By Timothy Puko and Erin Ailworth 

Chesapeake Energy Corp. said Monday that it "has no plans to pursue bankruptcy" after a report 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. 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." A Chesapeake spokesman declined to elaborate further.

Shares of Chesapeake dropped by more than half but recovered some ground following the company's statement and were down 37% in midday trading in New York.

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.

Once a Wall Street darling, Chesapeake has struggled under a heavy debt load incurred to finance oil and gas purchases made under the direction of Chesapeake's founder and former head Aubrey McClendon. Activist shareholders forced out Mr. McClendon in 2013 and installed a new chief executive, Doug Lawler, who has been trying to right the ship even as natural-gas and crude-oil prices remain low. The company has posted a string of quarterly losses.

Chesapeake's woes rippled to pipeline companies Williams and Energy Transfer Equity LP, which are trying to merge. Last year, Chesapeake reworked some expensive natural-gas transportation contracts it had with Williams, and had been hoping to renegotiate others.

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. Williams shares were down 26% in midday trading, while Energy Transfer Equity lost 32%.

Williams declined to comment.

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 5%.

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.

Write to Timothy Puko at tim.puko@wsj.com and Erin Ailworth at Erin.Ailworth@wsj.com

 

(END) Dow Jones Newswires

February 08, 2016 13:15 ET (18:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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