OKLAHOMA CITY, Aug. 11 (UPI) -- Leaving part of a Texas oil and natural gas shale basin will free up potentially more than a billion dollars in financial commitments, Chesapeake Energy said.
Chesapeake, which has headquarters in Oklahoma, said it was exiting the Barnett shale basin in Texas, which could result in an increase in operating income by up to $300 million per year through 2019. It could also free up as much as $1.9 billion in commitments in the transit and refinery side of the energy sector for the company.
Second-quarter revenue for Chesapeake declined 54 percent year-on-year and the loss was around $1.8 billion. The company said the primary driver of the loss was weak energy prices, which for crude oil are down more than 12 percent from last year and more than 50 percent below peak levels in 2014.
CEO Doug Lawry said his company had enough financial discipline, meanwhile, to cut its debt load by more than $1 billion as it worked to keep costs under control.
In early February, the company retained the services of longtime counsel Kirkland & Ellis to help manage debt and strengthen its balance sheet, though it said it had no plans to pursue bankruptcy.
By exiting Barnett, which the company said had a negative cash-flow profile, the CEO said he could help transform Chesapeake into a top-tier exploration and production company.
"We believe there are more positive moves to come," Lawry said in a statement.
The company said proved reserves in Barnett as of Dec. 31 were 81 million barrels of oil equivalent, of which 96 percent was natural gas. Assets released by Chesapeake were producing an average 65,000 boe per day, with nearly all of that coming in the form of natural gas.
Second-quarter daily production was around 657,100 boe per day and the company raised its full-year expectations for output by 3 percent.