Chesapeake Energy seeks $12 billion in asset sale amid cash crunch

OKLAHOMA CITY, OK — “Oklahoma City-based Chesapeake expects to get $10 billion to $12 billion from transactions including the potential sale of all its oil and gas fields in the Permian Basin of Texas and New Mexico, the company said in a statement Monday. It expects to receive about $2 billion in the next 60 days from two separate transactions involving advance sales of output in Texas and Oklahoma.

The deals will help Chesapeake reduce a net debt load that is twice the size of Exxon Mobil Corp.’s, a company with a market value 27 times larger. Chairman and CEO Aubrey McClendon is facing a $3.5 billion gap this year between cash flow and drilling costs, according to Raymond James & Associates Inc.

McClendon, who has been seeking an investment-grade rating since at least 2009, has vowed to cut long-term debt 25 percent by year end.

‘This is exactly what Chesapeake had to do given the pretty big cash flow-to-spending gap they are facing,’ said Kevin Cabla, an analyst at Raymond James in Houston. Selling more shares to bridge the financing gap ‘would have crushed the stock even more than it has been.’

Shares of Chesapeake rose 53 cents, or 2.4 percent, to close at $22.66. Before Monday, the stock had lost 28 percent of its value in the past year.”

— Jim Polson and Joe Carroll, Bloomberg News

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