Chesapeake shares plunge 66% in one day

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Shares of Oklahoma-based oil exploration company Chesapeake Energy (NYSE: CHK) fell more than 66% Tuesday afternoon after Bloomberg announced after negotiating Monday that the company “is preparing for possible bankruptcy” .

The $ CHK was traded early Monday, going from nearly $ 40 per share to almost $ 70. But trading was interrupted several times on Tuesday pending news after the stock fell in half. The stock is now trading at $ 23 per share.

Chesapeake sits on top of a mountain of about $ 9 billion in debt.

The idea that Chesapeake could go bankrupt is nothing new. Last May, Chesapeake said he was evaluating Chapter 11, along with some other options, because the low oil price environment was unsustainable given its heavy debt load. But Chesapeake had already ringed the bankruptcy bell in November as well, saying there was “substantial doubt” about the “ability of the company to continue operating.”

Even before that, the Chesapeake stock was looked upon with disdain, not just for being a pioneer of fracker and shale. Chesapeake founder Aubrey McLendon, after leaving the company a few years earlier, was charged in 2016 for allegedly plotting to fix rental prices. One day after his charge, McLendon was killed in a car accident.

These are tough times for all oil and gas explorers, not to mention those with huge debt and more than a year of inventory volatility even before the oil price crisis. Chesapeake depreciated its oil and gas assets by approximately $ 8.5 billion this year and had only $ 82 million in cash at the end of the first quarter. That money compares to some $ 192 million in bond payments due in August.

Although trade was halted pending heartbreaking news, no news was announced even after trade resumed.

By Julianne Geiger for Oilprice.com

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