Chesapeake Says It Doesn't Plan to Pursue Bankruptcy
February 08 2016 - 12:10PM
Dow Jones News
By Tim Puko
Chesapeake Energy Corp. said Monday that it "has no plans to
pursue bankruptcy" after reports intensified such fears, cutting
its stock in half in early trading.
The report also sent shares of another stressed energy firm,
Williams Cos., and other pipeline companies tumbling, the latest
tremors from a world-wide collapse in energy prices and comes from
a company that was a pioneer of the U.S. oil-and-gas boom.
A Debtwire report said Chesapeake retained Kirkland & Ellis
LLP to help with debt and restructuring, according to Bloomberg
News. Chesapeake responded by issuing a statement saying it "has no
plans to pursue bankruptcy." It said Kirkland & Ellis has been
working with the company since 2010 and "continues to advise the
company as it seeks to further strengthen its balance sheet
following its recent debt exchange."
Shares of Chesapeake dropped by more than half but recovered
some ground following the company's statement and recently were
down 28% to $2.21. Shares of Williams were recently down 22%.
Chesapeake and Williams have been among the biggest losers from the
fall in oil and gas prices.
Chesapeake has wells in most of the major U.S. natural-gas
fields, giving its health far-reaching influence. About a fifth of
the revenue at Williams comes from processing and shipping the gas
and oil Chesapeake produces, according to Fitch Ratings, which
downgraded the ratings of both companies in the past two
months.
Several other energy companies with big pipeline operations have
also taken sharp losses Monday. ONEOK Inc., Kinder Morgan Inc. and
Marathon Petroleum Corp. were down at least 7%.
Monday's big swing is the latest in a series of dramatic moves
across markets--many, but not all tied to the shakeout from falling
energy prices. LinkedIn's shares tumbled 44% on Friday, leading a
sharp dive in technology shares that helped sink the Dow Jones
Industrial Average 211.61 points, or 1.3%, in one session.
The Wall Street Journal reported in December that Chesapeake was
working with restructuring advisers at Evercore Partners Inc. to
shore up its balance sheet as commodity prices extend their
decline, citing people familiar with the matter. The Evercore
bankers are advising the natural-gas producer on potential measures
to reduce its $11.6 billion debt load, such as exchanging existing
bonds at a discount for new securities or selling assets, the
people said.
Williams didn't immediately respond to calls seeking
comment.
Write to Tim Puko at Tim.Puko@wsj.com
(END) Dow Jones Newswires
February 08, 2016 11:55 ET (16:55 GMT)
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