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Chesapeake Energy, the second largest natural gas producer in the United States, came under severe pressure on Monday after rumors surfaced that the company was near bankruptcy.
Over the weekend, the publication Debtwire reported that Chesapeake sought the help of Kirkland & Ellis to help it with its debt, fueling speculation that Chapter 11 bankruptcy was not far away. When the markets opened on Monday, Chesapeake paid the price. Its share price tumbled by more than 50 percent. Trading was briefly halted, but by midday, the company’s stock was down 33 percent.
Chesapeake dismissed the concerns, saying that it "currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders." Chesapeake has $10 billion in debt and only $1.8 billion in cash on hand. The company’s stock is down by more than 93 percent over the past 12 months.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com