Chesapeake to Reduce Spending by $500 Million

Chesapeake Energy announced on Monday it plans further cuts to its 2015 capital spending. The company will reduce spending, cut rigs and slow production in order to navigate the current low crude pricing environment.

For 2015, Chesapeake will spend $3.5 billion to $4 billion, a $500 million reduction from its last update in February.

Other important spending updates include:

Plans to spud and connect to sales approximately 520 and 650 gross operated wells, respectively, in 2015 (a decrease from 1,175 and 1,150 wells in 2014)
Connect to sales approximately 650 gross operated wells, respectively, in 2015 (a decrease from 1,175 and 1,150 wells in 2014).
Lowering its targeted 2015 production to 231 236 million barrels of oil equivalent, or average daily production of 635 645 thousand barrels of oil equivalent, which represents 1 3% production growth over the prior year after adjusting for 2014 asset sales.

“We entered 2015 with a strong liquidity position and we intend to manage it prudently. In response to continued weak commodity prices, we are further reducing capital expenditures and associated drilling activity. As a result, we now forecast ending 2015 with approximately $6 billion in combined cash and borrowing capacity under our credit facility. With this budget revision we anticipate being free cash flow neutral by the end of 2015.”

— Doug Lawler, Chesapeake’s Chief Executive Officer

Legal trouble continues to plague Chesapeake. In January, the company agreed to pay $119 million to settle a class action suite from 2013 that included thousands of royalty owners involving possibly 10,000 wells. And, most recently, a group of landowners in Bradford County, PA filed a suit alleging that Chesapeake and Williams Partners violated antitrust laws by conspired to restrain trade in the market for gas gathering services. Read more here.

Chesapeake Energy is active all across the Eagle Ford including Atascosa County, Dimmit County, Duval County, Frio County, Goliad County, LaSalle County, McMullen County, Washington County, Webb County and Zavala County.