Shortly after announcing it would try to eliminate debt with a $2 billion
loan, Chesapeake posted its third
quarter results, showing a loss of more than $2 billion.
The loss is the largest at Chesapeake
in about three years. The company has continued to massively expand its
operations despite an environment of low gas prices many operators have found
inhospitable.
CEO Aubrey McClendon said he was most pleased Chesapeake
has continued to improve its position in gas liquids such as a propane and
ethane. Currently those materials are proving more valuable than methane, the
resource drillers have conventionally gone after for energy needs.
"We are pleased to report our liquids production continues its
impressive growth, led by a 96 percent year-over-year and 21 percent sequential
increase in our oil production. Three years ago when Chesapeake was
producing only 33,000 bbls per day of liquids, we embarked on a strategy to
transform our asset base from one focused almost exclusively on natural gas to
one that would provide more balance between liquids and natural gas production
and that would likely also lead to higher returns on capital. Our
current liquids production now exceeds 140,000 bbls per day, even after
excluding 21,000 bbls per day recently sold in the Permian
transactions. We believe the company remains on target to reach our
goal of 250,000 bbls per day of net liquids production in 2015."
Despite the focus on liquids, natural gas output increased about 25 percent
in the third quarter.
McClendon was also optimistic the overall performance of the company would
improve.
"Improving natural gas market fundamentals, combined with our
increasing liquids production, the completion of our 2012-13 asset sales
program and our long-term debt reduction to below $9.5 billion, should enable
Chesapeake to continue making significant financial progress in the 2012 fourth
quarter and in 2013 as well," McClendon said.
The $2 billion loan announced Nov. 1 is intended to help pay back the
company's large debt load. According to its third quarter results, the company
has more than $15 billion in debt and is trying to reduce that to around $9.5
billion.
The company has already made some strides to that goal earlier this year in
a series of multi-billion dollar asset sales.
"The board and management believe current corporate loan market
conditions offer attractive refinancing opportunities on favorable terms,"
said Archie W. Dunham, Chesapeake's
non-executive chairman of the board. "By using the proceeds of this loan
to repay more costly debt and provide excess liquidity, we will enhance our
financial flexibility and ensure our ability to complete our planned asset
sales efficiently."
our planned asset sales efficiently."
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