US-based natural gas company Chesapeake Energy has initiated lay-offs this week after divesting its oil assets in 2023, reported Reuters.
Notably, the lay-offs are not related to the company’s pending merger with Southwestern Energy.
In 2022, Chesapeake Energy announced its intention to exit the Eagle Ford shale field to become a pure-play natural gas producer.
The company sold part of these assets to INEOS Energy for $1.4bn (£1.1bn) and later completed the divestiture by selling the remaining assets to SilverBow Resources for $700m.
Natural gas producers including Chesapeake Energy have faced challenges this year due to low prices.
The first quarter saw a 20% drop in prices due to high inventories and softer-than-expected demand.
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By GlobalDataChesapeake Energy missed Wall Street’s profit estimates and, like many in the industry, has scaled back production.
The company plans to reduce its output to approximately 2.7 billion cubic feet per day (bcf/d) in 2024, down from an estimated 3.6bcf/d in 2023.
The projected output for 2023 is composed of nearly 95% natural gas and 5% liquids.
Based in Oklahoma City, Oklahoma, Chesapeake Energy is also in the midst of completing a $7.4bn merger with Southwestern Energy.
However, the merger has been postponed to the latter half of the year due to a second request for additional information from a US regulator.
Announcing the deal in January, Chesapeake Energy said the deal would close in the second quarter of 2024.
The anticipated merger with Southwestern Energy is expected to form an energy company with significant holdings in the Appalachia and Haynesville basins.
The combined entity is projected to have a production rate of around 7.9 billion cubic feet equivalent per day, with a portfolio heavily weighted towards natural gas.
