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Chesapeake says it can no longer pay dividends and now the stock is tanking

A Chesapeake Energy Corp. worker walks past stacks of drill pipe needed to tap oil and gas trapped deeply in rock like shale at a Chesapeake oil drilling site on the Eagle Ford shale near Crystal City, Texas, in this June 6, 2011 file photo.  REUTERS/Anna Driver
A Chesapeake Energy Corp. worker walks past stacks of drill pipe needed to tap oil and gas trapped deeply in rock like shale at a Chesapeake oil drilling site on the Eagle Ford shale near Crystal City, Texas, in this June 6, 2011 file photo. REUTERS/Anna Driver

(Thomson Reuters) A Chesapeake Energy Corp. worker walking past stacks of drill pipe at a Chesapeake oil drilling site on the Eagle Ford shale near Crystal City

Chesapeake shares fell 5% on Tuesday after the company said it is will not pay shareholders dividends from the third quarter.

In a press release on Tuesday, CEO Doug Lawler said: "Due to the current commodity price environment for oil, natural gas and natural gas liquids, and the resulting reduction in capital available to invest in its high-quality assets, Chesapeake Energy will eliminate its common dividend effective 2015 third quarter and redirect the cash into its 2016 capital program to maximize the return available to its shareholders."

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Lawler said removing the dividend will save about $240 million annually. He said Chesapeake still has about $2 billion in unrestricted cash, and so its balance sheet is not in shambles.

According to Bloomberg, the company is expected to post a net loss of $3.18 billion this year, its worst annual loss since 2009.

In morning trading on Tuesday, the stock fell more than 5% to a 12-year low of around $9.40 per share. The stock is down 50% year-to-date and 64% over the past 12 months.

Chesapeake is scheduled to report second-quarter results before the market open on August 5.

Here's a look at the stock price over the past year:

Screen Shot 2015 07 21 at 11.17.11 AM
Screen Shot 2015 07 21 at 11.17.11 AM

(Google Finance)

Chesapeake is the world's second-largest producer of natural gas, which hasn't performed great in the past year either:

natgas
natgas

(Finviz)



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