The global energy markets have been taken a pounding over the past few weeks. While prices for oil have settled to somewhat reasonable levels, the industry is still reeling from when oil prices dipped into negative territory. One of the strangest stocks on the market over the past couple of days has been a relatively small oil and gas company few people would have heard of before. Chesapeake Energy (NYSE:CHK) has seen its shares almost triple on Monday, only to plummet by around two-thirds on Tuesday following the stock being halted for news.
For those not familiar with this company, Chesapeake Energy is one of the many oil and gas producers in the U.S. that are facing a crucial financial situation. In this particular case, the company is straddled with an enormous amount of debt. Following the announcement that “pending news” was on the horizon, most investors seem to have anticipated that this announcement would have to do with the company’s debt load.
Whether that be getting new funding – or even filing for a much-rumored bankruptcy – something strange ended up happening. Chesapeake ended up making no press releases or announcements at all, nor were they any securities filings sent to the SEC. Not only that, Chesapeake also refused to comment on this situation to the financial press.
For the most part, the company had been rumored to be going bankrupt. An earlier report from Bloomberg said that the company could be preparing a bankruptcy filing over its financial situation. At the company’s height, Chesapeake rivaled the likes of Exxon Mobil and other giants. Now, the company has fallen on dark times and doesn’t seem likely to return better days anytime soon.
At the moment, Chesapeake owes around $9 billion in debt and has considered whether it would be skipping the interest payments on its loans, which are due June 15. Additionally, the company has the option of invoking a grace period while it talks with its creditors about its financial situation. Although nothing is confirmed at this point, the suspicious silence surrounding the company’s supposed news announcement is enough to make many investors worried about what’s coming on the horizon.
Most energy companies have been struggling during this time. Even the largest firms in the world are laying off thousands or even tens of thousands of jobs around the world. Just yesterday, BP announced that it would be laying off 14% of its global workforce as it tries to get things under control. Despite the fact that oil prices are trading in the high-thirties, much higher than what many analysts had worried prices would be at, energy companies around the world aren’t expected to recover anytime soon.
Chesapeake Energy Company Profile
Chesapeake Energy Corp is a US-based exploration and production company. It is engaged in the acquisition, exploration, and development of properties for the production of oil, natural gas and natural gas liquids from underground reservoirs. Geographically, the company focuses its exploration, development, acquisition and production efforts in the operating areas of Marcellus, Northern Appalachian Basin in Pennsylvania; Haynesville, Northwestern Louisiana and East Texas (Gulf Coast); Eagle Ford, South Texas; Utica, Southern Appalachian Basin in Ohio; Mid-Continent, Anadarko Basin in northwestern Oklahoma; and Powder River Basin, Stacked pay in Wyoming. – Warrior Trading News