Chesapeake Energy Denies Bankruptcy Rumors

Chesapeake Energy is the second-largest producer of natural gas in the United States, as well as the 12th largest producer of oil and natural gas liquids. Because they are such a big name in the oil and natural gas industry many were left wondering if they were going to have to file for bankruptcy. Why might you ask would they be forced to file for bankruptcy? Well a consulting firm recently stated that at least 67 different oil and natural gas companies filed for bankruptcy in 2015. Add the fact that oil prices have been crashing, and people have reason to believe such a big company might be going under.

 

Cheap gas for consumers doesn’t mean a good market

Even though most of the nation is seeing a huge decrease in the price of gas, the crashing prices are causing dozens of drilling and service companies to go out of business, thus losing a number of jobs. The Houston law firm Haynes and Boone, even stated that five energy gas producers have already had to file for bankruptcy into the first five weeks of the new year. It is getting bad, and is only likely to get worse. With crashing prices, Chesapeake Energy saw a huge tank of their stocks, which is why people believed they might be yet another company forced to file for bankruptcy.

 

No truth to bankruptcy claims

Chesapeake Energy has made it known that the bankruptcy rumors are not true at this time. Since their stock tanked over 50 percent, they had to make a public speech. The plunge seen in their stock might have been caused by a report by Debtwire. They stated that the company was working with Kirkland & Ellis, restructuring attorneys, to come up with balance sheet options. With so many bankruptcies in the energy field, this was a bit of cause for concern. Kirkland & Ellis has been working with Chesapeake Energy since 2010 and has continuously advised the company on its balance sheets, so the company says this is nothing new. The company made a statement that they plan to work aggressively to maximize the value of their company for all shareholders.

 

Chesapeake Energy rise

Even though their stocks have plunged, before the financial crisis of 2008 the company saw wonderful numbers in the stock market. Because they were doing so well, they were able to take on the extra debt in order to finance expansion plans for the company. Due to the number of cheap natural gas and oil prices, the company is sitting on a debt of close to $11 billion. In 2015 the company was even forced to cut this debt through the use of a debt exchange. Still, the company remains hopeful in denying any bankruptcy claims.

 

Williams Companies worried

Even though there is no truth to the bankruptcy rumors Williams Companies is still worried. Williams Cos. is an energy company located in Tulsa, Oklahoma and noticed their stock also plummeted 25 percent. The reason the company is concerned is because they receive 20 percent of revenue from Chesapeake Energy.

 

Even with no future plans of filing for bankruptcy, with the way the market is changing, it might be inevitable in the future. We will just have to wait and see!