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Chesapeake cuts annual capex by 57%, plans more asset sales

U.S. natural gas producer Chesapeake Energy more than halved its annual capital budget and said it would sell more assets this year.

The company's shares fell nearly 6.5 percent in premarket trading on Wednesday. (Get the latest quote here.)

Chesapeake said it planned to spend $1.3 billion to $1.8 billion this year, down 57 percent from 2015 levels, and sell assets worth $500 million to $1 billion.

It said production could fall by as much as 5 percent this year due to the asset sales.

A worker on a Chesapeake Energy natural gas rig in Fort Worth, Texas
Matt Nager | Bloomberg | Getty Images
A worker on a Chesapeake Energy natural gas rig in Fort Worth, Texas

Chesapeake has struck deals to sell assets worth about $700 million this year so far, it said.

"We are also renegotiating gathering, transportation and processing contracts to better align with our current development plans and market conditions ..." Chief Executive Doug Lawler said in a statement.

Chesapeake reported a net loss of $2.23 billion, or $3.36 per share, attributable to shareholders for the fourth quarter ended Dec. 31. The company had a profit of $586 million, or 81 cents per share, a year earlier.

Excluding impairment charges of $2.83 billion and other items, Chesapeake reported a loss 16 cents per share, below the average analyst estimate of 17 cents, according to Thomson Reuters I/B/E/S.

Chesapeake shares were trading at $2.05 before the bell.

Up to Tuesday's close, the stock had fallen nearly 90 percent in the past 12 months.