Chesapeake’s faltering Oklahoma gas field threatens $880M in loans

|About: Chesapeake Energy Corporation (CHK)|By:, SA News Editor

Lower than expected production from Chesapeake Energy’s (CHK -1.1%) Sahara natural gas field in Oklahoma is threatening $880M in loans and notes from Barclays under a pair of agreements that repay the borrowings with future supplies of gas, crude oil and gas byproducts, Bloomberg reports.

Output from 3,300 CHK-operated wells in the Sahara field was 12% below projections during six months ending in February, Moody’s says; as a result, the production coverage ratio on the Glenn Pool Oil & Gas Trust five-year loan and 10-year notes declined to 1.18 from 1.29.

In December, Moody’s had downgraded ratings on $360M in CHK borrowings backed by Barnett Shale wells in Texas after production growth there slowed to 3.4% in 2013 after growing at double-digit rates in 11 of the prior 12 years.