The embodiment of America's exceptional shale-gas wealth - Chesapeake Energy Corp - filed for bankruptcy, emerging as one of the biggest victims of a massive collapse in energy demand from the pandemic-triggered global lockdown.
The company, based in Oklahoma City, filed for Chapter 11 creditor protection in the US Bankruptcy Court in the Southern District of Texas on Sunday, declaring $10 billion to $50 billion worth of assets and liabilities and over 100,000 creditors.
The American energy giant has reached a deal to take out around $7 billion in debt and raise $925 million in debtor-in-possession financing. The filing marks an end of a successful era for the energy group, and comes after months of negotiations with creditors.
The shale drilling pioneer that helped to steer the United States into a global energy behemoth said Sunday that it was a much-needed decision considering its mounting debt. Chesapeake's debt burden is currently approaching $9 billion. The company said it will continue to operate as usual during the bankruptcy process.
The oil and gas powerhouse was a leader in the fracking boom, utilizing the latest methods to extract oil and gas from the ground, a technique that has come under scrutiny because of its effect on the environmental.
Chesapeake was co-founded in 1989 with an initial investment of $50,000 by Aubrey McClendon, a popular early and high profile shale fracking figure who perished in a fiery one-car crash in Oklahoma in 2016 while facing a federal bid rigging investigation.
McClendon has developed Chesapeake from a tiny wildcatter to a major US natural gas company for more than 20 years. It remains by volume the sixth largest producer in the US.
New chief executive officer Doug Lawler, who inherited a company burdened with around $13 billion in debt in 2013, managed to chip to the debt pile with budget cuts and asset sales, but the never before seen oil price collapse this year left the group with no capacity to refinance the debt.
Over 200 oil companies have filed for bankruptcy protection during the last five years, a trend that is estimated to continue as a pandemic cripples demand for energy and depletes prices further.
Chesapeake Energy became a household name in the US, eventually registering a market valuation of over $37 billion. Then, the first in a wave of financial surprises hit the group as the Great Recession dragged energy prices into the pit. Chesapeake ended Friday's stock trading valued at about $115 million.