Chesapeake Estimates 2013 Funding Gap at About $3.5 BillionJoe Carroll
Chesapeake Energy Corp., the U.S. natural gas producer that asked its chief executive officer to resign last week, estimated its spending commitments will exceed cash flow by about $3.5 billion this year.
Chesapeake plans to sell oilfields, gas-processing plants and other assets to cover the funding gap and repay debt, Jeffrey Mobley, vice president of investor relations, said during a presentation at a Credit Suisse Group AG conference today.
CEO Aubrey McClendon agreed on Jan. 29 to step down by April 1 from the company he co-founded 23 years ago after slumping gas prices erased profits, worsened Chesapeake’s debt load and triggered job cuts and asset sales. The company’s $13.6 billion market value is less than half its $35.6 billion peak from 2008 and a fraction of the $100 billion estimate that McClendon pegged as its true value during a March interview.
The Oklahoma City-based company expects to announce transactions involving holdings in the Mississippi Lime formation in Oklahoma and Kansas, as well as the Eagle Ford Shale in Texas, early this year, Mobley said.
He declined to estimate the potential value of those pending deals and said the company will be “less proscriptive” about asset values in the future.
Chesapeake rose 2.1 percent to $20.54 at the close in New York.