Shares of Chesapeake Energy Corporation (NYSE: CHK) rose over 5% in the premarket as the company said it would cut investments as natural gas prices fall. Concerns about natural gas price drops have pressed that firm’s shares to near 52-week lows
In reaction to the lowest natural gas prices in a decade the company said it would
Curtail its Gross Operated Gas Production by up to 1.0 Bcf per Day and Plans to Defer New Dry Gas Well Completions and Pipeline Connections Wherever Possible
Chesapeake to Redirect Capital Savings from Curtailing Dry Gas Activity to its Liquids-Rich Plays that Deliver Superior Returns
Chesapeake’s Undeveloped Net Leasehold Expenditures in 2012 Projected to be Approximately $1.4 Billion, Down from Net Leasehold Expenditures of $3.4 Billion and $5.8 Billion in 2011 and 2010, Respectively
CEO Aubrey K. McClendon remarked
“An exceptionally mild winter to date has pressured U.S. natural gas prices to levels below our prior expectations and below levels that are economically attractive for developing dry gas plays in the U.S., shale or otherwise. Having led the industry in natural gas production growth over the past 10 and five years, we recognize the need to demonstrate leadership and take action now in order to protect value for our shareholders. During the past five years, our gross operated natural gas production has increased from approximately 2.1 bcf per day to 6.3 bcf per day currently, and accounted for approximately 30% of the nation’s total growth in natural gas production.”
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