OKLAHOMA CITY, April 11, 2016 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE:CHK) today announced it has amended its
$4.0 billion secured revolving credit
facility agreement maturing in 2019 with its bank syndicate group.
Key attributes include:
- Borrowing base reaffirmed at $4.0
billion, consistent with current availability
- Next scheduled redetermination of borrowing base
postponed until June
2017
- Senior secured leverage ratio covenant relief granted
until September 2017
- Interest coverage ratio covenant reduced to 0.65x through
March 2017
Following the recent redetermination review by its bank
syndicate group, Chesapeake's senior secured revolving credit
facility borrowing base was reaffirmed at $4.0 billion, consistent with current
availability. In connection with the redetermination, Chesapeake
agreed to pledge additional assets as collateral under the Credit
Agreement. As part of the amendment, the next scheduled borrowing
base redetermination review has been postponed, and the lenders
have agreed not to exercise their interim redetermination right, in
each case until June 2017. The
amendment includes a collateral value coverage test, which may
limit Chesapeake's borrowing capacity if its collateral coverage
ratio falls below 1.25x, tested as of March
31, 2017.
The amendment provides temporary covenant relief, with the
facility's senior secured leverage ratio suspended until
September 2017, then reverting to
3.5x through December 2017 and
decreasing to 3.0x thereafter. In addition, the amendment reduces
the interest coverage ratio to 0.65x from 1.1x through March 2017, after which it will increase to 0.70x
through June 2017, then reverting to
1.2x in September 2017 and to 1.25x
thereafter. During the period in which the existing maintenance
covenants are suspended, Chesapeake has agreed to maintain a
minimum liquidity amount of $500
million at all times, increasing to $750 million if its collateral coverage ratio
falls below 1.1x, tested as of December 31,
2016. The amendment also gives Chesapeake the ability to
incur up to $2.5 billion of first
lien indebtedness secured on a pari passu basis with the existing
obligations under the Credit Agreement, subject to payment priority
in favor of the existing lenders and subject to the other
limitations on junior lien debt set out in the Credit
Agreement.
Chesapeake Energy Corporation (NYSE:CHK) is the
second-largest producer of natural gas and the 12th largest
producer of oil and natural gas liquids in the U.S. Headquartered
in Oklahoma City, the company's
operations are focused on discovering and developing its large and
geographically diverse resource base of unconventional oil and
natural gas assets onshore in the U.S. The company also owns
substantial marketing and compression businesses. Further
information is available at
www.chk.com where Chesapeake routinely
posts announcements, updates, events, investor information,
presentations and news releases.
This news release includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are statements other than statements of historical fact.
They include statements that give our current expectations or
forecasts of future events, production and well connection
forecasts, estimates of operating costs, anticipated capital
and operational efficiencies, planned development drilling and
expected drilling cost reductions, general and administrative
expenses, capital expenditures, the timing of anticipated noncore
asset sales and proceeds to be received therefrom, projected cash
flow and liquidity, our ability to enhance our cash
flow and financial flexibility, plans and objectives for future
operations (including our ability to optimize base production and
execute gas gathering agreements), the ability of our employees,
portfolio strength and operational leadership to create long-term
value, and the assumptions on which such statements are based.
Although we believe the expectations and forecasts reflected in the
forward-looking statements are reasonable, we can give no assurance
they will prove to have been correct. They can be affected by
inaccurate or changed assumptions or by known or unknown risks and
uncertainties.
Factors that could cause actual results to differ materially
from expected results include those described under "Risk Factors"
in Item 1A of our annual report on Form 10-K and any updates to
those factors set forth in Chesapeake's subsequent quarterly
reports on Form 10-Q or current reports on Form 8-K (available at
http://www.chk.com/investors/sec-filings). These risk factors
include the volatility of oil, natural gas and NGL prices;
write-downs of our oil and natural gas carrying values due to
declines in prices; the limitations our level of indebtedness may
have on our financial flexibility; the availability of operating
cash flow and other funds to finance reserve replacement costs; our
ability to replace reserves and sustain production; uncertainties
inherent in estimating quantities of oil, natural gas and NGL
reserves and projecting future rates of production and the amount
and timing of development expenditures; our ability to generate
profits or achieve targeted results in drilling and well
operations; leasehold terms expiring before production can be
established; commodity derivative activities resulting in lower
prices realized on oil, natural gas and NGL sales; the need to
secure derivative liabilities and the inability of counterparties
to satisfy their obligations; adverse developments or losses from
pending or future litigation and regulatory proceedings, including
royalty claims; charges incurred in response to market conditions
and in connection with actions to reduce financial leverage and
complexity; drilling and operating risks and resulting liabilities;
effects of environmental protection laws and regulation on our
business; legislative and regulatory initiatives further regulating
hydraulic fracturing; our need to secure adequate supplies of water
for our drilling operations and to dispose of or recycle the water
used; federal and state tax proposals affecting our industry;
potential OTC derivatives regulation limiting our ability to hedge
against commodity price fluctuations; impacts of potential
legislative and regulatory actions addressing climate change;
competition in the oil and gas exploration and production industry;
a deterioration in general economic, business or industry
conditions; negative public perceptions of our industry; limited
control over properties we do not operate; pipeline and gathering
system capacity constraints and transportation interruptions; cyber
attacks adversely impacting our operations; and interruption in
operations at our headquarters due to a catastrophic event.
In addition, disclosures concerning the estimated
contribution of derivative contracts to our future results of
operations are based upon market information as of a specific
date. These market prices are subject to significant
volatility. Our production forecasts are also dependent upon
many assumptions, including estimates of production decline rates
from existing wells and the outcome of future drilling
activity. Expected asset sales may not be completed in the
time frame anticipated or at all. We caution you not to place
undue reliance on our forward-looking statements, which speak only
as of the date of this news release, and we undertake no obligation
to update any of the information provided in this release, except
as required by applicable law.
INVESTOR
CONTACT:
|
MEDIA CONTACT:
|
Brad Sylvester, CFA
|
Gordon Pennoyer
|
(405) 935-8870
|
(405) 935-8878
|
ir@chk.com
|
media@chk.com
|
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SOURCE Chesapeake Energy Corporation