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Chesapeake curbs operations
Chesapeake Energy Corp. said Friday it will make additional operational cuts for the remainder of this year, 2009 and 2010 while it raises cash by selling assets.
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The announcement came the same day its chairman and chief executive, Aubrey McClendon, revealed he was forced to sell substantially from his 33.4 million shares of Chesapeake stock.
Officials said the company will attempt to generate at least $2.5 billion in cash during the fourth quarter of the year by selling a quarter of its interest in the Marcellus Shale, by selling leases and production in other areas, and through a volumetric production payment.
The company also will cut its capital expenditures by another $1.5 billion during each of the coming two years, in addition to $3.2 billion in cuts it announced just last month.
Chesapeake also announced that it:
Borrowed the remaining capacity under its revolving credit and invested that in Treasury securities and other highly liquid securities, giving it $1.5 billion in hand at the end of September;
• Anticipates generating excess cash of about $1.5 billion during this year’s final quarter, giving it about $2.5 billion to $3 billion of cash in hand at the end of the year;
• Anticipates generating excess cash of at least $1 billion in 2009 and in 2010.
Chesapeake’s gamble
"They are in survival mode, not unlike many of their peers,” said Jake Dollarhide, chief executive officer of
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