Chesapeake Energy eliminates its annual dividend of 35 cents per share

IndustriesAssociated Press

With natural gas and crude in an extended decline and few signs of a rebound, Chesapeake Energy axed its annual dividend and will redirect the money into its 2016 capital spending program.

CEO Doug Lawler said in the action will save the company about $240 million a year.

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"The company's liquidity position remains extremely strong with more than $2 billion of unrestricted cash on our balance sheet and an undrawn $4 billion revolving credit facility as of June 30, 2015," Lawler said in a printed statement. "We continue to move forward with multiple opportunities that will strengthen our cash flow generation capabilities."

Shares slid almost 4 percent to levels not seen since August 2003.

Chesapeake expanded rapidly under co-founder and CEO Aubrey McClendon and was a pioneer in the shale drilling industry. The advancements made due to new drilling technology combined with the 2007-2009 recession, however, have created a huge glut of both oil and natural gas and prices have not recovered.

Lawler took over in 2013 and began to sell off assets to raise cash. Natural gas prices stabilized that year, but plunged again at the beginning of 2014 and the energy industry has been cutting capital expenditures for some time.

Shares of Chesapeake Energy Corp., which is based in Oklahoma City, fell to $9.40 in morning trading.