[AP] Chesapeake looking to sell assets, reduce debt

Chesapeake Energy will try to raise as much as $12 billion by selling assets and making a series of other financial moves in an effort to reduce its debt.

The company announced Monday it hopes to raise $6 billion to $8 billion of the total amount by selling parts or all of some its emerging oil and gas territory in West Texas and Oklahoma.

Natural gas prices have fallen to ten-year lows recently, making many natural gas drilling operations unprofitable. Chesapeake is the nation's second largest natural gas driller.

Chesapeake is attempting to reduce debt and shift its drilling focus to geologic formations that hold a greater percentage of oil and other liquid hydrocarbons, and away from those that hold mostly natural gas.

The company said it expects to receive $2 billion in payments over the next 60 days from selling a portion of its production in the Texas Panhandle and by putting some oil and gas territory in Oklahoma into a joint venture with a party it didn't name.

The company said it will also an additional $2 billion worth of natural gas processing assets and raise $1 billion in new long term debt.

Shares rose nearly 3 percent to $22.70 in premarket trading.

Chesapeake said it is looking to sell part of its assets in what is known as the Mississippi Lime formation in Oklahoma and the Permian Basin formation in West Texas and New Mexico to joint venture partners.

Chesapeake has entered into similar transactions in recent months with the China National Offshore Oil Corp. and the French oil giant Total.

But the company also said it is willing to sell its Permian Basin assets outright if it receives what it calls a "compelling offer." It said the Permian Basin assets represent 5 percent of the company's total net proved reserved and current production.