DOW JONES NEWSWIRES
Chesapeake Energy Corp. (CHK) said it will record a $1.8 billion
fourth-quarter impairment charge to its natural gas and oil
properties, and plans to eliminate its swaps for 2009, in a sign
that lower commodity prices and global economic woes continue to
negatively affect energy producers.
The charges are an admission that some of the assets the
nation's largest natural-gas producer acquired are no longer worth
as much as once thought.
The announcement comes after ConocoPhillips (COP) earlier this
month admitted it would take several one-time charges, totaling $34
billion in its fourth quarter, and announced it would slash its
capital budget and lay off 4% of its work force.
The recession and global financial crisis are taking a toll on
energy companies after several years of rising oil and natural-gas
prices.
Additionally, to add to its downside price protection from the
weak natural gas market, Chesapeake said it modified its hedging
position from December and plans to eliminate virtually all 2009
"knockout" swaps. The company said it may decrease or increase its
hedging position, depending on changes in the natural gas and oil
futures markets.
The company also reported its fourth quarter daily production of
natural gas equivalent averaged 2.32 billion cubic feet, flat from
the third quarter and an increase of 4% from a year ago. The
average daily production consisted of 2.13 billion cubic feet of
natural gas and 30,956 barrels of oil and natural gas liquids.
Chesapeake estimates year-end proven reserves totaled 12.1
trillion cubic feet of natural gas equivalent, an increase of 11%
from last year.
Shares were down 0.8% to $15.51 in after-hours trading.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com
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