Chesapeake Energy, a Shale Pioneer, Files for Bankruptcy Protection – The New York Times

Before his ouster in 2013, Mr. McClendon built an elegant school for the company in Oklahoma City, complete with a community garden, luxurious dining centers and two parking garages that alone cost $100 million to develop.
He acquired prize properties like the Oklahoma City Thunder basketball team, interests in a French winery and a $12 million antique map collection. The basketball team still plays in Chesapeake Energy Arena, which was a sign of Oklahoma Citys revival as a gas hub.
From 2010 to 2013, the company invested around $30 billion more on leasing and drilling than it made from its production.
Mr. McClendon was also understood to cut corners, which got him and his business in trouble. Chesapeake executives complained of an absence of a formal budgeting process or employee efficiency management system. The business borrowed cash to money charities and genuine estate projects.

” We are basically resetting Chesapeakes capital structure and service to address our tradition financial weaknesses,” said Doug Lawler, Chesapeakes president and chief executive. “Chesapeake will be distinctively positioned to emerge from the Chapter 11 procedure as a more powerful and more competitive enterprise.”
Chesapeake has 1,900 employees.
It is the current greatly indebted oil and gas business to look for personal bankruptcy defense considering that the coronavirus pandemic crippled need for energy.
Under its previous primary executive Mr. McClendon, the business drilled across Texas, Oklahoma, Ohio, Wyoming and Louisiana. Mr. McClendon was audacious as he aggressively outbid competitors on land leases and checked out commonly in the early 2000s, although he also drilled many wells that disappointed investors. By 2011, he and others who followed in his steps had produced an excess of natural gas that sent Chesapeake and other business to the verge of collapse.
To find an use for all that natural gas, Mr. McClendon went on a campaign to promote compressed natural gas lorries, but the effort went no place. He attempted to make alliances with environmentalists, arguing that gas could replace coal and be a bridge fuel to a cleaner energy future.

In a declaration, Chesapeake stated it was filing for Chapter 11 security to assist in a complete restructuring. As part of its contract with lenders, the company stated it had actually protected $925 million in funding under a revolving credit center, and eliminated approximately $7 billion of financial obligation. It also secured a $600 million future dedication of brand-new equity.

HOUSTON– Chesapeake Energy, a leader in drawing out gas from shale rock throughout the country, submitted for bankruptcy defense on Sunday, not able to overcome a mountain of financial obligation that ended up being unsustainable after a years of stubbornly low gas prices.
The company helped transform the United States from a natural gas importer into a significant exporter under the swashbuckling management of Aubrey McClendon, a company co-founder and previous president.
However Mr. McClendon amassed and overextended the company over $20 billion in debt prior to he was displaced in 2013, and Chesapeake, based in Oklahoma City, never ever completely recuperated.
Chesapeake lost $8.3 billion in the very first quarter of this year, and had simply $82 million in cash at the end of March. With $9.5 billion in financial obligation at the end of in 2015, it has bond payments of $192 million due in August.

Upgraded June 24, 2020

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Mr. McClendon was charged in 2016 with conspiring to reduce costs for oil and gas leases. The indictment said he had actually orchestrated a conspiracy in which two oil and gas companies colluded not to bid against each other for several leases in northwestern Oklahoma from late 2007 to early 2012.
A day after the indictment, Mr. McClendon, at age 56, passed away in a crash in Oklahoma City after his car struck a bridge at high speed. On news of Mr. McClendons death, the oil magnate T. Boone Pickens, who passed away in 2019, stated, “No individual lacks flaws, however his impact on American energy will be long lasting.”.
When Mr. Lawler, a veteran Anadarko executive, took over the business in 2013 he called his brand-new job “the most significant challenge in the whole industry.”.

By 2011, he and others who followed in his steps had actually produced an excess of natural gas that sent Chesapeake and other companies to the brink of collapse.
A widely cited paper published in April suggests that people are most transmittable about two days prior to the beginning of coronavirus symptoms and approximated that 44 percent of brand-new infections were a result of transmission from individuals who were not yet revealing symptoms. A number of studies of influenza, rhinovirus, coronavirus and other microorganisms have actually shown that breathing diseases, consisting of the brand-new coronavirus, can spread out by touching infected surfaces, especially in places like day care offices, centers and hospitals. Mr. Lawler had been attempting to turn around the business by producing more oil and offering gas properties. Approximately 20 American oil and gas producers have currently submitted for bankruptcy this year, consisting of Ultra Petroleum and Whiting Petroleum.

Mr. Lawler had been trying to turn around the company by producing more oil and selling gas possessions. However the shale drilling boom of recent years has actually let loose more petroleum than the world needs, sending out rates lower. The coronavirus pandemic and a choice by Saudi Arabia and Russia this year to increase production were the newest blows.
On the other hand the financial downturn has actually cut need for gas in the United States, and slashed exports to foreign markets.
There had actually been reports of an insolvency for months. Roughly 20 American oil and gas manufacturers have actually already applied for bankruptcy this year, including Ultra Petroleum and Whiting Petroleum. An overall of 227 manufacturers have actually applied for personal bankruptcy in the five years that ended May 31, including more than $134 billion in aggregate financial obligation, according to the Haynes and Boone Oil Patch Bankruptcy Monitor.