Chesapeake plans to generate cash by cutting acquisitions
NEW YORK/DALLAS, - Chesapeake Energy Corp, the most active driller in the United States, is poised to start generating cash by cutting interest payments and slowing oil and gas field acquisitions that reached $5 billion last year.
CNOOC Ltd, China's largest offshore energy producer, in January agreed to pay $570 million in cash for a one-third stake in Chesapeake's Niobrara shale project in Colorado and Wyoming. It also will pay up to $697 million of Chesapeake's drilling costs in the basin.
On Monday, Chesapeake announced plans to sell its holdings in the Fayetteville gas-shale formation in Arkansas, as well as minority stakes in two companies. The sales may yield more than $5 billion in pretax funds, which will be used in part to cut debt, the company said. That may cut costs by $400 million a year, adding to profit, said Michael Bodino of Global Hunter Securities in Fort Worth, Texas.
