S&P lowers Chesapeake Energy

Standard & Poor's said it lowered Chesapeake Energy Corp.'s corporate credit rating to BB from BB+ and lowered ratings on two related entities - Chesapeake Oilfield Operating LLC and Chesapeake Midstream Partners LP.

The agency also said it placed all of these ratings on CreditWatch with negative implications.

The downgrade and CreditWatch placement reflects a view that recent revelations about personal transactions undertaken by Chesapeake's chief executive officer relating to the company's unusual founder well participation program underscore shortcomings in Chesapeake Energy Corp.'s corporate governance practices, S&P said.

Turmoil resulting from these developments and from potential revelations resulting from the board investigation could hamper Chesapeake's ability to meet the massive external funding requirements stemming from its currently weak operating cash flow and aggressive capital spending, the agency said.

Chesapeake's production is heavily skewed toward natural gas and natural gas prices are severely depressed at this time, S&P said.

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