Chesapeake Energy Seeks to Alleviate Cash Crunch
In a series of filings with the Securities and Exchange Commission, Natural gas producer Chesapeake Energy Corp. said it may issue close to $2 billion in common shares in coming months to raise operating cash and to fund drilling leases the company is trying to renegotiate.
The potential offerings mark Chesapeake’s latest attempt to shore up its tattered finances as it’s squeezed by heavy debt, falling gas prices and tight credit that have combined to drain its available cash.
The move could substantially dilute shareholders’ investment at a time when the company’s stock already has plummeted 70% since July.
The company plans to generate $2.5 billion to $3 billion through asset sales this quarter. On Tuesday, it said it closed the sale of 32.5 percent of its Marcellus Shale interest to Norway’s Statoil for $1.25 billion in cash and a further $2.125 billion over the next four years.
Jeff Mobley, the company’s senior vice president of investor relations, said the company doesn’t plan to use the $1 billion registration immediately, adding that the company wants to have “flexibility” in uncertain times. “We want to have the ability to use them in the future,” he said.