Leaders of Oklahoma City’s Chesapeake Energy say the company is significantly stronger after emerging from its Chapter 11 bankruptcy in February and reducing total indebtedness by $9.4 billion.
In a Form 10-Q filing with the Securities and Exchange Commission, the company offered more details that were not offered as part of its first quarter earnings report announced this week.
As of the end of March, Chesapeake had $2.064 billion in liquidity available including $340 million cash on hand and $1.724 billion of aggregate unused borrowing capacity available.
Interim Chief Executive Officer Michael Wichterich said a new dividend strategy was launched as a result of the strong liquidity position at the annual dividend of $1.375 on common shares will be paid June 10, 2021.
Chesapeake expects to bring or have online nearly 120 to 135 gross wells by investing up to $740 million in capital expenditures with an operation of five to seven rigs.
“We expect that approximately 80% of our 2021 capital expenditures will be directed toward our natural gas assets,” stated Wichterich in the filing. He said the firm plans to fund its 2021 capital program through cash on hand and expected cash flow from the operations.
Prior to its bankruptcy filing, the company had been attempting to convert much of its exploration efforts to oil rather than gas.
After entering Chapter 11 bankruptcy in 2020, the company was hit with numerous lawsuits and some are still being resolved in the courts.
Among them are lawsuits stemming from earthquake activity in the state, suit which Chesapeake said in the SEC filing that it is “actively seeking dismissal.”
The company is also in discussions with the Pennsylvania Department of Environmental Protection regarding gas migration in the vicinity of some of Chesapeake’s wells in Wyoming County, Pennsylvania. The filing stated that Chesapeake believes it is close to identifying steps to resolve Pennsylvania’s concerns.
“Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows,” stated the SEC filing by Chesapeake.
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