In what’s already been a busy Friday for Chesapeake Energy Corp., the company capped off the day with an announcement about a $3 billion loan to repay borrowings in its existing credit facility.
The unsecured loan is from Goldman Sachs and affiliates of Jeffries Group. Chesapeake expects to pay off part of the loan from asset sales this year between $9 billion and $11.5 billion, the company said in a news release. ”Chesapeake has received strong interest from prospective buyers of its Permian Basin asset sales process and its Mississippi Lime joint venture process, and the company expects to complete these two transactions in the 2012 third quarter,” the release said.
Chairman and CEO Aubrey McClendon said the loan will provide the company with additional flexibility as it pursues its asset sales:
“As previously announced, Chesapeake’s business strategy is evolving in 2012 from the unconventional resource play identification and leasehold capture strategy of the past seven years to a strategy now focused exclusively on developing the 10 core plays in which we have built a #1 or #2 position and on continuing our transition from natural gas to liquids, reducing capital expenditures and paying down long-term debt,” McClendon said. “We believe Chesapeake has built the nation’s best collection of E&P assets, and we are 100% committed to delivering on the very substantial growth and value embedded in these assets for our shareholders through a relentless focus on developing our 10 core plays.”
On Friday afternoon, the company filed its quarterly report with the Securities and Exchange Commission, including a note about the difficult environment for natural gas prices that called into question the company’s ability to complete its planned asset sales. Shares fell sharply in the last hour of trading as investors took note of the filing.
Chesapeake said it will hold a conference call at 7:30 a.m. Monday to discuss the new loan agreement and its quarterly filing.