Chesapeake Energy (CHK) just filed for bankruptcy protection.
Rocked by $7 billion in debt, and a drop in oil and gas prices, the news comes as no shock. As recently as May 2020, the company had concerns regarding its long-term viability.
The company just said $7 billion in debt will be wiped out through restructuring, as noted by CNBC. “The company has secured $925 million in debtor-in-possession financing in order to continue operations during the bankruptcy process. “Chesapeake has secured an agreement in principle from certain existing lenders for $2.5 billion in debt financing on emergence from bankruptcy, as well as a backstop commitment for $600 million in new equity.”
Earnings have been disastrous in recent months, too.
In the fourth quarter of 2019. Chesapeake posted a net loss of $346 million, or 18 cents, as compared to net income of $576 million, or 57 cents a share a year earlier. Excluding non-recurring items, the adjusted loss per share was 4 cents, which did beat forecasts for a loss of 6 cents. Revenue fell 31% to $1.93 billion, which missed estimates for $2.02 billion.
The filing is the largest bankruptcy of a U.S. oil and gas producer since 2015, says Reuters.