• 3 hours UK On Track To Approve Construction of “Mini” Nuclear Reactors
  • 7 hours LNG Glut To Continue Into 2020s, IEA Says
  • 9 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 12 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 14 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 15 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 4 days New Video Game Targets Oil Infrastructure
  • 4 days Shell Restarts Bonny Light Exports
  • 4 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 5 days Rosneft Signs $400M Deal With Kurdistan
  • 5 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 6 days Conflicting News Spurs Doubt On Aramco IPO
  • 6 days Exxon Starts Production At New Refinery In Texas
  • 6 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 7 days VW Fails To Secure Critical Commodity For EVs
  • 7 days Enbridge Pipeline Expansion Finally Approved
  • 7 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 7 days OPEC Oil Deal Compliance Falls To 86%

Chesapeake Must Sell at Least $7 Billion of Assets to Avoid Faulting on Debt

Chesapeake Must Sell at Least $7 Billion of Assets to Avoid Faulting on Debt

A team of analysts led by Peter Speer from Moody’s Investor Service has announced that Chesapeake Energy Corp must sell at least $7 billion in assets this year to avoid breaching the term of their loans and receiving a credit downgrade.

Chesapeake, the largest US natural gas producer after Exxon Mobil Corp., is in the midst of a cash flow crisis after the CEO Aubrey McClendon allowed hedging contracts to expire in late 2011, leaving the company exposed when natural gas prices fell to their lowest level in ten years.

The company has already taken out a $4 billion loan this month to try and ease its cash flow problems, but Speer still expects them to exceed their debt restrictions, which limit debt to four times earnings before interest, taxes, depreciation and amortization, later in the year.

James Sullivan, and analyst at Alembic Global Advisors, has calculated that the shortfall in cash could exceed $15 billion this year, and then another $7 billion in 2013.

“Even $7 billion in asset sales could place Chesapeake’s covenant compliance for its revolving credit facility in some doubt, and the company would still face a significant funding gap in 2013,” Speer wrote. “Asset sales much below $7 billion, meanwhile, would likely lead to a downgrade.”

McClendon plans to sell oil and gas assets in several states including Texas, Oklahoma, and Kansas, in an attempt to free up capital and avoid further cash flow problems and defaulting on its debt. The 1.5 million acres in Texas’ Permian Basin alone could raise between $4 and $6 billion.

By. Joao Peixe of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News