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Chesapeake Energy on track to end 2008 with $3 billion of liquidity
By Jennifer Lanning Drey
Portland, Ore., Oct. 31 - Chesapeake Energy Corp. projects it will end the year with $3 billion of cash on hand or bank credit availability and add at least another $1 billion per year to its cash stockpile in 2009 and 2010, Aubrey McClendon, chief executive officer of Chesapeake, said Friday during the company's third-quarter earnings call.
"We think it makes sense to build cash over time and use that cash to buy back debt or perhaps stock," McClendon said later in the call.
The CEO also said Chesapeake is optimistic that its previously announced asset monetization plan for the fourth quarter of 2008 remains on track.
The company closed $7.5 billion of asset monetization transactions during the third quarter.
"People think there are no buyers for assets in the industry or that if there are, they can't get any credit, but we're just not seeing that," he said.
McClendon said he believes property sales can - and should - remain an integral part of Chesapeake's business strategy.
Chesapeake reported operating cash flow of $1.40 billion and EBITDA of $5.96 billion for the third quarter on revenue of $7.49 billion.
The company had cash of $1.96 billion at Sept. 30, according to its earnings release.
During the quarter, Chesapeake exchanged some of its 2%, 2.5% and 2.75% convertible notes for common stock after being approached on an unsolicited basis by holders of the notes, chief financial officer Marc Rowland said.
The company is preparing to detail the exchanges in a public filing, he said.
Chesapeake Energy is an Oklahoma City-based independent producer of natural gas.
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