* Stock drops 8 pct before paring more than half its loss
* Sees U.S. rig count bottoming out in spring (Adds details, background, share move)
NEW YORK Feb 18 Natural gas producer Chesapeake Energy Corp (CHK.N) shares fell as much as 8 percent on Wednesday after a massive writedown on the value of its assets pulled it to a loss for the fourth quarter.
Chesapeake, which reported its earnings after markets closed on Tuesday, cut the value of its energy reserves by $1.73 billion, largely to reflect the drop of 25 percent in natural gas prices from the previous year.
Energy producers are required by U.S. regulations to value their reserves by the end-of-year energy price, a rule that has sharply cut asset values across the industry.
The writedown pulled its quarterly earnings to a loss of $866 million, or $1.51 per share. Excluding one-time items, Chesapeake's earnings per share of 73 cents fell slightly short of analysts' average forecast of 74 cents per share.
In addition, a glut of natural gas left over from the drilling boom in 2008 has weighed on the fuel price and is not likely to abate until the second half of the year, Chesapeake said.
Chief Executive Officer Aubrey McClendon told an analysts' conference call he expected the number of U.S. rigs drilling for natural gas to fall by 50 to 70 percent from the levels seen in 2008.
Chesapeake has said it would curtail spending on new wells, bringing the number of rigs operating for the company down from the current 111.
"We will bottom probably in late spring around 105, 106," McClendon said. Chesapeake's rig count had peaked at 158 last year.
The company also said costs to drill and maintain wells, which had risen sharply in recent years as the industry ramped up activity, would likely decline by as much as 25 percent in 2009 from the previous year.
Shares in Chesapeake, which slumped nearly 60 percent in 2008, were down 3.5 percent at $16.52 per share on the New York Stock Exchange. (Reporting by Matt Daily; Editing by Brian Moss)