“The divestiture of the
“As we take the $1.9 billion in anticipated net proceeds to reduce our debt, it’s going to further strengthen our portfolio going forward and increase our cash flow.”
The sale to
Paying off the $1.9 billion in debt is expected to cut Chesapeake’s annual interest expense by $150 million.
Chesapeake has relied heavily on assets sales to repay more than $12 billion in debt over the past five years. Lawler said the company now is to the point where it will reduce debt through cash flow rather than primarily through asset sales.
“This large asset sale is a strategic pivot for the company going forward in that we will be turning toward our existing assets for EBITDA (earnings before interest, taxes, depreciation and amortization) growth,” Lawler said. “That’s not to say we would not sell additional assets going forward, but asset sales will no longer be our principal target to achieve debt reduction. We’re going to do that organically through growth.”
Chesapeake finished 2017 with about $9.2 billion in debt.
The sales announcement came after markets closed Thursday. In aftermarket trading, Chesapeake shares rose sharply.
Chesapeake operates 920 wells in the
“It’s a very strong oil growth asset for us,” Lawler said. “We are experiencing improved drilling and completion costs and reduced drilling and completion time.”
Chesapeake produced about 32,000 barrels of oil equivalent per day in the
“We anticipate we will see further growth that essentially will double that again in 2019,” Lawler said.
Overall, Chesapeake now is set to produce 10 percent more oil in 2019 than in 2018, adjusted for asset sales, the company said Thursday.
“We are stronger today financially and operationally than ever before,” Lawler said. “Our future outlook is stronger than ever before. With the five remaining assets we have and our talented employees in
(c)2018 The Oklahoman
Visit The Oklahoman at www.newsok.com
Distributed by Tribune Content Agency, LLC.