One group of investment analysts say investors should take note of Oklahoma City-based Chesapeake Energy’s scaling back of operations in the Mid-Continent region.
The company is down to one rig and one frac crew in Oklahoma, according to the investment firm of Seeking Alpha. Chesapeake had at least four drilling rigs and two completion crews back in May.
A review of Chesapeake’s third quarter report issued Nov. 2 indicated the company fully intended to make such reductions.
“We anticipate spending less capital in 2018 than 2017 and, given our asset quality and industry-leading capital efficiency, we expect to deliver flat to modest production growth on a lower capital expenditure,” stated Doug Lawler, Chesapeake’s Chief Executive Officer.
Seeking Alpha suggests Chesapeake might have more divestiture plans in store after selling off more than 1 million net acres over the past few years in the Mid-Continent region. The sales raised $1.2 billion in cash for Chesapeake but with the downsizing, it raises the speculation that the company could be considering more such land and asset sales.
And that should not be a surprise either, based on Lawler’s comments at the Third Quarter announcement.
“We continue to improve our capital efficiency and cost structure as we drive toward free cash flow neutrality. As we look toward 2018, our priorities remain unchanged as we focus on further improving our balance sheet.”
