Chesapeake Energy Corporation Restructuring for Profitability

Chesapeake Energy Corp., one of the nation's top producers of natural gas, is selling off assets and cutting spending. It is selling $5 billion in assets, including its stake in an Arkansas gas field. Chesapeake also agreed to sell a stake in a Rocky Mountain oil field for $1.3 billion last week. The moves are part of a strategy to cut debt and slow growth to become more profitable. Investor Carl Icahn has bought a 5.8% stake in the company.

Chesapeake and other companies have developed the new drilling technique called hydraulic fracturing. The method unlocks huge deposits of oil and natural gas trapped in dense rocks called shale.

Chesapeake has raised the billions of dollars it needed to buy drilling rights across the country. The company issued shares, borrowed money and sold stakes in its fields to companies from the U.K., Norway, France and China. The strategy turned the company into the second-biggest producer of natural gas in the U.S., after Exxon Mobil Corp. (WSJ, 2/14/2011)