Chesapeake Energy says $3 billion loan resolves any liquidity questions

Chesapeake Energy told investors this morning that a planned asset sales of $9.5 billion and a $3 billion unsecured loan leave it with sufficient cash flows, as the company tries to dispel concerns that it might be prevented from selling assets by other debt covenant requirements.

“We firmly believe this term loan answers the most important question about Chesapeake in the marketplace today,” Chief Executive Officer Aubrey McClendon said. “Will we have enough financial firepower to be able to complete our pending asset sales and to finish our transition to a more liquids-focused producer?”

McClendon assured investors that the more than $50 billion of assets owned by Chesapeake and the $3 billion loan has ensured that Chesapeake will be able to go forward with its planned sales of assets in the Permian basin and a Mississippi Lime joint venture process.

“We now have substantially enhanced our liquidity and that will ensure we can complete our asset monetization transactions from a position of strength.”

McClendon said that ambiguity about whether the sale of some assets could not take place due to collateral requirements was referring to a cancelled volumetric production payment – a deal in which a company receives cash in advance from investors in return for promised production from its well.

Chesapeake had earlier said it would do a VPP deal in the Eagle Ford, but the company removed this deal from its Friday filing, leaving investors to speculate on the company’s immediate liquidity needs.

On Friday evening, Chesapeake announced it had received a $3 billion unsecured loan from Goldman Sachs Inc. and Jefferies Group Inc.