Chesapeake Energy Corporation (NYSE:CHK) lately dropped down the capital budget of the company this year by over 10%. At the same time, the company also lowered the 2015 production outlook by a sharp contrast. Interestingly, a similar scenario has been observed in other energy companies, all of which are reeling under adverse effects of dropped oil prices.
Chesapeake Energy still remains investors’ pet
Despite slashing a considerable amount of the capital budget, Chesapeake Energy Corporation remains the preferred choice of the investors. This is evident from the fact that Carl Icahn, a billionaire investor increased his stake in this company from around 10% to approximately 11%. The largest investor of the company however is Southeastern Asset Management Inc with 11.4% of the shares in Chesapeake Energy Corporation.
Oil companies balancing the declining energy prices
In the recent months, a lot of oil producers made announcements for controlling their capital spending in 2015, by curbing thousands and millions of dollars. The purpose of the companies and producers to do so is for stabilizing and managing the diminishing prices in the energy sector.
Oklahoma based Chesapeake Energy Corporation also decreased the capital spending budget to a range of $3.5 billion and $4 billion. Its previous capital spending budget range was $4 billion to $4.5 billion. Apart from this shushing, the company announced 55% reduction in comparison to the previous year. It said that Chesapeake shall operate 25-35 rigs in 2015.
Resulting this, the production target has been decreased by 1-3% growth, in contrast with 2014. In May 2015, it had announced that its production growth for 2015 shall be projected at 7-10%. Commenting on this issue, the Chief Executive Officer of company, Doug Lawler said that the reduction of capital expenditure comes in light of weak prices of commodity. At the same time, he said, Chesapeake Energy Corporation (NYSE:CHK) is also bringing down the associated drilling activities.