Chesapeake Energy Continues Asset Sales to Pay Down Debt

Chesapeake Energy (NYSE: CHK) announced that it has reached an agreement to sell gas fieilds in the Permian basin and other assets for $6.9 billion. The Oklahoma City company needs to sell some of its oil and gas interests to fill a funding gap that analysts estimate at $4 billion in 2013. The properties will be sold to Royal Dutch Shell and Chevron (NYSE: CVX).

CEO Aubrey McClendon has said the company is trying to sell $14 billion worth of assets by the end of the year.

By the end of the third-quarter, Chesapeake will have announced nearly $12 billion in asset sales. That figure includes the sale of most of the company's 1.5 million acres in the Permian Basin and its midstream business.

The debt reduction program is part of an overall strategy to boost the company's stock price. Last June, Chesapeake replaced its chairman and four members of its board due to pressure from large shareholders.

In the last year, Chesapeake saw it shares drop from $31 per share last September to just $14 per share in May. Part of its problem is a glut of Natural Gas

Chesapeake is the world's second largest natural gas producer. But gas prices have dropped substaintially due to oversupply. The warmest winter on record reduced demand for natural gas, but producers produced more than ever. Natural gas prices hit a ten-year low early in April.

Since the board shake-up and the continuation of asset sales program, Chesapeake has rallied to over $20 per share.