NYSE Suspends Trading in Chesapeake Energy Common Shares With Immediate Effect

Cornelia Mascio
Luglio 1, 2020

The financing package provides the business with the capital necessary to fund its operations during the court-supervised Chapter 11 reorganization proceedings, according to Chesapeake.

Kirkland & Ellis LLP is serving as legal counsel, Alvarez & Marsal is serving as restructuring advisor, Rothschild & Co and Intrepid Financial Partners are serving as financial advisors, and Reevemark is serving as communications advisor to the Company. It will proceed with normal operations during the restructuring.

The agreement also has backing from portions of other creditors, including those behind 87 percent of its term loan, and holders of 60 percent and 27 percent, respectively, of its senior secured second lien notes due 2025, and senior unsecured notes.

Shares of ChesapeakeEnergy closed down 7.28% on Friday before the oil major filed for bankruptcy protection on Sunday.

Under the leadership of the late Aubrey McClendon, Chesapeake swept up leases from Pennsylvania to the Dakotas, from Louisiana to New Mexico. Chesapeake's outlook plunged this year as the coronavirus outbreak and a Saudi-Russia price war sharply cut energy prices and drove its first quarter losses to more than $8 billion.

"Chesapeake acquired liquids-rich assets in the Anadarko basin, Utica, Niobrara, and Eagle Ford but most of this acreage failed to make profitable transition to a sustainable business model in a low oil price environment", Nysveen said in a statement sent to Rigzone.

Founded in 1989 in energy-state Oklahoma, the company has long battled high levels of debt, but came under particular pressure during the pandemic. It has focused on drilling in underdeveloped areas of Oklahoma and Texas, largely abandoning traditional vertical well drilling, employing instead lateral drilling techniques to free natural gas from unconventional shale formations. "It was likely going to happen with or without COVID-19", said Alex Beeker, an analyst with the consultancy Wood Mackenzie, in a note Sunday.

But the gas market is only part of the story.

By 2012, Chesapeake carried a debt load twice the size of the much larger ExxonMobil which would ultimately lead to the ouster of McClendon in 2013 and the recruitment of Lawler who was previously an exploration executive at Anadarko Petroleum.

The producer, which spent heavily to become the top USA producer of natural gas at one point, is still the No. 2 shale gas producer behind EQT Corp, according to data provider Enverus.

Last November, Lawler said the company would be able to improve its financial position despite issuing notice to investors that its debt load was about to surpass the terms of its credit facility.

McClendon was forced out in 2013; he died three years later, the day after he was indicted on a charge of price-fixing, when he drove his Chevrolet Tahoe into a concrete abutment. However, the company has managed to avoid the bankruptcy process for many years starting in 2008 during the great financial crisis.

In the FAQ section, the business noted that its employees will continue to be paid and receive benefits and said it anticipates its shares will continue to be publicly traded through the Chapter 11 process.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE