NEW YORK -- Standard & Poor's Rating Services has downgraded its outlook to negative on Chesapeake Energy Corp., citing depressed natural gas prices and the heavy debt the company carries.
Chesapeake, the second-largest producer of natural gas in the United States, is actively drilling in the Utica shale, a liquids-rich repository of natural gas locked deep underneath eastern Ohio. The company controls the most mineral leases in Mahoning, Trumbull and Columbiana counties in Ohio.
Standard & Poor's says the company's operating cash flow suffers from depressed prices of natural dry gas and "we believe this will increase the extent of its near-term free cash flow deficit."
Standard & Poor's also revised Chesapeake affiliate Chesapeake Oilfield Operating LLC and awarded it a 'BB+' rating, the same as Chesapeake Energy. However, on a stand-alone basis, Standard & Poor's rates Chesapeake Oilfield a 'bb-', reflecting what it calls the company's "'weak' business risk profile and 'aggressive' financial risk profile."
Published by The Business Journal, Youngstown, Ohio.