Yesterday Chesapeake Energy (NYSE:CHK) stock bounced back after its quarterly report was released. Investor confidence increased as assets were sold off and the company’s liquidity increased. Chesapeake should be able to pay its upcoming debts with the cash from the asset sales.
Agreements to sell $700 million in gas fields and other assets were made. The company plans to sell between $500 million and $1 billion in properties as well as release at least half of the drilling rigs from their contracts.
The Oklahoma City company will further decrease costs by halting further drilling of new wells in the Marcellus and Utica Shale plays, as reported by StateImpact. Chesapeake put in three new wells in the Marcellus in 2015 compared to 25 wells in 2014. According to TribLIVE the only remaining rig in the Marcellus has been released as well as the two in Eastern Ohio.
Chesapeake pumps more oil than every US producer other than Exxon Mobil Corp. but has been restructuring, closing offices, selling parts of their portfolio and shrinking its workforce in order to keep its head above water.
CEO Doug Lawler said “We are also renegotiating gathering, transportation and processing contracts to better align with our current development plans and market conditions, aggressively working to minimize the decline of our base production and making shorter-cycle investments with our 2016 capital program.”
Cheasapeake will have to continue write downs as some 2016 crude is hedged at $47.79 per barrel although currently WTI crude trades at $32.91.