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Moody’s Ratings Agency released a report today on the state of the oil and gas producer Chesapeake Energy Corporation. The company is facing several problems at the moment including a significant gap between its income and expenditures. In order to pay the loans that the company has taken to sustain its existence the firm is attempting to sell assets.

Moody’s puts a figure of $7 billion on the amount Chesapeake will have to raise from asset sales in order to meet its agreements. If the firm does not manage to sell at least that value in assets it is likely that Moody’s will downgrade its credit rating. The firm’s current rating is Ba2.

Moody’s added that $7 billion may not give enough leeway to Chesapeake and recommended the firm sell closer to $10 billion of their assets. Chesapeake’s current plans amount to a sale of about $11.5 billion.

The report was authored by an analyst from Moody’s named Peter Speer. It concentrates on the firm’s cash flow problem which it blames, quite rightly, on the lows in natural gas prices this year though points out some mistakes made at the firm that increased vulnerability to the problem.

Chesapeake is no stranger to offloading assets in order to fund its continuing strategies. The company sold $7 billion worth of assets in 2010 and $10 billion in 2011 according to Speer. The company has been indicted with accusations of being more interested in land flipping than dealing with natural gas.

Those charges have ramped up since recent discoveries of poor corporate governance at the company have propelled investor complaints. Legendary activist Carl Icahn has gotten involved in the process by picking up 7.56% of the company. He is trying to replace directors and change the way in which the firm is operated.

Chesapeake’s issues may stem directly from the low prices in natural gas but the real problem is the firms continuing work against its own success. Just today the company announced it had discovered significant reserves in a Texas and Western Oklahoma field. The firm plans to drill 65 new wells in the coming years.

The increase in supply caused by Chesapeake’s continued exploration does nothing to solve the firm’s cash flow problem but does increase the value of its assets. This is the logic behind the characterization of the firm as a land flipping enterprise rather than an energy company. Its clearly a characterization everybody, including Moody’s, expects them to live up to.