Chesapeake Energy Corp cut its cash outlook for the next two years and said it will further reduce spending in response to the global financial crisis and lower natural gas prices, a regulatory filing on Wednesday showed.
Chesapeake has cut its budget for the acquisition of new acreage in 2009 and 2010 and has trimmed the amount it plans to spend on drilling, according to a filing with the U.S. Securities and Exchange commission.
The highly leveraged U.S. company had planned to spend as much as $2.3 billion acquiring drilling rights next year.
This is the third time since Sept. 22 that Chesapeake has adjusted its financial forecasts and announced plans to cut capital spending.
Energy companies like Chesapeake that have outspent cashflow and relied on capital markets to finance acreage acquisitions and drilling programs have been hit hard by the credit crunch as sources of financing are harder to find an more expensive.
A 50 percent drop in natural gas futures from July highs has not helped the outlook for U.S. onshore exploration and production companies, some of which ramped up drilling plans to capitalize on high commodity prices.
Chesapeake said it now expects total cash inflows of about $7.8 billion to $9 billion in 2009, down from its prior forecast for about $9.9 billion to $11.5 billion, the SEC filing said.For 2010, the company is forecasting cash inflow of $8.2 billion to $9.5 billion, down from $9.2 billion to $10.8 billion.
From The Guardian