Chesapeake Energy will be on budget this year: CEO

Mon Apr 1, 2013 12:42pm EDT
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By Anna Driver

HOUSTON (Reuters) - Natural gas company Chesapeake Energy Corp (CHK.N: Quote) is on track to stay within its budget for the year, Steve Dixon, the newly appointed interim chief executive officer, said on Monday.

Dixon, seeking to reassure investors following the departure of CEO Aubrey McClendon, said on a conference call that he had "tremendous confidence" that Chesapeake's spending would not exceed the company's planned drilling budget of about $6 billion.

On Friday, Chesapeake announced Dixon's appointment as interim CEO and said he was part of a three-person team to lead the second-largest U.S. producer of natural gas as it continues its search for a permanent replacement for McClendon.

Mark Hanson, an analyst at Morningstar in Chicago, said Dixon hit all the right notes in his remarks to investors.

"I like what I heard on the call today," Hanson said. "They really seem to be turning the corner on (financial) discipline."

McClendon's departure was announced in late January, following a governance crisis and a liquidity crunch caused by heavy spending on oil and gas acreage and a collapse in the price of natural gas.

Investors took control of the Chesapeake board in June. Reining in spending is now a top priority for the company, which faces a gap of about $4 billion this year between its expected cash flow and capital expenditures.

To help cover that shortfall, Chesapeake has pledged to sell up to $7 billion in oil and gas properties this year. So far, it has closed or signed deals totaling $1.5 billion, Dixon said, adding that there has been good interest in some of the company's smaller asset packages.   Continued...

Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, on April 17, 2012. REUTERS/Steve Sisney