Chesapeake Energy Corp., the second-largest U.S. natural gas producer, filed paperwork for the possible spinoff of its oilfield-services unit.

The transaction will be tax-free to its shareholders, the Oklahoma City-based company said today in a statement. Prior to the completion of the spinoff, the unit will convert into a corporation and change its name to Seventy Seven Energy Inc.

Chesapeake said last month it was considering the sale or spinoff of the unit, which reported revenue of about $2.2 billion last year and is able to work as a stand-alone firm. The company is cutting capital spending to close a funding gap of about $1 billion in 2014. Today’s filing with the U.S. Securities and Exchange Commission didn’t give a timeframe for a spinoff or state how many shares Chesapeake owners may get.

The unit reported a net loss of $19.7 million last year, the filing showed.

Chesapeake retained Morgan Stanley as its financial adviser to evaluate strategic alternatives for the unit, according to today’s statement.