Chesapeake Energy to take charges of $1.8B in 4Q

NEW YORK - Chesapeake Energy expects to record non-cash charges of $1.8 billion in the fourth quarter because of falling commodity prices and said Tuesday that it would begin a public offering of $500 million in senior notes to repay debt.

The largest natural gas producer in the U.S. said it will also end the year with less cash than it had expected last month.

"We have added further downside protection to our attractive natural gas and oil hedging positions and ended 2008 with approximately $1.75 billion in cash and cash equivalents on hand," said Aubrey McClendon, Chesapeake's chief executive officer. "We will continue to carefully manage our corporate liquidity and capital spending levels to protect value and safely navigate the current challenging economic environment."

McClendon said last month he expected the company to end 2008 with $2 billion to $2.5 billion.

The company will report additional non-cash charges to reflect diminished value for other assets.

Oklahoma City-based Chesapeake Energy Corp. in November sold a $4.37 billion stake in its Appalachian natural gas deposits to Norwegian energy company Station Hydra.

The company said it would use proceeds from the sale of senior notes, due in 2015, to pay down deb on its bank credit facility.

Chesapeake reports fourth-quarter and year-end results on Feb. 17.

Shares fell 16 cents Tuesday to $15.64.

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