Shale pioneer Chesapeake weighs bankruptcy filing
The natural gas giant that helped revolutionize the energy industry is considering filing for bankruptcy. Debt-ridden Chesapeake Energy said Monday it's "analyzing all available strategic alternatives." The crash in oil and gas prices caused by the pandemic will likely decimate the value of the company's untapped oil and gas reserves. That would reduce its ability to borrow against those assets.
That's a huge problem because Chesapeake is saddled with debt of nearly $9 billion, and big payments are due this year. The company said it has no access to capital markets and that it won't be able to meet its financial covenants starting in the fourth quarter.
The bankruptcy filing marks a huge reversal of fortunes for a company that had bet big on natural gas and had spearheaded the shale revolution. Just as the company was trying to cut its debt and shift from gas and emphasize oil production, energy prices crashed. Then, it got hit by falling demand for energy caused by the pandemic.
Chesapeake, whose shares have plummeted more than 90% this year, fell further Monday morning.
