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Chesapeake Energy Corp. NYSE:CHK offer buyouts to 275 employees

XOM, ACMP, PAA

Chesapeake Energy Corp. said Friday it will offer buyouts to 275 employees, the third round of staff cuts the company has made in 6 months as it struggles to keep costs in line amid low Nat Gas prices.

The buyouts come as Chesapeake and other Nat Gas producers struggle with stubbornly low prices. A technology driven drilling boom has expanded Nat Gas supply while recent mild Winter temperatures have curbed demand.

Nat Gas futures were lower for the 7th day Friday as lingering warm weather in the Midwest and the Eastern US continues to shrink demand for Gas-fueled home heating and swells inventories. Nat Gas was selling for 3.29 a million British thermal units, a 9.5% decling over the past 6 days and the longest drop since January.

Chesapeake, the 2nd-largest Nat Gas producer after Exxon Mobil Corp. NYSE:XOM has been particularly hard hit by low Nat Gas prices as the company makes an expensive move to produce more Crude Oil, which is more profitable than Nat Gas. The company has sold nearly $11-B in assets in Y 2012 but continues to hold $10.8-B in debt after years of acquiring acreage.

The move may have been prompted by Chesapeake not meeting its desired price for the pipeline and midstream assets it recently sold.

Chesapeake reported asset sales to Access Midstream Partners LP NYSE:ACMP and Plains All American Pipeline LP NYSE:PAA earlier this week for about $2.3-B, below some analysts’ expectations.

Employees taking the buyout would leave Chesapeake in February, the company said. The buyouts would remove about 2% of Chesapeake’s staff of nearly 12,500 people.

In June, the company in June laid off 70 workers in Fort Worth, Texas, the 1st cuts since Y 2009. In August, it confirmed that it plans to sell the glass-and-granite high-rise that has served as its Barnett Shale HQ.

In November, Chesapeake laid off 115 workers at a subsidiary in West Virginia as it relocated operations to Ohio, where its drilling is more profitable; it hired back 43 of those workers.