Dec. 8 (Bloomberg) -- Chesapeake Energy Corp., the second- biggest independent U.S. natural-gas producer, jumped 24 percent in New York trading after saying it will cut spending and build cash because of a plunge in prices.

Chesapeake, based in Oklahoma City, surged $2.76 to $14.08 in composite trading on the New York Stock Exchange, the biggest one-day gain since 1999. Before today, the shares had fallen 71 percent this year.

Chief Executive Officer Aubrey McClendon is slashing Chesapeake’s capital budget as gas in New York declines 59 percent from $13.694 per million British thermal units reached in July. During a conference call with analysts, McClendon also apologized for filing a shelf registration statement in November and backed away from issuing new equity.

“Aubrey finally admitted some wrongdoing,” David Cohen, who helps manage $82 billion at Loomis Sayles & Co. in Boston, including 2.44 million shares of Chesapeake, said in an e-mailed statement. “They’ve essentially done what they needed to. Now the question is, will they hold to this version of the budget? It’s the fifth one in the past few months.”

During the call, McClendon said he was disappointed with Chesapeake’s share price and blamed it on “false rumors” about liquidity. The company has “plenty” of liquidity, he said.

Chesapeake said yesterday it will cut its 2009 and 2010 capital spending by a combined $2.9 billion, or 31 percent. It also reduced its leasehold and producing-property acquisition budget for the two years by a combined $2.2 billion, or 78 percent. Since July 31, the company said it has reduced spending by $9.8 billion.

“The plan is to live within their means, which is what investors were looking for,” Jason Gammel, an analyst at Macquarie Bank Ltd. in New York, said in an interview. Gammel rates Chesapeake shares “outperform” and doesn’t own any.

Chesapeake is well-positioned to survive low gas prices, McClendon said on the call. The company has locked in about 75 percent of production at $8.20 per thousand cubic feet, he said.

Devon Energy Corp. is the largest U.S. independent oil and gas producer. Independent producers are those without refining assets.

To contact the reporter on this story: Dan Lonkevich in New York at dlonkevich@bloomberg.net

Last Updated: December 8, 2008 16:31 EST