A possible revival of oil…
If OPEC does not agree…
Chesapeake Energy has been struggling with massive debts all year, and has just completed the latest of a string of asset sales intended to raise money to cover the debt.
The asset sale raised $6.9 billion dollars, of which $4 billion will be used to reduce the $14.33 billion debt to keep them afloat for the rest of the year, and buy them time to work out how they will survive in 2013.
They have sold most of their 1.5 million acres in the Permian Basin, located in the western part of Texas and southeastern New Mexico, to Royal Dutch Shell Plc and Chevron Corp.
Their Permian sale received a price of about $3,200 per acre, less than half of the $7,500 an acre average that the land was calling in other sales during 2011 and 2012, and far less than analysts had expected. Although they also sold nearly all of their remaining network of pipelines for far more than was expected.
Mark Hanson, an analyst at Morningstar, is discouraging about Chesapeakes position improving for the next year, saying that “they probably need to sell a not insignificant amount of assets in 2013 to plug” their funding gap.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com