Chesapeake Energy stated Monday it was unable to access financing and was contemplating a bankruptcy court shakeup of its more than $9 billion debt if oil prices don’t recover from the sharp plunge caused by the COVID-19 pandemic.
The declaration follows last month’s assertion by the pioneering shale gas producer that it was in discussions to apply for bankruptcy financing and was in talks for a loan to run its operations through the court proceedings.
Company filings confirmed it had a combined debt of over $1 billion by way of debt maturities and interest expenses, of which $250 million in senior notes had been due this year.
That is the second warning by the Oklahoma Metropolis-based firm since November. It stated this quarter’s review of the value of its untapped oil and gas reserves is likely to present a drop because of its distressed funds, reducing its ability to borrow against those assets.
Chesapeake last week said it would prepay $25 million in incentives to prime executives. Peers Whiting Petroleum and Diamond Offshore Drilling also gave cash awards to senior administration just days before filing for Chapter 11 protection in April.
The company stated its net loss available to shareholders widened to $8.3 billion, or $852.97 /share, from $44 million, or $6.37, because of $8.5 billion of asset impairments.
A bankruptcy filing would limit an extended reversal of fortunes for Chesapeake. This organization helped revolutionize the energy industry through the relentless extraction of untapped oil and natural gas from shale rock formations, and environmentally controversial method that became generally known as fracking.