Chesapeake Energy Corp. said Jan. 29 it had cut debt by $900 million in the fourth quarter, easing some concerns that the natural gas producer might not be able to meet its loan covenants.
Shares of the company, which in November warned on its ability to continue as a going concern, rose 2.3% to 53 cents in premarket trading.
Chesapeake had in December completed a term-loan refinancing with support from 99% of debtholders and later refinanced some longer-dated notes.
That helped the company push down its principal debt to $8.9 billion at the end of 2019 from $9.7 billion at Sept. 30.
"We remain committed to achieving further meaningful debt reduction through asset sales, capital markets transactions and cost discipline," CEO Doug Lawler said.
About $300 million of the company's debt matures this year and it had about $1.4 billion of liquidity at the end of 2019.
Reuters reported last month that Chesapeake's refinancing plans had sidelined a $1 billion deal to sell gas assets in Louisiana to Dallas Cowboys owner Jerry Jones' Comstock Resources Inc. Chesapeake also has shale positions in the Appalachian Basin, Midcontinent, Rockies and South Texas regions.
The company on Jan. 29 also forecast average oil production of 125,000 to 126,000 barrels per day in the fourth quarter, slightly below the 10% sequential growth it had earlier targeted.
Chesapeake expects fourth-quarter production of between 476,000 barrels of oil equivalent per day (boe/d) and 478,000 boe/d, which at its midpoint was slightly lower than the third-quarter output of 478,000 boe/d.
Both the COVID-19 pandemic and the oil price crash have had a deep impact on what E&Ps and their lenders expect compared to what they thought last fall, according to a Haynes and Boone report.
Following Ken Mariani’s retirement, effective April 3, Martyn Willsher, who currently serves as the company’s CFO, will serve as interim CEO of Amplify Energy.
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