Chesapeake Raises $1.3 Billion - More Marcellus?

Late yesterday Chesapeake Energy announced the placement of $500 million of contingent convertible senior notes due 2038 and $800 million in senior notes due 2018. Chesapeake intends to use the net proceeds from the offerings to fund the redemption of its 7.75% Senior Notes due 2015, to repay outstanding indebtedness under its revolving credit facility, and for general corporate purposes.

Interestingly, according to the 12/31/07 10-K filed in February, the indebtedness under the 7.75% notes being redeemed is $300 million. leaving $1 billion for general corporate purposes and/or reduction of the outstanding credit facility. As of 12/31/07, Chesapeake owed $1.95 billion under the $3.5 billion revolver. Considering what are very favorable interest rate terms on the revolver, it would seem that that these funds are destined for investment. More Marcellus perhaps?

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