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Chesapeake to sell $2.3B in notes to pay off debt

OKLAHOMA CITY (AP) -- As part of its drive to pare down its debt load, Chesapeake Energy will sell $2.3 billion in senior notes.

The Oklahoma City-based oil and gas company said Monday that it will use proceeds to pay off existing debt.

The new notes will be issued in three separate series, due in 2016, 2021 and 2023.

Chesapeake Energy Corp. is the second-largest producer of natural gas in the U.S. after Exxon Mobil Corp. Hurt by low natural gas prices, it has sold off billions in assets to pay off debt incurred as it rushed to buy land and other assets. It's also increasingly focused on more lucrative oil and gas liquids.

Moody's Investors Service said Monday that while the proceeds from the sale of the notes will be used to pay off more expensive debt that matures in 2013, it remains concerned about whether the company will be able to sell enough assets this year to both fund its capital spending and significantly reduce debt.

The company had long-term debt of about $12.62 billion at the end of last year.

Part of the proceeds will be used to buy back some of the company's 7.625 percent senior notes due 2013 and 6.875 percent senior notes due 2018 through tender offers that also were launched on Monday. The tender offers are set to expire on April 12, Chesapeake said.

A substantial portion of the remaining net proceeds are expected to be used to redeem the company's 6.775 percent senior notes due 2019 at par value. Any leftover proceeds will be used to later buy back 7.625 percent senior notes due 2013 not acquired through the tender offer and to pay off other debt over time, the company said.

Chesapeake shares fell 5 cents to $22.41 in afternoon trading. They are trading in a 52-week range of $13.32 to $26.09.