Fitch ups Chesapeake Energy

Fitch Ratings said it has upgraded its rating of Chesapeake Energy's senior unsecured notes to BB from BB-, its senior secured bank facility rating to BBB- from BB+, and its convertible preferred stock rating to B+ from B.

The outlook for Chesapeake has changed to stable from positive.

Fitch said the change in Chesapeake's ratings are based on the significant growth of the company in the past three years, Chesapeake's low risk reserve profile and the conservative funding strategy employed to finance the growth.

Pro forma for the recently announced property acquisitions (68 billion cubic feet equivalent of proved reserves), Chesapeake has 3.6 trillion cubic feet equivalent of reserves, approximately 91% larger than when Fitch initially rated the credit. Additionally, production at year-end was 796 million cubic feet equivalent per day, about 80% greater than in June 2001.

Management currently forecasts 2004 production at 910 million cubic feet equivalent per day.

Fitch said the ratings also take into consideration ongoing discussions to amend Chesapeake's existing credit facility as well as the use of a new senior secured hedge facility. The amended senior secured credit facility would increase Chesapeake's liquidity situation and reduce the amount of collateral required.

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