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This excerpt taken from the CHK 8-K filed Jul 9, 2008. Liquidity and Capital Resources, page 33
Response: We provide for our cash needs in a variety ways, as explained in “Liquidity and Capital Resources.” Over the past year, we have increased the borrowing capacity under our revolving bank credit facility by $1 billion. It now has a credit limit of $3.5 billion. We use the facility to “accommodate timing differences between cash flow from operations, asset monetizations [such as the December 2007 VPP discussed under comment #8 below] and planned capital expenditures.” On page 33, we stated that we planned to raise approximately $3 billion by the end of 2009 through various asset monetization transactions. One of those transactions, a second VPP transaction, closed as planned in May 2008 and we received proceeds of $623 million. Another transaction described on page 33, the sale of a minority interest in a midstream partnership we are forming, is expected to close early in the third quarter and is expected to raise approximately $1 billion. In May 2008, we announced a new sale of oil and natural gas properties which we expect will generate over $1.5 billion of proceeds. From time to time, we also divest properties in smaller transactions as part of our effort to high-grade our leasehold inventory and to redeploy capital to higher priority areas.
Securities and Exchange Commission June 13, 2008 Page 7 of 14
Late in the first quarter 2008, we announced a new significant shale discovery and seven other new discoveries and projects. These and an acceleration of activity in existing plays caused us to increase our planned capital expenditures and to raise additional funds through public capital market transactions. On April 2, 2008, we completed a public offering of 23 million shares of common stock for total net proceeds of $1.011 billion, and on May 27, 2008, we completed public offerings of $800 million aggregate principal amount of 7.25% Senior Notes due 2018 and $1.380 billion aggregate principal amount of 2.25% Contingent Convertible Senior Notes due 2038. We rely on many alternative external sources of capital to supplement our cash flows from operations (public markets, bank financing, VPP sales, potential joint venture partners, etc.). It is possible, although we believe highly unlikely, that all of these sources would simultaneously be unavailable to the company. However, our capital expenditure program is largely discretionary and can be reduced or deferred from time to time, a point we make on page 35. We believe the whole of our discussion of sources and uses of funds in the 2007 Form 10-K appropriately addressed how cash affects our ability to do business. |
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