Chesapeake Energy Predicts 2014 Capex Decline

By Ben Fox Rubin 

Chesapeake Energy Corp. expects to spend less on capital improvements in 2014, as the natural-gas company works to trim costs after years of liberal spending.

The company projected $5.2 billion to $5.6 billion in 2014 capital expenditures, representing a 20% reduction from the midpoint of 2013's outlook.

After adjusting for 2013 asset sales, the company expects to generate 8% to 10% production growth this year, consisting of 8% to 12% oil production growth, 44% to 49% natural gas liquids production growth and 4% to 6% natural gas production growth.

Per-unit production and general and administrative expenses are expected to decline in 2014.

The Oklahoma City company, which spent billions of dollars more than it made from operations in recent years, has started spending less, but its cost-control efforts have raised concerns among investors about the company's growth prospects.

New Chief Executive Doug Lawler has mapped out a strategy of spending only as much money as the company brings in. Increased production will come from drilling the best prospects, while leases on less lucrative properties will be allowed to expire, Mr. Lawler has said.

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