Chesapeake Will Shed $14 Billion in Assets by Year-End

In a presentation to investors, Chesapeake Energy Corp. (NYSE: CHK) CEO Aubrey McClendon said the company is on track to sell up to $14 billion in assets by the end of 2012 and another $4.25 billion to $5 billion in 2013 as the company implements its asset harvesting strategy. The strategy shift from asset acquisition will lead to “higher returns on invested capital, lower cap-ex, and a more streamlined company,” according to Chesapeake’s presentation.

The company expects $11.7 billion in asset sales to be either completed or announced by the end of the third quarter of this year while still projecting production growth of 18% compared to 2011 production. Chesapeake now spends about 85% of its capex dollars on liquids-rich plays and only 15% on pure natural gas plays. The company said its liquids production in 2013 will amount to about 25% of total production and 55% of total realized revenue. Chesapeake’s goal is for liquids production to reach 35% of total production by 2015, up from just 10% in 2010.

Proceeds from the company’s asset sales are targeted to pay off Chesapeake’s $4 billion term loan and to reduce total debt by 25% by the end of the year. Current long-term debt stands at $14.33 billion.

Chesapeake’s shares are down about 0.8% this morning, at $19.39 in a 52-week range of $13.32 to $32.51.

The Chesapeake presentation is available here.

Paul Ausick