Chesapeake to sell some Oklahoma assets to Newfield

May 5, 2016 11:16 AM

Chesapeake Energy Corp, the second-largest U.S. natural gas producer, said it would sell some assets in Oklahoma to Newfield Exploration Co for $470 million as part of a plan to shore up its finances through divestitures.

Chesapeake's shares were up 12% at $6.31 in premarket trading after the company also reported a smaller quarterly loss and cut its production expense forecast for the year.

The company said it would sell about 42,000 net acres in Oklahoma's STACK field, with current production of 3,800 barrels of oil equivalent per day.

Low natural gas and oil prices have hit the heavily leveraged company, which plans to sell assets worth an additional $500 million to $1 billion this year.

"We anticipate subsequent divestitures during the second and third quarters," Chief Executive Doug Lawler said in a statement.

The company on Thursday lowered its forecast for 2016 production costs to $3.40-$3.60 per barrel of oil equivalent (boe) from $3.60-$3.80 per boe.

Chesapeake said in February that it tapped legal counsel Kirkland & Ellis for advice as it seeks to strengthen its balance sheet with debt exchanges and other transactions, and that it had no plans for bankruptcy as some in the market have speculated.

The company's net loss attributable to shareholders narrowed to $964 million in the three months ended March 31, from $3.78 billion a year earlier. The year-earlier period included one-time items of $3.8 billion.

Excluding an $853 million impairment charge, loss in the latest quarter was 10 cents per share, in line with analysts' average estimate.

Revenue slumped 39% to $1.95 billion, widely missing analysts' expectations of $2.55 billion.

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