Chesapeake Energy Cuts Production, Merges with Rival to Weather Low Gas Prices
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Chesapeake Energy is adapting to low natural gas prices by cutting capital spending by 20% and production by 15% in 2024. This should help support prices in the near term.
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Chesapeake has a strong balance sheet with low leverage, ample liquidity, and no near-term debt maturities, allowing it to weather low prices.
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The company is positioning itself to benefit from rising demand for LNG exports by securing export capacity and sales agreements.
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Chesapeake announced a merger with Southwestern Energy to create one of the largest natural gas producers in the US with significant synergies.
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The merger should lead to higher free cash flow and dividends over time. Chesapeake targets 50%+ of post-base free cash flow for variable dividends.