Chesapeake Energy Corp received a US$3 billion loan from Goldman Sachs and the Jefferies Group, giving the company more time to sell assets and lower its debt.
Chesapeake has been aggressively selling oil and gas assets, but its stock tumbled on Friday after the company suggested that some of its planned sales could be delayed. Investors, who worried about a cash crunch if any sales were delayed or halted, sent Chesapeake’s stock down 13.8 percent to close at US$14.81 on Friday.
However, the Oklahoma City company’s shares climbed 3.7 percent to US$15.35 in after-hours trading on news of the unsecured loan.
“This short-term loan from Goldman and Jefferies provides us with significant additional financial flexibility as we execute our asset sales during the remainder of 2012,” chairman and chief executive Aubrey McClendon said in a statement.
Chesapeake said on late Friday that it plans to complete US$9 billion to US$11.5 billion in asset sales during the remainder of this year and will use part of the proceeds from those sales to pay back the loan. The company previously outlined plans to sell as much as US$14 billion of assets this year.
Chesapeake anticipates closing on the sale of its Permian Basin property in Texas and its Mississippi Lime joint venture during the third quarter, saying it has received strong interest for both assets from potential buyers.
Chesapeake also said it would use the loan’s net proceeds to repay borrowings under an existing revolving credit facility. The new facility expires on Dec. 2, 2017.
A series of negative headlines have called Chesapeake’s leadership and oversight into question recently. During the past few weeks, news reports revealed that McClendon took out personal loans from a company while that company was planning to buy Chesapeake assets.
Chesapeake has stripped McClendon of his board chairmanship. It is also ending a program that allows McClendon to make personal investments in the company’s wells. On Friday, Chesapeake said McClendon received US$108.6 million from January to last month from sales of company well assets.