
(Source: Casimiro PT/Shutterstock.com)
Chesapeake Energy Inc., a highly indebted pioneer of the U.S. shale energy industry, has hired restructuring advisers as the company has been crippled by persistently weak natural gas prices coupled with the recent collapse of oil prices and the repercussions of the coronavirus pandemic.
The Oklahoma City-based company has hired law firm Kirkland & Ellis and financial advisers Rothschild & Co. to help manage its $9 billion debt pile while navigating the crisis, people familiar with the matter said.
One of the early movers of the U.S. shale revolution, Chesapeake warned late last year that it was struggling to operate in a low commodities prices environment. Its difficulties were exacerbated by the oil price war sparked in recent days by the confrontation between Saudi Arabia and Russia.
Chesapeake was co-founded by the late Aubrey McClendon in 1989 and rose from obscurity to become for a time the second-largest gas producer in the U.S. after Exxon Mobil Corp. Its shares closed down almost 33% on March 16 to $0.20.
In after-market trading hours, the company’s share price dropped a further 10% after Reuters first reported that it had hired restructuring advisers. Chesapeake declined to comment.
Bankers and lawyers advising oil and gas companies warned there could be many more forced to consider going bankrupt to manage their ballooning debt pile.
“It’s a complete meltdown,” said an adviser working with multiple upstream companies considering filing for Chapter 11 bankruptcy protection. “Any company that is an E&P [exploration and production] company, other than the very big ones, is in danger . . . unless the government offers them a bailout package it’s going to be a disaster.”
The near-collapse of several energy companies comes in the wake of the failure of OPEC and Russia earlier this month to agree a deal on cutting production to prop up crude prices. Saudi Arabia wanted to make further cuts to production, but when Russia refused, it decided to raise output.
Recommended Reading
Ring May Drill—or Sell—Barnett, Devonian Assets in Eastern Permian
2025-03-07 - Ring Energy could look to drill—or sell—Barnett and Devonian horizontal locations on the eastern side of the Permian’s Central Basin Platform. Major E&Ps are testing and tinkering on Barnett well designs nearby.
Oxy CEO: US Oil Production Likely to Peak Within Five Years
2025-03-11 - U.S. oil production will likely peak within the next five years or so, Oxy’s CEO Vicki Hollub said. But secondary and tertiary recovery methods, such as CO2 floods, could sustain U.S. output.
Hibernia IV Joins Dawson Dean Wildcatting Alongside EOG, SM, Birch
2025-01-30 - Hibernia IV is among a handful of wildcatters—including EOG Resources, SM Energy and Birch Resources—exploring the Dean sandstone near the Dawson-Martin county line, state records show.
E&Ps Pivot from the Pricey Permian
2025-02-01 - SM Energy, Ovintiv and Devon Energy were rumored to be hunting for Permian M&A—but they ultimately inked deals in cheaper basins. Experts say it’s a trend to watch as producers shrug off high Permian prices for runway in the Williston, Eagle Ford, the Uinta and the Montney.
SM Energy Marries Wildcatting and Analytics in the Oil Patch
2025-04-01 - As E&P SM Energy explores in Texas and Utah, Herb Vogel’s approach is far from a Hail Mary.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.