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US Chesapeake Energy files for bankruptcy

Chesapeake Energy has filed for bankruptcy in the US, with a reported debt of £7.3bn.

Commenting on the news, Rystad Energy’s Head of Analysis Per Magnus Nysveen says: ‘Chesapeake was the undisputable master of US shale gas. The massive financial burden of investing first into the shale gas boom, then its failed attempt to grow a similar strong position on oil plays, have brought the giant to its knees. Chesapeake acquired liquids-rich assets in the Anadarko Basin, Utica, Niobrara, and Eagle Ford but most of this acreage failed to make profitable transition to a sustainable business model in a low oil price environment. New investors would now have to believe in commodity prices way above the current forward curves to bring the company safely through Chapter 11 proceedings.’

He continues: ‘Chesapeake had a challenging financial situation for many years and some processes were accelerated by the COVID-19 pandemic and the associated oil market downturn. It would be fair to say that the company’s Chapter 11 was anticipated by a large part of market participants and this is not really representative of the rest of the industry. A material portion of the US light oil supply is now controlled by supermajors and large independents with access to the core acreage and strong balance sheets. Most of these companies can gradually adapt even if oil prices of $35–40 WTI stay around for longer.’

News Item details


Journal title: Petroleum Review

Countries: USA -

Subjects: Economics, business and commerce, Shale gas, Business management

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