Chesapeake: ‘No Plans to Pursue Bankruptcy’
OKLAHOMA CITY – Chesapeake Energy Corp., the most prolific driller in eastern Ohio’s Utica shale, reports it has retained a law firm to restructure its $9.8 billion debt, triggering a free fall in its share price this morning.
Chesapeake’s stock plummeted as much as 50% in the wake of a Debtwire report this morning that the company has hired Kirkland & Ellis LLP to restructure its debt, stoking fears of bankruptcy.
However, the company said in a statement that bankruptcy is not part of this initiative, which sent stock prices back up slightly. By 11:40 a.m., Chesapeake share prices were down 24% at $2.32.
“Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for its shareholders,” the company said.
Kirkland & Ellis LLP “has served as one of Chesapeake’s counsel since 2010 and continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange.”
Chesapeake holds the largest acreage position in the Utica shale, most of it in Carroll County, Ohio The company also holds a strong position in Columbiana County, Ohio, where it owns more than 30 producing horizontal wells.
Since late 2014, oil and gas prices have hit rock bottom, and energy companies such as Chesapeake are struggling to keep operations afloat in a very dismal market.
At the end of January, Chesapeake announced that it suspended preferred stock dividends in order to save the company $170 million. The company has also taken measures to halt new drilling activity and curtail production at its working wells.
Chesapeake, the second-largest producer of natural gas, and the 12th largest producer of natural gas-liquids in the United States, was the first major energy company to explore the Utica in 2010.
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