UPDATE 1-Chesapeake to spend less in 2014, targets higher output

* Expects total capital expenditure at $5.2-$5.6 bln

* Forecasts production growth of 8-10 pct, adjusted for asset sales

* Estimated per-unit production expenses to decline 10 pct

Feb 6 (Reuters) - Chesapeake Energy Corp cut its capital budget for the year by more than a fifth as CEO Doug Lawler focuses on drilling in U.S. shale basins that offer the best returns such as the Eagle Ford field in south Texas.

The Oklahoma City-based company said it would spend between $5.2 billion and $5.6 billion this year, about 20 percent less than its 2013 capital expenditure estimate of $6.9 billion.

Lawler, who replaced Chesapeake's co-founder and former CEO Aubrey McClendon in June, has pledged to cut costs and debt while growing oil and gas production in the company's most profitable fields.

After adjusting for 2013 asset sales, Chesapeake said it expected to generate between 8 percent and 10 percent of year-over-year production growth in 2014.

The company was targeting more than $4 billion from asset sales in 2013. On an absolute basis, Chesapeake is targeting 2014 production growth of 2 to 4 percent, it said on Thursday.

The company said it expected oil output to rise 8-12 percent, natural gas liquids production to increase 44-49 percent and natural gas output to climb 4-6 percent.

Chesapeake, like other U.S. oil and gas companies, is looking to raise its output of higher-priced crude as natural gas prices remain depressed.

About 35 percent of Chesapeake's 2014 budget is earmarked for drilling in the Eagle Ford shale field.

A rise in natural gas and natural gas liquids output from the company's operations in central United States, the Utica shale in Ohio and Marcellus shale in the U.S. Northeast is also expected to contribute to production growth in 2014.

As a result of ongoing cost-cutting initiatives, Chesapeake expects production expenses to fall by about 10 percent to $4.25-$4.75 per barrel of oil equivalent (boe) in 2014.

The company expects general and administrative expenses to slide 25 percent this year.

Analysts at Tudor Pickering Holt said the company's cost outlook and expected production growth was broadly in line with estimates.

Chesapeake's shares rose 29 percent in the past year until Wednesday's close of $26.21 on the New York Stock Exchange.