Tue Nov 5, 2019, 02:54 PM

Epitome of America's Shale Gas Boom Now Warns It May Go Bust

BY Rachel Adams-Heard, David Wethe and Kriti Gupta 2 hrs ago

(Bloomberg) -- Chesapeake Energy Corp. -- once the epitome of America’s shale-gas fortunes -- is warning it may not be able to outlast low fuel prices.

Reflecting growing pain across the energy sector, the Oklahoma-based company’s shares and bonds tumbled Tuesday after it said it may not be viable as a “going concern” if low oil and natural gas prices persist. The warning came just over an hour after the company posted a wider-than-expected loss for the third quarter.

A decade ago, Chesapeake was a $37.5 billion company led by the energetic Aubrey McClendon, an outspoken advocate for the gas industry. Chesapeake became the second-largest U.S producer of the fuel. But in 2016, McClendon was indicted by a federal grand jury on charges of conspiring to rig bids for the purchase of oil and gas leases. A day later, he was dead after his car collided with a highway overpass.

On Tuesday, Chesapeake’s market value was $2.6 billion. The company was brought there by years of low gas prices, the result of an industry that has been the victim of its own success in cracking open shale-rock formations for access to additional supplies.

Chesapeake has spent the years since McClendon’s death selling assets, cutting jobs and trying to produce more oil in an effort to chip away at a mountain of debt. Its notice Tuesday comes as shale producers struggle to prove to investors they can produce positive cash flow, not just grow at any cost.


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Reply Epitome of America's Shale Gas Boom Now Warns It May Go Bust (Original post)
RCW2014 Nov 2019 OP
FreeWheelBurning Nov 2019 #1
Badsamm Nov 2019 #2

Response to RCW2014 (Original post)

Tue Nov 5, 2019, 03:08 PM

1. Shale production is not and never has been as efficient as traditional drilling

These companies should know this and not flood the market with the oil they get from shale extraction. Shale companies will always start to lose money before the companies that drill for oil when the price per barrel of oil drops. Not planning for slowdowns for when the price drops is short sighted and greedy.

With the price where it is now, some shale companies will go out of business, the price of oil will go up, new shale companies will enter the market. It is a predictable cycle.

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Response to RCW2014 (Original post)

Tue Nov 5, 2019, 06:45 PM

2. Anyone that followed this from the begging already knew this. Oil is way to cheap

For them to make money

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