Chesapeake Energy Corporation Announces Amendment to Revolving Credit Facility
September 30 2015 - 6:22PM
Business Wire
Chesapeake Energy Corporation (NYSE:CHK) today announced it has
amended its five-year, $4.0 billion revolving credit facility
agreement maturing in 2019 with its bank syndicate group. Key
attributes include:
- Facility moves to a $4.0 billion
senior secured revolving credit facility from a senior unsecured
revolving credit facility
- The initial borrowing base is
confirmed at $4.0 billion, consistent with current
availability
- Previous total leverage ratio
financial covenant of 4.0x trailing 12-month earnings before
interest, depreciation and amortization (EBITDA) is
suspended
- Two new financial covenants include
a senior secured leverage ratio of 3.5x through 2017 and 3.0x
thereafter, and an interest coverage ratio of 1.1x through the
first quarter of 2017, increasing incrementally to 1.25x by the end
of 2017
Chesapeake’s credit facility may become unsecured when specific
conditions set forth in the credit agreement are met. During an
unsecured period, the total leverage ratio would be reinstated and
the senior secured leverage ratio and interest coverage ratio would
no longer apply. While Chesapeake’s obligations under the facility
are secured, the amendment gives Chesapeake the ability to incur up
to $2.0 billion of junior lien indebtedness. As of September 30,
2015, Chesapeake has $12.0 million in outstanding letters of credit
under the facility with the remainder of the $4.0 billion
available.
Nick Dell’Osso, Chesapeake’s Chief Financial Officer, commented,
“This amendment to our existing revolving credit facility gives
Chesapeake greater flexibility and access to our liquidity. The new
senior secured leverage ratio which begins at 3.5x and new interest
coverage ratio which begins at 1.1x coverage provide us with full
access to the facility’s capacity under current market conditions.
Along with opportunities for additional proceeds from potential
asset divestitures, joint ventures and farm-out agreements, and an
estimated reduction in our 2016 cost structure of more than $200
million through production and G&A cost improvements, this
amendment places Chesapeake in a position of greater strength and
flexibility.”
Chesapeake Energy Corporation (NYSE:CHK) is the
second-largest producer of natural gas and the 12th largest
producer of oil and natural gas liquids in the U.S. Headquartered
in Oklahoma City, the company's operations are focused on
discovering and developing its large and geographically diverse
resource base of unconventional oil and natural gas assets onshore
in the U.S. The company also owns substantial marketing and
compression businesses. Further information is available at
www.chk.com where Chesapeake routinely posts
announcements, updates, events, investor information, presentations
and news releases.
This news release includes "forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are statements other than statements of historical fact.
They include statements that give our current expectations or
forecasts of future events, including expected gains in financial
flexibility, access to the credit facility’s full capacity, our
ability to comply with the senior secured leverage ratio and
interest coverage ratio covenants, anticipated assets sales and
proceeds to be received therefrom, projected cash flow and
liquidity, estimated reductions in 2016 cost structures through
production and G&A cost improvements, business strategy and
other opportunities, plans and objectives for future operations
(including joint venture and participation or farm-out agreements),
and the assumptions on which such statements are based. Although we
believe the expectations and forecasts reflected in the
forward-looking statements are reasonable, we can give no assurance
they will prove to have been correct. They can be affected by
inaccurate or changed assumptions or by known or unknown risks and
uncertainties.
Factors that could cause actual results to differ materially
from expected results include those described under "Risk Factors”
in Item 1A of our annual report on Form 10-K and any updates to
those factors set forth in Chesapeake's quarterly report on Form
10-Q filed on August 5, 2015, or current reports on Form 8-K
(available at http://www.chk.com/investors/sec-filings). These risk
factors include the volatility of oil, natural gas and NGL prices;
write-downs of our oil and natural gas carrying values due to
declines in prices; the availability of operating cash flow and
other funds to finance reserve replacement costs; our ability to
replace reserves and sustain production; uncertainties inherent in
estimating quantities of oil, natural gas and NGL reserves and
projecting future rates of production and the amount and timing of
development expenditures; our ability to generate profits or
achieve targeted results in drilling and well operations; leasehold
terms expiring before production can be established; commodity
derivative activities resulting in lower prices realized on oil,
natural gas and NGL sales; the need to secure derivative
liabilities and the inability of counterparties to satisfy their
obligations; adverse developments or losses from pending or future
litigation and regulatory proceedings, including royalty claims;
the limitations our level of indebtedness may have on our financial
flexibility; charges incurred in response to market conditions and
in connection with actions to reduce financial leverage and
complexity; drilling and operating risks and resulting liabilities;
effects of environmental protection laws and regulation on our
business; legislative and regulatory initiatives further regulating
hydraulic fracturing; our need to secure adequate supplies of water
for our drilling operations and to dispose of or recycle the water
used; federal and state tax proposals affecting our industry;
potential OTC derivatives regulation limiting our ability to hedge
against commodity price fluctuations; impacts of potential
legislative and regulatory actions addressing climate change;
competition in the oil and gas exploration and production industry;
a deterioration in general economic, business or industry
conditions; negative public perceptions of our industry; limited
control over properties we do not operate; pipeline and gathering
system capacity constraints and transportation interruptions; cyber
attacks adversely impacting our operations; and interruption in
operations at our headquarters due to a catastrophic event.
In addition, disclosures concerning the estimated contribution
of derivative contracts to our future results of operations are
based upon market information as of a specific date. These market
prices are subject to significant volatility. We caution you not to
place undue reliance on our forward-looking statements, which speak
only as of the date of this news release, and we undertake no
obligation to update any of the information provided in this
release, except as required by applicable law.
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version on businesswire.com: http://www.businesswire.com/news/home/20150930006895/en/
Chesapeake Energy CorporationINVESTOR CONTACT:Brad
Sylvester, CFA, 405-935-8859ir@chk.comorMEDIA CONTACT:Gordon
Pennoyer, 405-935-8878media@chk.com
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