Energ​y,​ Large​st US Natur​al Gas Produ​cer,​ Runs Out Of Cash

[Mrs. Sharon B. Hodge]

Energ​y,​ Large​st US Natur​al Gas Produ​cer,​ Runs Out Of Cash






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Energy, Largest US Natural Gas Producer, Runs Out Of Cash
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Global Economic Analysis
November 27, 2008

http://globaleconomicanalysis. blogspot. com/2008/11/chesapeake-ene...

Chesapeake Energy Corp., the nation's largest producer of natural gas, seeks to raise up to $1.
8 billion through common stock sales in an effort to fund its drilling and exploration activities and mitigate the impact of lower natural gas prices on cash flow

In two filings with the Securities and Exchange Commission late Wednesday, the company said it will issue shares worth as much as $1 billion before fees and also registered 50 million shares worth at most $791 million for potential sale

Oklahoma City, Okla.
-based Chesapeake said it will use proceeds from the $1 billion offering for general corporate purposes, including fund exploration, development and other capital expenditures

The move would dilute holdings of shareholders, who already suffered through a substantial decline in Chesapeake's stock price this year. Shares closed at $20.
24 on Wednesday, off 73 percent from the stock's $74 52-week high set this summer

But the company said cash flow, borrowings and cash on hand have not been enough to pay for capital expenditures

Chesapeake has used up the remaining financing available under its $3.5 billion bank credit facility and only $251 million is left of another $460 million credit line.
Credit markets remain tight with financial institutions under duress

Read The Rest HERE

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Chesapeake Energy may sell $1,8 Billion stock to get cash
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Associated Pres
Thursday November 27, 2008
By Deborah Yao, AP Business Writer

http://biz. yahoo. com/ap/081127/chesapeake_energy_capital_raise. html

Chesapeake Energy seeks to raise up to $18 billion via stock sale to shore up cash position

Chesapeake Energy Corp., the nation's largest producer of natural gas, seeks to raise up to $1.
8 billion through common stock sales in an effort to fund its drilling and exploration activities and mitigate the impact of lower natural gas prices on cash flow

In two filings with the Securities and Exchange Commission late Wednesday, the company said it will issue shares worth as much as $1 billion before fees and also registered 50 million shares worth at most $791 million for potential sale

Oklahoma City, Okla.
-based Chesapeake said it will use proceeds from the $1 billion offering for general corporate purposes, including fund exploration, development and other capital expenditures

The move would dilute holdings of shareholders, who already suffered through a substantial decline in Chesapeake's stock price this year. Shares closed at $20.
24 on Wednesday, off 73 percent from the stock's $74 52-week high set this summer

But the company said cash flow, borrowings and cash on hand have not been enough to pay for capital expenditures

Chesapeake has used up the remaining financing available under its $3.5 billion bank credit facility and only $251 million is left of another $460 million credit line.
Credit markets remain tight with financial institutions under duress

While cash flow from operations had risen in the first nine months of 2008 compared to a year ago, it's heavily dependent on natural gas prices, which have fallen off sharply

"Changes in market prices for natural gas and oil directly impact the level of our cash flow from operations," the company said in a filing

Chesapeake has hedged about 73 percent of its remaining natural gas and oil reserves in 2008 and 67 percent of expected production in 2009 at average prices of $9.09 and $8.65 per thousand cubic feet equivalent (Mcfe), respectively. In Nymex trading Thursday, natural gas for January delivery slid 9.7 cents to $6.
781 per 1,000 cubic feet

The company has cut back on its capital expenditure budget through 2010 in light of global economic distress and concerns about oversupply of natural gas in the U.S.
market

Chesapeake said it's negotiating with several "significant" leaseholders to acquire leaseholds at reduced prices.
In the filing, it said some leaseholders may agree to accept common stock for all or part of the deal

The company has struck several multibillion-dollar transactions recently

In September, BP PLC's U.S. arm said it plans to buy a 25 percent stake in Chesapeake's Fayetteville Shale assets in Arkansas for $1.9 billion. A month earlier, BP said it had bought similar Chesapeake assets in Oklahoma for $1.
7 billion

Earlier this month, Chesapeake sold even more natural gas assets to Norwegian energy company StatoilHydro for $3.
38 billion