Oklahoma City-based Chesapeake Energy on Aug. 17 announced that it secured a $1 billion loan for buying back a portion of the company’s outstanding debt. The move is part of Chesapeakes continuing transformation to improve its financial standing as it attempts to streamline operations and eliminate unnecessary costs.
It’s no secret that Chesapeake Energy, and the oil industry as a whole, have been in a rut these past two years. The continually unfolding damage that has accompanied the steep cut in the oil price, coupled with rumors of a potential Chesapeake bankruptcy, have made for a rough ride for the stock price. February seemed to be the lowest point for the stock, as it eventually reached $1.50 a share. The stock has since progressed upwards as Chesapeake shut down the bankruptcy rumors and successfully maintained access to a vital $4 billion credit line in April.
Chesapeake still has a considerable amount of debt, but there has been a significant reduction in that debt as the company’s goals have shifted in recent years.
“Our main focus is reduction of total debt and the improvement in our liquidity, specifically debt maturing in the next six to 24 months,” Chesapeake CFO Domenic J. Dell’Osso told analysts in a call. “Financial discipline across our entire business remains the priority at Chesapeake.”
The company has cut $3 billion in debt since last year and its current outstanding debt amounts to $8.7 billion, according to data from Bloomberg.
That strategy has been successful so far, as the stock seems to have been on the rise and Moody’s changed its outlook on Chesapeake to positive.