Chesapeake Energy Corp. will meet its $6 billion drilling budget as it continues its strategy to sell assets and drill aggressively, the company said Monday.
In his first analyst call as interim CEO, Steve Dixon said the Oklahoma City natural gas and oil company will continue its previously announced strategy.
“Our management team and board of directors are well-aligned in our objective and strategy to take Chesapeake forward,” Dixon said. “We will remain focused on increasing our liquids production, driving capital efficiencies across our business and enhancing our financial flexibility to prudently fund our future growth. Maintaining our culture of excellence at Chesapeake is also a priority, and we will continue to conduct our business with the same urgency, intensity and attention to detail that we've always had.”
Dixon began the call with praise for departing Chesapeake co-founder and CEO Aubrey McClendon.
“I'd like to begin by expressing our sincere appreciation and gratitude to Aubrey for his leadership, dedication and contributions to the company and to our entire industry over the past 24 years,” Dixon said.
“I personally would like to thank Aubrey for his wisdom, guidance and friendship during the 22 years that we have partnered together here at Chesapeake, and I certainly wish him well in his future endeavors.”
At least four times during the 30-minute call, Dixon emphasized the company's attention to its budget and its efforts to reduce drilling costs.
“Our current level of drilling and completion and leasehold capital expenditures are on pace below our budgeted expenditure plan for the year,” Dixon said. “And while expenditures are on track to come in under budget in the first quarter, we are also delivering on planned production targets.
“We're also making great progress in cost reductions and are on track for our lease operating and G&A (general and administrative) expenses to come in at or below budget this year.”
Company buys back senior notes
Chesapeake Energy Corp. on Monday said it has bought back more than $592 million in senior notes and issued $2.3 billion in new notes even as former CEO Aubrey McClendon was set to give testimony in an ongoing dispute over another note repurchase effort.
Chesapeake said it bought back more than $216 million, or 46 percent, of its 7.625 percent senior notes due in 2013 and more than $376 million, or 79 percent, of its 6.875 percent senior notes due in 2018. The tender offers are scheduled to continue until April 12.
Chesapeake also said Monday it has completed its previously announced new issuance of $2.3 billion. The new offering is comprised of three series of notes: $500 million in 3.25 percent senior notes due in 2016; $700 million in 5.375 percent senior notes due in 2021; and $1.1 billion in 5.75 percent senior notes due in 2023.
Chesapeake also wants to buy back $1.3 billion in 6.775 percent senior notes due in 2019, although that issue has been more difficult.
Bondholder Bank of New York Mellon sued earlier this year, saying Chesapeake must pay an additional $400 million in interest because it waited too long to announce its buyback plan.
McClendon will testify in the case, according to court filings released Monday.