Chesapeake liquidates assets as demand falls

Monday, October 13th 2008, 7:05 pm
By: News 9

By Dave Jordan, NEWS 9

OKLAHOMA CITY -- Monday was a historic day on Wall Street, after investors welcomed the biggest one-day point gain ever by closing the DOW more than 900 points.

Although Monday was profitable on Wall Street, Chesapeake Energy took steps to protect itself from further financial losses.

Officials for the country's largest natural gas producer said it has stopped some of its drilling operations and continued to sell off assets to free up previously allocated money.

Despite Monday's financial surge on the Street, demand for natural gas and oil remained weak enough to convince Chesapeake to take action.

The cutbacks came on the heels of Chief Executive Aubrey McClendon's decision to sell 33 million shares of his own stock.

"You can't do anything about Tsunamis that come your way except to protect the company, the stakeholders and shareholders across Oklahoma, and we always focus on that," VP of Chesapeake Energy Tom Price said.

The scheduled cutbacks are expected to create $2.5 billion in cash for the energy company, and analyst Bob Rader, who owns shares of Chesapeake, said it's a smart move for the company to create liquidity while slowing down its drilling operations.

"Gas isn't going to go anywhere," Rader said. "It's been there for a long time and they don't have to drill it now if there's not a demand for the gas."

Chesapeake officials said they have no intention of cutting the company's workforce, including making layoffs.

Chesapeake has more than 4,000 employees across the state, 2,700 of them in Oklahoma City.