Chesapeake Energy Corporation (NYSE:CHK) third quarter earnings report, due today, will be thoroughly scanned for whether or not the company has changed its free-spending ways.

Chesapeake

A few months back, company’s largest investors, Carl Icahn and Mason Hawkins, unhappy with the company’s balance sheet, took control of the board. Since then, the Wall Street expectations from the second-largest producer of natural gas in the United States have increased.  The company mentioned in the second quarter earnings report, “Management and the board of directors are currently reviewing operations for 2013 and beyond” and more details will follow in the third-quarter earnings report.

“I think everybody is going to be looking very closely at this first full quarter they’ve had since the major changes,” said Jake Dollarhide, chief executive of Longbow Asset Management, which holds Chesapeake bonds and stock. “It will be very interesting to see how these numbers compare to a year ago”.

Chesapeake Energy Corporation (NYSE:CHK) renegotiated its loan contracts for its $4 billion credit facility earlier this month, which will reduce its debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) to 4.2X by September 2013 from 6X in September of this year. The sliding ratio hints that the company plans to curtail its spending and earnings.

Tim Revzan, an analyst with Sterne Agee, will be watching for the spending numbers in the upcoming earnings report.  “The important number is going to be 2013 spending,” Rezvan said, and added “The company has signaled pretty strongly it doesn’t want to rely on asset sales”.

Chesapeake Energy Corporation (NYSE:CHK) revealed in the second quarter that it expects capital expenditure to range from $12.8 billion to $13.6 billion this year and slide to $7 billion to $7.75 billion next year. The persistent fall in natural gas prices has forced the company to sell assets to meet the funding gap. So far, the company has sold or agreed to sell about $12 billion of acreage, pipelines, and processing plants, sales that have helped it to plug the funding gap.

Other items to watch for in the earnings report will be: a write-down of the value of some of the company’s natural gas assets and an update on Chesapeake’s efforts to find a joint venture partner, or buyer, for some of its 2 million acres in the Mississippi Lime formation in northern Oklahoma and southern Kansas

Chesapeake Energy Corporation (NYSE:CHK)’s “management needs to prove over a sustained period that it would abide by a more conservative and transparent approach to regain trust of investors,” analysts at Deutsche Bank said in an October 8 note to clients.