On the way up
Chesapeake Energy Corp. directors have reinstated dividends on preferred stock and will pay shareholders for dividend payments that were skipped over the past year.
Chesapeake Energy Corp. directors have reinstated dividends on the company’s preferred stock and will pay shareholders for dividend payments that were skipped over the past year, the company said Friday.
Chesapeake one year ago suspended the dividends, saying it would use the $170 million in annual savings to buy debt at significant discounts.
“Given the current commodity price environment for oil, natural gas and natural gas liquids, we believe that redirecting this cash toward debt retirement provides better returns for the company,” CEO Doug Lawler said in January 2016.
“We currently have senior debt securities trading at significant discounts, and we will continue to take advantage of that within the coming year.”
At the time, oil prices were approaching 12-year lows and Wall Street analysts speculated Chesapeake could be headed for bankruptcy.
Since then, however, Chesapeake has secured its financing, repaid $3 billion in debt and agreed to sell nearly $2.5 billion in assets.
Oil and natural gas prices also have strengthened, with the oil price more than doubling from its February lows.
Chesapeake on Friday reinstated the dividend for its 4.5 percent, 5 percent, 5.75 percent and 5.75 percent series A convertible preferred stock.
The per-share payment for the four deferred quarters will be $4.50 for the 4.5 percent stock, $5 for the 5 percent stock and $57.50 for each of the 5.75 percent stocks.
Shareholders also will receive a regular dividend for the first quarter of 2017, which will be $1.125 for the 4.5 percent stock, $1.25 for the 5 percent stock and $14.375 for the 5.75 percent stocks.
The payments will be made Feb. 15 to shareholders as of Feb. 1.