Pioneer Of Shale Oil Production In The United States, Chesapeake Energy Declared Bankruptcy
Chesapeake Energy, one of the first companies in the United States to start shale oil exploration and production, declared bankruptcy. Documents about this she sent to the district bankruptcy court in Texas, according to the company's website.
Chesapeake Energy is asking the court for protection under Chapter 11 of the US bankruptcy law, which allows the company to reorganize its operations. The company's debt is estimated at $7 billion, the report said. Chesapeake Energy's losses in the first quarter of 2020 totaled $8.3 billion, and its liquidity at the end of March was $82 million. Previously, the company agreed with creditors. According to it, the company will allocate a loan of $925 million and another $600 million for the issue of debt bills.
Since January, Chesapeake shares have fallen more than 93%, from $172 to $11.85, according to data at the close of trading on Friday, June 26. In early June, Bloomberg, citing sources, reported that control of the company May passes to one of the main creditors. According to CNBS, these include Franklin Templeton, which manages assets, and Fidelity Investments, which provides financial services.
US shale oil producers will write off up to $300 billion of assets in the second quarter of 2020. In the first quarter, they wrote off assets by $38 billion. Deloitte estimates that 30% of shale developers may go bankrupt at an average oil price of $35 per barrel (this quarter it is still $27), and another 20% will experience severe financial problems. According to the New York Times, about two dozen American oil companies have already filed applications since the beginning of the year, resorting to Chapter 11 of the US bankruptcy law. By the end of May, average daily oil production in the United States fell to 11.2 million barrels from more than 13 million barrels in March, according to the energy information Administration. The decline in production by about 1.75 million barrels this spring is directly related to the shutdown of existing wells, according to IHS Markit. According to its forecasts, most of the production will be returned by the end of September.