Chesapeake earlier said it plans to focus on gas and deals with LNG exporters. Credit: Retina Creative from Pixabay.

Chesapeake Energy has laid off nearly 3% of its workforce ahead of its potential sale of oil properties in South Texas, Reuters reported, citing people familiar with the development.

Last week, the gas producer got rid of approximately 40 workers including geoscientists and geologists involved in its oil production, the sources said.

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In April 2022, Reuters reported that Chesapeake was working with two undisclosed banks on a potential sale of its oil-producing South Texas assets to raise as much as $2bn.

In August, the company said it intends to shift its focus towards its mainstay natural gas operations by offloading oil-producing properties in the Eagle Ford shale region of Texas.

The assets considered for sale include nearly $4bn worth of properties purchased from Wildhorse Resource Development in 2019, according to Reuters.

Chesapeake president and CEO Nick Dell’Osso said: “Our acreage positions in the Marcellus and Haynesville are truly differentiated, with industry-leading capital efficiency, deep runways of low breakeven inventory, strong operating margins, and advantaged emissions profiles.

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“Given we now view our Eagle Ford assets as non-core to our future capital allocation strategy, we are increasing our capital allocation to Haynesville in the second half of the year and into 2023 to position the asset for returns-driven growth.”

Earlier this year, Reuters reported that Chesapeake is in advanced talks to buy Chief Oil & Gas in a deal worth approximately $2.4bn, including debt.

Following a drop in oil prices in 2020, Chesapeake filed for bankruptcy to facilitate a restructuring of its balance sheet.

It subsequently emerged from Chapter 11 bankruptcy in 2021 as prices of natural gas began to rise.