Chesapeake Energy Plans to Cut 15% of Jobs--2nd Update
September 29 2015 - 5:52PM
Dow Jones News
By Erin Ailworth And Tess Stynes
Chesapeake Energy Corp. said it is reducing its workforce by 15%
to reduce costs amid low prices for crude and natural gas.
In a regulatory filing Tuesday, the U.S. shale driller said it
expects to post third-quarter charges of roughly $55.5 million
related to the move.
Because of the swoon in oil prices, Chesapeake has reduced rig
operations and cut capital expenditures after failing to offset the
plunge with higher production.
Chesapeake, based in Oklahoma City, had about 5,000 employees.
Today, 740 of them will be laid off, with about 560 of those
positions coming from the home office in Oklahoma, the company
said.
"As you are fully aware, the current commodity price environment
continues to be a challenge for our industry and for Chesapeake,"
Chief Executive Doug Lawler wrote in an email to employees. "While
this was extremely difficult, we are acting decisively and
prudently to enhance the long-term competitiveness and strength of
Chesapeake."
Shares of Chesapeake Energy, down 71% over the past year, fell
0.3% to $6.77 in after-hours trading.
Chesapeake is among the U.S. large energy companies that have
written down the value of their oil fields this year as a rout in
commodities prices has made properties across the country not worth
drilling.
In August, Chesapeake posted a deep loss for the second quarter,
hurt by a write-down of $4.02 billion on some properties.
Mr. Lawler has been trying to reshape the company since he took
the helm in the summer of 2013.
For many years before the global financial crisis, Chesapeake
co-founder and then-chief executive Aubrey McClendon borrowed
heavily to snap up oil and gas prospects around the U.S. and drill
more wells than his rivals. Under his direction, the company's debt
load ballooned to more than $16 billion, and shareholders began to
fret about his appetite for risk and enthusiasm for spending on
borrowed money.
Mr. McClendon left Chesapeake two years ago. Mr. Lawler stepped
in and almost immediately began to sell off energy properties from
West Virginia to Pennsylvania that weren't core to Chesapeake's
business in order to raise money and pay down debt. The boldest
deal of this sort came a year ago in October 2014 when Chesapeake
struck a $5.38 billion deal to sell a significant piece of itself
to rival driller Southwestern Energy Corp.
Mr. Lawler has reined in spending, but plummeting oil and gas
prices continued to take a toll on the company, along with many
other American energy producers. Today the entire company is valued
at less than $5 billion as measured by market capitalization.
Write to Erin Ailworth at Erin.Ailworth@wsj.com and Tess Stynes
at tess.stynes@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 29, 2015 17:37 ET (21:37 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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