Chesapeake Granite Wash Trust (OTCMKTS:CHKR) (OTCMKTS:CHKR) is a grantor trust that holds a net profits interest in oil and natural gas production from leasehold interests in the Granite Wash play of the Texas and Oklahoma panhandles. Established in April 2011, the trust was created by Chesapeake Energy Corporation as a mechanism to distribute to unitholders a share of cash flows generated from the underlying hydrocarbon assets.
The trust’s assets are concentrated in the Granite Wash formation, a tight sandstone reservoir known for its production of crude oil, natural gas and natural gas liquids. Production activities in this region are conducted by Chesapeake Energy and its subsidiaries, which undertake drilling, completion and operational responsibilities. Revenues are derived from the sale of hydrocarbons produced, less operating and capital costs, and then passed through to unitholders on a quarterly basis.
As a passive investment vehicle, Chesapeake Granite Wash Trust does not engage directly in exploration or production activities. Instead, it relies on Chesapeake Energy’s technical and operational expertise to manage field operations, including lease maintenance and compliance with environmental and regulatory requirements. The trust is administered by a trustee, which oversees financial reporting, distribution calculations and other fiduciary duties on behalf of unitholders.
Investors in the trust benefit from exposure to production upside in the Granite Wash without direct involvement in day-to-day drilling operations. Over time, distribution levels have reflected variations in commodity prices, production rates and operational costs. While the trust has a finite lifespan tied to the depletion of the underlying reserves, it offers a relatively straightforward means for investors to participate in the cash flow generated by a significant onshore shale resource in the U.S.
