Chesapeake Energy Corp., the No. 2 U.S. natural gas producer, thinks it has a one-word answer to its debt issues: Oil.
Chief Executive Officer Doug Lawler is focusing 60 percent of the Oklahoma City-based driller’s 2017 budget on crude oil projects, mostly in South Texas, Oklahoma and Wyoming shale fields. The company plans about 320 new crude wells this year, compared with 90 for gas, Lawler said on Feb. 14. The hoped-for result: Oil output, set to grow 10 percent in 2017, could grow by double that rate next year.
The former deep-water exploration chief for Anadarko Petroleum Corp. has been striving to bring the gas producer back on its feet after inheriting suffocating debt, collapsing cash flow and wilting reserves 3 1/2 years ago. Lawler’s emphasis on crude derives from the fact that oil fetches three or four times more money on an energy-equivalent basis.
“He likes to set big goals and this is the biggest one of all,” said James Sullivan, senior analyst at Alembic Global Advisors in New York, one of six analysts following the company with the equivalent of buy ratings on Chesapeake’s stock.