As per a new deal with the lenders of its revolving credit facility, Chesapeake Energy Corporation (NYSE:CHK) will now be able to take on more debt relative to its earnings.

Earlier, the embattled natural-gas producer was allowed to take on debt up to four times greater than its earnings. But now, with the new amendments filed with the Securities and Exchange Commission on Monday, the same limit has increased to six times the company’s earnings. The filing also lays out a schedule for the company to decrease that level incrementally each quarter. As per the deal, the company has to pay an extra 0.25 percent interest than its previously agreed-to variable rate on its borrowings, if it draws on more than $2 billion, according to the amendment.

Chesapeake

The analyst consider such a move to be a short term fix, making sure that the company has enough cash for its operations, despite its selling billions of dollars in oil-and-gas assets. “You wouldn’t do this unless you had issues,” said Mark Hanson, a Morningstar Inc. analyst. Mr. Hanson also pointed out that Chesapeake Energy Corporation (NYSE:CHK) was about to breach the ratio of debt to earnings required by its original agreement. Chesapeake said that it plans to bring its long term debt down to $9.5 billion by the end of the year, which stood at $14.3 billion at the end of June.

The oil and gas producer revealed in May of this year, that it will indefinitely delay a planned sale of its oil-producing assets that could erode its earnings, as the company was struggling to stand by the terms of the earlier $4 billion credit facility. To enhance its liquidity, Chesapeake took a $4 billion, high- interest term loan, and used the proceeds to pay the outstanding balance on the credit line.

Like many other players in the industry, Chesapeake Energy Corporation (NYSE:CHK) has also been affected by a drop in the prices of the commodities, due to a surge in gas production. The company revealed that it plans to raise at least $13 billion from asset sales to close a gap between planned spending and decreased revenue. As a part of its plans, Chesapeake announced last month it would sell $7 billion worth of oil-and-gas assets.

Shares of Chesapeake Energy Corporation (NYSE:CHK) were up slightly, by 0.1% to $19.31, in after-hours trading Monday.