Chesapeake Energy Corp. said Friday its planned asset sales likely will be completed in the first quarter of 2013 instead of by the end of 2012 as the company has previously announced.
“We remain absolutely committed to reducing our net long-term debt to no more than $9.5 billion,” said Domenic J. Dell'Osso Jr., Chesapeake's executive vice president and chief financial officer. “And if not achieved by Dec. 31, 2012, we expect to accomplish this No. 1 goal in early 2013.”
The company is still on target to sell $17 billion to $19 billion in assets by the end of 2013, CEO Aubrey McClendon said.
McClendon also praised his company's efforts to increase production.
Chesapeake's average daily production climbed 24 percent year-over-year and 9 percent from the previous quarter. Oil production jumped 96 percent year-over-year and 21 percent sequentially.
“We believe it's very important for our investors to recognize that Chesapeake's liquids growth story is primarily an oil production growth story more than an NGL (natural gas liquids) growth story,” McClendon said. “Obviously, not all liquids are made alike and so we are certainly focused on increasing oil production more than NGL production.”
McClendon also said natural gas prices are likely to increase faster than most industry observers have predicted. He pointed out that seven months ago, the country's natural gas storage held 900 billion cubic feet more than it did one year before. That surplus is now down to 120 billion cubic feet.
“We believe the small remaining storage overhang should soon go into a year-over-year deficit, which is a quite remarkable turn of events from this past spring,” McClendon said.
McClendon attributed the storage drop to Chesapeake and other natural gas producers switching their focus to oil and reducing their natural gas production and as electric utilities move to burning more natural gas and less coal.
“After battling natural gas headwinds, driven by relentless supply growth for the past four years, we now expect to enjoy a multiyear rebound in natural gas prices driven by demand growth that is likely to be equally relentless,” McClendon said. “This move from a multiyear trend of natural gas headwinds to a multiyear period of natural gas tail winds will have many positive implications for Chesapeake and its investors.”