Latest SEC Filing Shows Chesapeake Doesn’t Rule Out Bankruptcy

Chesapeake EnergyChesapeake Energy, the second largest natural gas driller in the U.S. (behind Exxon Mobil) and one of the largest in the Marcellus/Utica, has been on a roller coaster for the past few years. Corporate raider Carl Icahn bought himself a big slice of the company, and along with another corporate raider/Chesapeake investor, Mason Hawkins, they tossed CEO Aubrey McClendon out the door. The two then installed their own guy, Doug Lawler, who proceeded to slash jobs and sell assets–all in a bid to prop up the company’s stock price so these two corporate raiders can make a buck on their investment. We call it disgusting. Others call it business as usual. The result? Chesapeake’s stock tanked and there were rumors of an impending bankruptcy (see Chesapeake Energy: We’re Not Filing for Bankruptcy…Yet). But then Chessy’s bankers decided to keep a $4 billion line of credit open in April (see Lifeline: Chesapeake’s $4B Line of Credit Reaffirmed by Banks). That helped set off a rally in the company’s stock. But the rally has evaporated like St. Elmo’s fire. In a recent filing with the Securities and Exchange Commission, Chesapeake spoke plainly about the possibility that if the price of natgas does not recover soon, they may not be able to meet their debt obligations in 2017. In other words, “We may be heading for bankruptcy next year, if…”

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