Cheseapeake Energy (CHK) – Get Report, the natural gas producer, is preparing to file for bankruptcy, according to a report. CHK shares plunged lower Tuesday amid reports that the shale oil and gas producer is preparing to file for Chapter 11 bankruptcy protection.
Shale gas pioneer Chesapeake Energy, once worth $37.5 billion, has warned of a possible Chapter 11 bankruptcy filing in order to restructure some $9 billion in debts. Chesapeake Energy Corporation stock down in Tody Pre-market $39.50 −30.42 (43.51%)
Bloomberg, citing people familiar with the matter, said the filing could hand control of Chesapeake to senior lenders.
A spokesman for Chesapeake declined to comment for Bloomberg.
Chesapeake is negotiating a restructuring support agreement that could see certain holders take a majority of the equity in bankruptcy. The support agreement remains fluid and the terms could change, the people told Bloomberg.
Shares of Chesapeake fell 57.79% in premarket trading Tuesday to $29.51 a share after soaring 181% in Monday’s session.
The potential filing, first reported by Bloomberg, could hand control of the Oklahoma-based group to the creditors holding around $9 billion in outstanding debt and send shockwaves around an industry struggling to cope with this year’s 40% plunge in U.S. crude prices.
Chesapeake including a ‘going concern’ clause in filings with the U.S. Securities and Exchange Commission last month, and said it was evaluating strategic alternatives, including a Chapter 11 filing, while warning that it did not expect to be in compliance with its lenders by the end of the year.
Chesapeake shares, which once commanded a market value of more than $37.5 billion at their peak, were marked 50.74% lower in pre-market trading Tuesday to indicate an opening bell price of $34.44 each, a move that would peg the company’s market value at just over $340 million.
Chesapeake Energy Corp. is preparing a potential bankruptcy filing that could hand control of one of the leading lights of the U.S. shale revolution to senior lenders, according to people with knowledge of the matter.
Chesapeake Energy said on some days ago it is no longer able to access financing and is considering a bankruptcy court restructuring of its $9 billion debt if oil prices don’t recover from their sharp fall caused by the COVID-19 pandemic.
Chesapeake, which had about 2,300 employees at the end of 2019, has also laid off workers, according to Monday’s filing. Last quarter, it terminated contracts of the majority of the employees who joined through its $4 billion acquisition of Texas oil producer WildHorse in 2018.