The media information of the week before was confirmed – a shale gas giant, the American company Chesapeake Energy filed an application for protection against creditors in court. Low gas and oil prices meant that the company stopped dealing with servicing its debt.
- The company was hit by low energy prices.
- The company was a leading US gas producer in the past.
- Chesapeake Energy is also famous for the large-scale extraction of shale gas.
Applying marks the end of the era of Oklahoma City shale gas pioneer and follows months of negotiations with creditors.
The current CEO, Doug Lawler, managed to reduce the company’s debt by approximately $ 20 billion. Paradoxically, however, it was his strategy to diversify the company’s operations that turned out to be the proverbial nail in the company’s coffin.
Last year, Lawler spent about $ 4 billion on measures to reduce Chesapeake’s dependence on natural gas. It included for the purchase of petroleum assets. It now appears that this money has been wasted.
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The outbreak of the coronavirus pandemic and the price war on the oil market between Russia and Saudi Arabia meant that virtually all of Chesapeak’s business turned out to be unprofitable, which translated into a loss in the first quarter and a collapse in the company’s stock quotes.
At the end of last week, Chesapeake Energy shares could be bought for $ 11.85. It is up to 93 percent less than at the beginning of the year.
Chesapeake’s filing with a US bankruptcy court in the southern Texas District has made it the largest bankruptcy of the US oil and gas producer since at least 2015, since the law firm Haynes & Boone began publishing data on the restructuring of companies in the industry .
Chesapeake Energy was founded in 1989. Until 2005, the company was the second largest US producer of natural gas, second only to Exxon Mobil Corp. Later, its market share melted, but was still significant.
The company is known, among others from pioneering activities in the field of shale gas extraction, in particular the so-called hydroszczelinowania. Specialists emphasize that Chesapeake Energy, like no other company in the industry, focused on new technologies in the exploration and extraction of natural gas. It was a precursor to the wide use of fracturing or directional drilling.
At the same time, the company was accompanied by numerous controversies. Chesapeak was regularly obtained from ecological organizations for the technologies used. However, litigation was much more expensive.
Many proceedings were pending against the company. Chesapeake Energy was accused of for collusion aimed at reducing the price of land rents from which shale gas was extracted, or for fixing and falsifying offers.
At the end of last year, the company employed 2,300 people.
It is not yet known what will happen with the company’s assets. However, many indicate that a significant part of them will become a tasty morsel for other companies in the industry.
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