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Only On 9: Chesapeake CEO Says Company Is Stronger Than Ever

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OKLAHOMA CITY -

Since 2015, 88 oil and gas companies in the U.S. have declared bankruptcy, according to industry analysts.

Many of those analysts figured Chesapeake Energy would be on that list, but it hasn't happened. The company's top executive says it won't -- Chesapeake has the energy to survive and thrive.

"This is a stable company, this is a strong company, it's a growth company," said Doug Lawler, Chesapeake president and CEO.

Lawler is bullish on Chesapeake, and he's pushing his message of optimism to employees, shareholders, analysts and local media. Lawler sat down with News 9 for a rare on-camera interview last week.

"Chesapeake is recognized worldwide as the unconventional leader," said Lawler, providing background for a series new advertisements the company is expected to roll out, beginning Christmas day.

The spots tout the company's leadership in unlocking unconventional formations and, more generally, in pushing the boundaries of research and exploration for the benefit of all.

Lawler said, over the last couple of years, Chesapeake has been faced with a particularly difficult situation: stay afloat during a dramatic downturn in commodity prices, under the weight of the company's massive debt.

"Who would have thought, that when oil drops from $100 to $30, a company like Chesapeake would have driven $10.9 billion off of our balance sheet in debt and leverage?" asked Lawler.

Lawler's fiscal discipline, his calling card since arriving in June 2013, has made the company far leaner:

  • Total debt has been cut from about $21B to $9B
  • Production costs have been slashed through greater efficiencies
  • The workforce has been reduced to 3,500 (from a high of 13,000)

"The strength of this organization is in the employees," Lawler emphasized. "It's in the assets that we have and the technology that's been deployed for more efficient and better recovery, and better profitability."

Chesapeake's new image spots are part of a broader campaign to rebrand the company.

Out is the old logo featuring a blue flame. It is a logo that, through an extension of the letter H, underscores the horizontal drilling that has helped make Chesapeake the top independent producer in the country.

Lawler said the old logo suggested Chesapeake was simply a producer of gas, when, in fact, the company is continually increasing its oil production (Oil comprises about 25 percent of production right now, but Lawler says the goal is bump that up to 35 or 40 percent). The clean, sharp lettering in the new logo also reflect a continuing belief that the use of cutting edge technology is a company strength.

One way that Chesapeake has reduced debt is through the sale of assets, such as acreage in the Haynesville shale. Despite these divestments, Lawler said the company's core assets remain extremely strong.

"It's not a well-known fact, but Chesapeake has 11 billion barrels of net recoverable resources available to us," Lawler stated, "that's significant inventory for growth in the future."

Chesapeake retains strong positions in the Marcellus shale (Pennsylvania), the Utica (Ohio), the Powder River Basin (Wyoming), the Eagle Ford (Texas) and the Mid-Continent, which includes Oklahoma.

Lawler said Chesapeake is currently the biggest producer in Oklahoma and, with that in mind, is very cognizant of the seismicity issue.

"We support all the science and the research," Lawler explained. "We are compliant with all the regulations in the state and will continue to be compliant."

Lawler also remains cognizant of the company's legacy. As different as he believes Chesapeake is today, he says, much credit must still go to late co-founder Aubrey McClendon, for the quality leases he amassed.

"We benefit today from a very large asset base that was principally put together as the company grew through that period," Lawler acknowledged.

The key now, he says, is continuing to reduce the debt that was also was amassed at that time, while getting the greatest value from the assets.

"It has not been fun, it has been a difficult time the last few years as we fought through this low-price environment," said Lawler, "but we are powering through -- we've got a little ways to go, but the energy is contagious."

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