Chesapeake Energy has reduced its 2015 capital budget to $3.5 billion to $4.0 billion for 2015, which is a $500 million reduction from its previous guidance of $4.0 billion to $4.5 billion.
“We entered 2015 with a strong liquidity position and we intend to manage it prudently,” Doug Lawler, CEO, Chesapeake, said in a statement. “In response to continued weak commodity prices, we are further reducing capital expenditures and associated drilling activity.”
Chesapeake plans to operate 25 to 35 rigs in 2015, which represents a decrease of approximately 55% from an average of 64 rigs in 2014. The company intends to spud and connect to sales approximately 520 and 650 gross operated wells, respectively, in 2015, a decrease from 1,175 and 1,150 wells in 2014. As a result, the company is lowering its targeted 2015 production to 231 million to 236 million barrels of oil equivalent, or average daily production of 635,000 to 645,000 barrels of oil equivalent, which represents 1% to 3% production growth over the prior year after adjusting for 2014 asset sales.
Lawler said that Chesapeake forecasts ending 2015 with approximately $6 billion in combined cash and borrowing capacity under its credit facility.
“With this budget revision we anticipate being free cash flow neutral by the end of 2015,” he said.