Chesapeake swears off big spending, shares jump

OKLAHOMA CITY, Okla., Tue Aug 7, 2012 – Chesapeake Energy Corp said on Tuesday it plans to stop spending heavily on oil and gas properties next year in a strategic shift from land acquisition to resource development, helping to boost the U.S. company’s shares by over 10 percent.

Chief Executive Aubrey McClendon has spent heavily to amass more than 15 million acres (6 million hectares) in oil and gas basins around the United States, leaving the company awash in debt and unable to fund its operations without bringing in deep-pocketed partners or selling properties.

Big investors including Carl Icahn and Southeastern Asset Management’s Mason Hawkins have pressured McClendon to reduce spending and sell assets to bridge an estimated $10 billion funding gap for this year.

Chesapeake is pledging to lower spending and focus on producing higher-priced oil and natural gas liquids from basins it considers key, while it sheds up to $14 billion in assets this year and up to $5 billion in 2013.

In addition, the company will cut its capital budget by $6 billion next year, McClendon said. Its 2012 capex is estimated at $13 billion.