OKLAHOMA CITY, Oct. 5, 2016 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE:CHK) today provided an update on the
significant improvements in its capital structure following recent
transactions. Today, the company closed a private placement of
$1.25 billion of unsecured
convertible senior notes, with a provisional call feature that will
give Chesapeake an opportunity to convert the debt to equity in
three years if the company's stock trades above 130% of the
conversion price for a specified period. The company's cash on hand
as of September 30, and pro forma for
the convertible debt issuance, was approximately $1.0 billion with no borrowings on its revolving
bank credit facility.
Additionally, today the company closed privately negotiated
purchase and exchange agreements under which the company exchanged
approximately 110.3 million shares of its common stock for (i)
134,000 shares of 5.00% Cumulative Convertible Preferred Stock
(Series 2005B), (ii) 606,271 shares of 5.75% Cumulative Convertible
Preferred Stock and (iii) 553,007 shares of 5.75% Cumulative
Convertible Preferred Stock (Series A). This amount of preferred
stock represents approximately $1.2
billion of liquidation value, which was exchanged at a
discount of over 40 percent. As a result of these exchange
transactions, the company's common shares currently outstanding are
approximately 886 million, before giving effect to future dilution
from convertible securities.
Chesapeake Chief Executive Officer Doug
Lawler commented, "Through the transactions that closed
today, we have substantially improved our capital structure. The
issuance of the new unsecured convertible notes, plus the
significant reduction in our preferred stock at a deep discount,
results in additional liquidity and less preferred equity and is
accretive to our capital structure. With the cash proceeds from the
convertible note offering, we have taken measures to provide excess
liquidity to address the remaining maturities of our debt through
2018, before any incremental proceeds from the potential asset
sales that we are currently working. These transactions represent
major steps toward reaching our financial goals of $2-3 billion of debt reduction and growing
production within free cash flow. We continue to make great
progress in simplifying the balance sheet and reducing the overall
cost of financing, and we remain intently focused on further
reductions to our operating and capital cost structure."
Headquartered in Oklahoma
City, Chesapeake Energy Corporation's (NYSE: CHK) operations
are focused on discovering and developing its large and
geographically diverse resource base of unconventional oil and
natural gas assets onshore in the United States. The company
also owns oil and natural gas marketing and natural gas gathering
and compression businesses.
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 the expected benefits and
accretive nature of the convertible note offering and exchange
transactions, reductions to our operating and capital cost
structure, excess liquidity to address debt maturities, potential
asset sales, and our ability to further reduce debt and grow
production with free cash flow, 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 subsequent quarterly
reports on Form 10-Q 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 limitations our level of indebtedness may
have on our financial flexibility; 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; 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.
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 or the accompanying Outlook,
except as required by applicable law.
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
Brad Sylvester,
CFA
|
Gordon
Pennoyer
|
(405)
935-8870
|
(405)
935-8878
|
ir@chk.com
|
media@chk.com
|
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SOURCE Chesapeake Energy Corporation