Securities will have been duly executed, authenticated, issued and delivered in accordance with the provisions of such indenture; |
| (ix) | in the case of New Warrants, (i) the Board will have taken all necessary corporate action to authorize the creation of and the terms of such New Warrants and the issuance of the Securities to be issued pursuant thereto and to approve the warrant agreement relating thereto, (ii) such warrant agreement will have been duly executed and delivered by the Company and the warrant agent thereunder appointed by the Company, (iii) such New Warrants and such warrant agreement will be governed by New York law, (iv) neither such New Warrants nor such warrant agreement will include any provision that is unenforceable and (v) such New Warrants or certificates representing such New Warrants will have been duly executed, countersigned, registered and delivered in accordance with the provisions of such warrant agreement and the applicable Purchase Agreement to the purchasers thereof upon payment of the agreed-upon consideration therefor; |
Chesapeake Energy Corporation
June 22, 2021
Page 4
| (x) | in the case of Depositary Shares, (i) the Board will have taken all necessary corporate action to establish the terms of the Depositary Shares, including any action with respect to the Preferred Stock underlying such Depositary Shares, (ii) the applicable deposit agreement (the “Deposit Agreement”) will be duly authorized, executed and delivered by the Company and the depositary thereunder appointed by the Company, (iii) the terms of such Depositary Shares and of their issuance and sale will be duly established in conformity with the Deposit Agreement, (iv) such Depositary Shares will be authorized, offered and sold in accordance with the Deposit Agreement, (v) the Preferred Stock underlying such Depositary Shares will be duly issued and deposited with the depositary, (vi) the receipts evidencing such Depositary Shares (“Receipts”) will be duly issued against the deposit of such Preferred Stock in accordance with the Deposit Agreement, (vii) the Deposit Agreement and such Receipts will be governed by New York law and will not include any provision that is unenforceable and (viii) the Receipts will be duly executed, countersigned and registered in accordance with the provisions of the applicable Deposit Agreement and duly delivered to the purchasers thereof upon payment of the agreed upon consideration therefor; |
| (xi) | in the case of Share Purchase Contracts, (i) the Board will have taken all necessary corporate action to establish the terms thereof and approve the purchase contract agreement relating thereto, (ii) such Share Purchase Contracts will have been duly executed and delivered by the Company and the other parties thereto and (iii) such Share Purchase Contracts will be governed by New York law and will not include any provision that is unenforceable; |
| (xii) | in the case of Units, (i) the Board will have taken all necessary corporate action to establish the terms of such Units and the terms of the Securities such Units include, (ii) the terms of the Units and the related Securities and their issuance and sale will have been duly established in conformity with the applicable contracts, agreements or indentures that are a component of the offered Units (including authorization of the issuance of any Securities to be issued pursuant to such Units) and (iii) any agreement or other instrument establishing such Unit or defining the rights of holders of such Unit will be governed by New York law and will not contain any provision that is unenforceable; and |
Chesapeake Energy Corporation
June 22, 2021
Page 5
| (xiii) | the Securities and any related contracts, agreements, indentures and instruments will be duly executed and delivered in substantially the form reviewed by us prior to issuance of such Securities. |
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that:
| 1. | The Warrants to be sold by the Selling Stockholders constitute valid and binding obligations of the Company. |
| 2. | The Debt Securities, Depositary Shares, Warrants, Share Purchase Contracts and Units included in the Securities will, when issued, constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or other similar laws relating to or affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) or (iii) any implied covenants of good faith and fair dealing. |
| 3. | The Guarantees will, when issued, constitute legal, valid and binding obligations of the Covered Guarantors, enforceable against the Covered Guarantors in accordance with their respective terms and will have been duly authorized by all necessary corporate, limited liability company or limited partnership actions on the part of each of the Covered Guarantors and constitute legal, valid and binding obligations of the Covered Guarantors in accordance with their terms, except to the extent that the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or other similar laws relating to or affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) or (iii) any implied covenants of good faith and fair dealing. |
The opinions set forth above are limited in all respects to matters of the contract law of the State of New York, the General Corporation Law of the State of Delaware, the Delaware Limited Liability Company Act, the laws of the State of Texas and applicable federal law, each as currently in effect. We express no opinion herein with respect to the matters covered in such opinion, and to the extent elements of such matters are necessary to the conclusions expressed herein, we have, with your consent, assumed such matters.
Chesapeake Energy Corporation
June 22, 2021
Page 6
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading “Legal Matters” in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission.
We do not find it necessary for the purposes of this opinion, and accordingly we do not purport to cover herein, the application of the securities or “Blue Sky” laws of the various states to the sale of the Securities.
This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. This opinion speaks only as of the date hereof and we assume no obligation to revise or supplement this opinion after the date of effectiveness should the General Corporation Law of the State of Delaware or the laws of the State of Texas be changed by legislative action, judicial decision or otherwise after the date hereof.
This opinion is furnished to you in connection with the filing of the Registration Statement in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act, and is not to be used, circulated, quoted or otherwise relied upon for any other purpose.
| Sincerely, | |
| /s/ Kirkland & Ellis LLP |
Chesapeake Energy Corporation
June 22, 2021
Page 7
SCHEDULE I
SUBSIDIARY GUARANTORS
Name | Jurisdiction of | |
| Brazos Valley Longhorn, L.L.C. | Delaware | |
| Burleson Sand LLC | Delaware | |
| Burelson Water Resources, LLC | Texas | |
| Chesapeake AEZ Exploration, L.L.C. | Oklahoma | |
| Chesapeake Appalachia, L.L.C. | Oklahoma | |
| Chesapeake-Clements Acquisition, L.L.C. | Oklahoma | |
| Chesapeake E&P Holding, L.L.C. | Oklahoma | |
| Chesapeake Energy Louisiana, LLC | Oklahoma | |
| Chesapeake Energy Marketing, L.L.C. | Oklahoma | |
| Chesapeake Exploration, L.L.C. | Oklahoma | |
| Chesapeake Land Development Company, L.L.C. | Oklahoma | |
| Chesapeake Louisiana, L.P. | Oklahoma | |
| Chesapeake Midstream Development, L.L.C. | Oklahoma | |
| Chesapeake NG Ventures Corporation | Oklahoma | |
| Chesapeake Operating, L.L.C. | Oklahoma | |
| Chesapeake Plains, LLC | Oklahoma | |
| Chesapeake Royalty, L.L.C. | Oklahoma | |
| Chesapeake VRT, L.L.C. | Oklahoma | |
| CHK Energy Holdings, Inc. | Texas | |
| CHK Utica, L.L.C. | Delaware | |
| Compass Manufacturing, L.L.C. | Oklahoma | |
| EMLP, L.L.C. | Oklahoma | |
| Empress, L.L.C. | Oklahoma | |
| Empress Louisiana Properties, L.P. | Texas | |
| Esquisto Resources II, LLC | Texas | |
| GSF, L.L.C. | Oklahoma | |
| MC Louisiana Minerals, L.L.C. | Oklahoma | |
| MC Mineral Company, L.L.C. | Oklahoma | |
| Petromax E&P Burleson, LLC | Texas | |
| WHE AcqCo., LLC | Delaware | |
| WHR Eagle Ford LLC | Delaware | |
| WildHorse Resources II, LLC | Delaware | |
| WildHorse Resources Management Company, LLC | Delaware | |
| Winter Moon Energy Corporation | Oklahoma |