Chesapeake Energy Corporation (CHK) Reducing Per-Unit Production Costs

Will increased efficiency be enough to reduce Chesapeake’s enormous debt?

The looming pile of debt that Chesapeake has hanging over its head is enough to give me nightmares. Long-term debt is still more than $12 billion. Further worrying me is CFO Domenic Dell’Osso’s admission that the gap between total spending and expected cash flow for 2013 is about $4 billion. Dell’Osso insisted that the company was focused on reducing its debt, but didn’t give any details about upcoming asset sales.

Activist investor, Carl Icahn, has a great deal of confidence in Chesapeake’s ability to push through this difficult time and come out on top in 2014. Back in November of last year he upped his stake in the company to nearly 9%. Not content to watch from the sidelines, he used his leverage to rearrange the board. Knowing that Icahn is pulling the strings is a big relief, but as a defensive value investor, I am not about to get involved with the company until I’m certain its liquidity problems are completely solved.

The article Chesapeake Reducing Per-Unit Production Costs originally appeared on Fool.com and is written by Cory Renauer.

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