Hours before the release of its third-quarter earnings, Chesapeake Energy Corp. announced Thursday it has secured a $2 billion loan to repay debt and enhance its financial flexibility.
“The board and management believe current corporate loan market conditions offer attractive refinancing opportunities on favorable terms,” Chesapeake Chairman Archie W. Dunham said. “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.”
Bank of America, Goldman Sachs Bank and Jefferies Finance LLC will help Chesapeake arrange the unsecured term loan facility.
Chesapeake has spent much of this year trying to sell assets outside of its core holdings to stave off a looming funding deficit.
The company, which is switching its focus from natural gas to oil, recently completed the sale of some of its acreage in Texas' Permian Basin, bringing its total yield from 2012 asset sales to about $11.6 billion. That is about 85 percent of Chesapeake's stated goal.
“We continue to believe that Chesapeake's portfolio of assets and dedicated employees are second to none, and we have confidence in the company's ability to achieve its stated financial and operational goals,” Dunham said. “The board and management remain committed to reducing debt levels to $9.5 billion or below as we execute on a more focused drilling program on our existing assets.”
CEO Aubrey K. McClendon said he is pleased with the progress Chesapeake has been making.
“We are proud of the production growth we have achieved, particularly the growth of our oil and natural gas liquids production over this period,” McClendon said. “We also look forward to the completion of our 2012-2013 asset sales and more focused drilling activity that will lead over time to a balance between drilling capital expenditures and operating cash flow as we transition into our asset harvest strategy from our previous strategy of new play identification and capture.”