Chesapeake To Record $70 Million in Charges Related to Layoffs
By Nathalie Tadena
Chesapeake Energy Corp. (CHK) said it will incur about $70 million of one-time charges in the third and fourth quarters related to its layoffs of about 900 employees.
In a filing with the Securities and Exchange Commission, Chesapeake said it cut about 900 employees as part of a company-wide restructuring to reduce costs. The company said it has notified all the employees affected by the job cuts as of last Friday.
Chesapeake said the one-time charges it will incur include about $45 million of compensation expense related to the acceleration of restricted stock awards. The company estimates the cash flow impact of these charges and related employer payroll taxes will be about $25 million.
It also expects to incur a one-time charge of about $25 million in the third quarter related to other workforce cuts, including previously announced executive officer separations, that were outside of the workforce reduction plan.
Chesapeake, the country's second-largest gas producer after Exxon Mobil Corp. (XOM), helped pioneer the American energy boom, but low gas prices have left its balance sheet in tatters. The company has been shedding assets to raise cash as it focuses on more-profitable oil production and in paying down debt.
In August, Chesapeake reported its second-quarter profit slumped 40% as the natural-gas company was hit by one-time charges, although core earnings strengthened well above analyst estimates. The energy producer in August also reported rising oil output and its new chief executive pledged to close a persistent gap between its spending and cash flow by next year.
Shares closed at $26.50 and were unchanged after hours. Through the close, the stock is up 22% over the past three months.
Write to Nathalie Tadena at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires 10-15-131810ET Copyright (c) 2013 Dow Jones & Company, Inc.