Chesapeake Energy Corporation's "First-Day Motions" Approved By Court

The Oklahoma City-based company said on Sunday that it had been forced to enter chapter 11 protection because its debts of $9bn were unmanageable.

"The legacy debt and contractual obligations that have hindered our performance", the company said, finally had to be addressed. "With these demonstrated strengths, and the benefit of an appropriately sized capital structure, Chesapeake will be uniquely positioned to emerge from the Chapter 11 process as a stronger and more competitive enterprise".

A person familiar with workings of the company said Chesapeake had "no formal budgeting process" under the wildcatter billionaire executive.

Chesapeake revealed that it has secured commitments for $925 million in debtor-in-possession financing, which it says will be available upon court approval.

That month Chesapeake warned the US Securities and Exchange Commission through a "going concern" filing that it was considering the court-supervised bankruptcy process as it revealed it would likely not meet its obligations to lenders. Questions should be directed to the Company's claims agent by email to chesapeakeinfo@epiqglobal.com or by phone at 855-907-2082 (toll free) or 503-520-4448 (toll). The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP.

Wachtell, Lipton, Rosen & Katz is serving as legal counsel to the Company's Board of Directors.

"No company better signified the trends, good and bad, of the shale revolution", said Ethan Bellamy, an analyst at Robert W. Baird & Co.

The company said it has secured $600 million in new investments to help on the other side of bankruptcy.

Shares of ChesapeakeEnergy closed down 7.28% on Friday before the oil major filed for bankruptcy protection on Sunday.

Since taking over in 2013, current CEO Doug Lawler has brought the legacy debt load down to around $9 billion. Then, the first in a series of financial shocks hit Chesapeake as the fallout from the global financial crisis of 2008 sent energy prices into the basement. An early pioneer of horizontal drilling, he built the company into a key player in the USA gas industry.

Spectacular collapse Chesapeake, the archetype for America's extraordinary shale-gas fortunes, goes down as one of the biggest victims of a spectacular collapse in energy demand from the virus-induced global lockdown.

But the company took on a lot of debt to fuel its rapid expansion, and from 2010 to 2012 spent $30 billion more in drilling and leasing than it made from its operations. Now that a pioneer of U.S. fracking has fallen victim to the oil price crash, many other vulnerable producers may soon follow suit. Chesapeake remained primarily a gas producer, and it struggled to pay off its debt from McClendon's tenure. On March 1, 2016, McClendon was indicted on a charge of conspiring to rig bids on energy leases in Oklahoma. McClendon was ousted in 2013 and died in an auto accident three years later. "Chesapeake showed the market-and its competitors-how quickly production could grow, how fast projects could develop, and what the updated United States model for engaging with stakeholders looked like".