The oil and gas company was a leader in the boom in hydraulic fracturing, using unconventional techniques to extract oil and gas from the ground, a method that has been tested because of its environmental impact.
Other rescuers have followed Chesapeake’s path, accumulating huge debts to find oil and gas in fields covering New Mexico, Texas, Dakota and Pennsylvania.
But these companies are now under pressure to pay off these debts. More than 200 oil producers have filed for bankruptcy in the past five years, a trend that is expected to continue as the Covid-19 pandemic reduces demand for energy and drives prices down further.
Founded in 1989 by Aubrey McClendon and Tom Ward with an initial investment of $ 50,000, Chesapeake has focused on drilling in underdeveloped areas of Oklahoma and Texas. It has largely abandoned traditional vertical well drilling, using lateral drilling techniques to release natural gas from unconventional shale formations.
He became a colossus in the energy markets, eventually reaching a valuation of more than $ 37 billion. Then the first in a series of financial shocks hit Chesapeake as the aftermath of the 2008 global financial crisis sent energy prices underground.
The company was valued at around $ 115 million at the close of trading on Friday.
With the colorful McClendon as general manager, Chesapeake grew at lightning speed and was known for his aggressiveness in acquiring oil and gas drilling rights. McClendon pushed the company to acquire huge tracks of land in several states, taking on increasing debt. In some ways, Chesapeake was a victim of its own success, while other companies followed suit and energy production in the United States skyrocketed, driving prices down.
As Chesapeake grew at breakneck speed, natural gas prices were close to $ 20 per million British thermal units, the benchmark for the natural gas trade. But frackers like Chesapeake have flooded the market with cheap natural gas, driving prices far below $ 2.
But McClendon was forced to resign in 2013 following allegations of a conspiracy to rig calls for tenders for oil and gas contracts over several years, and amid investor concerns over his high spending in what was already an industry very indebted. McClendon died in a car accident in 2016 hours after the U.S. Department of Justice laid suspected malpractice charges in the market.
Chesapeake has paid millions of dollars since to pay bid rigging costs.
Robert Lawler became CEO after McClendon’s death and began selling assets to control Chesapeake’s debt. But that debt became more threatening in two years, the fracking boom ended in 2015. Chesapeake reported a quarterly loss of $ 4 billion that year and the first wave of layoffs started with 750 jobs.
Despite Chespeake’s problems, Lawler remained the highest-paid chief executive in Oklahoma last year with $ 15.4 million in compensation, according to a ranking by Associated Press and Equilar.
Chesapeake lost $ 8.3 billion in the first quarter of this year and posted $ 8.62 billion in net debt. The company said in a regulatory package in May that management has concluded that there is real doubt as to the ability of the company to continue operating.
For more than two decades, McClendon has made Chesapeake one of the largest producers of natural gas in the world, and in doing so has helped make the United States a major exporter of fossil fuels after years of dependence on it. with regard to foreign suppliers.