Chesapeake Energy applied for Chapter 11
Low oil prices and high expenses done the job
Shale gas company Chesapeake Energy has applied for bankruptcy protection. The company, which got into trouble because of the low oil and gas prices in recent months, hopes to be able to get its finances in order.
Chesapeake said in his filing that he had assets and liabilities of between $ 10 billion and $ 50 billion and more than 100,000 creditors. Agreements have already been made with some of the creditors to cancel approximately $ 7 billion in debt. In addition, the company received $ 925 million in loans collateralized by the company.
Chesapeake is one of the pioneers of the shale gas revolution in the United States. The company chose an aggressive tactic in which large debts were incurred to obtain drilling permits. At one point, the company was nearly as big as gas and gas giant Exxon Mobil. However, these licenses often yielded too little to reward investors. Founder Aubrey McClendon was therefore put aside seven years ago by investor Carl Icahn, among others.
Chesapeake’s business model was widely followed. That caused a lot of gas to be extracted in the United States. However, when demand fell in recent months due to the corona crisis, there was far too much supply.