Cash-Strapped Chesapeake Energy Puts Fort Worth Plaza Up For Sale

Cash-Strapped Chesapeake Energy Puts Fort Worth Plaza Up For Sale

America’s second biggest gas producer, Chesapeake Energy Corporation (NYSE:CHK), has planned to sell off its glass-and-granite office tower in Fort Worth, Texas. Julia Wilson, a senior executive at the oil giant, said the company is showing it to potential buyers. “The intention is to sell the building. We are certainly amenable to any good offers,” Wilson told the Star Telegram. Chesapeake Energy Corporation (NYSE:CHK) is reportedly scaling back on its Barnett Shale operations.

Cash-Strapped Chesapeake Energy Puts Fort Worth Plaza Up For Sale

The Oklahoma City-based producer acquired the 20-story building, with an area of 460,000-square-feet from Pier 1 Imports, for a hefty $104 million in 2008, over 60 percent higher than its market value back then. The oil company renamed it “Chesapeake Plaza”. Today, the building is valued at approximately $62.7 million.

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The building will not be able to fetch the same price Chesapeake Energy Corporation (NYSE:CHK) paid for it, says Matt Heidelbaugh, director at the commercial real estate broker company Cushman & Wakefield. “I think Chesapeake has shown themselves to be less price-sensitive than a real estate investor would be,” he said.

According to the Star Telegram, Chesapeake has put 25 Texas properties, excluding Chesapeake Plaza, up for sale for a total of $110 million. It is extremely important for Chesapeake to fetch high prices. The company, once known for its lavish spending, is now hungry for cash to fund its drilling program. Chesapeake Energy Corporation (NYSE:CHK) is expecting to raise $13-14 billion from asset sales this year in an attempt to pay off the $14.3 billion in debts and boost the drilling process. The company has been affected by the falling natural gas prices.

Chesapeake Energy Corporation (NYSE:CHK) has considerably reduced the drilling activity in Barnett Shale, now drilling in just two rigs. The company also laid off 70 employees, i.e., 8 percent of the total workforce in Barnett Shale.

Chesapeake Energy Corporation (NYSE:CHK) is not the only company cutting back on its Barnett Shale operations. The other major Barnett Shale players, like Exxon Mobil Corporation (NYSE:XOM) and Devon Energy Corporation (NYSE:DVN) are following the same path. These companies have poured in billions of dollars in the Fort Worth and Dallas area,  which kept the local economy strong, even during the economic downturn. Chesapeake, the second highest property tax payer in Fort Worth alone, has spent over $13 billion here since 2004.

The company’s stocks have plunged 35 percent since last year.

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