Chesapeake Energy Stock Crashing

On Monday, shares of oil and gas company Chesapeake Energy Corp  are crashing in news that the company was looking at restructuring its debt amount. As of 10:34 AM EST, CHK is down over 51%.

Source: Reuters

Natural gas producer Chesapeake Energy has hired restructuring lawyers from Kirkland & Ellis, people familiar with the matter told Reuters.

The company's shares plunged 51 percent to $1.50 in early trading.

Chesapeake, which has more than $10 billion in debt, has been hit by a steep fall in both oil and gas prices. Many energy-related companies have hired financial and legal advisors to help them manage heavy debt loads.

Trade publication Debtwire first reported the engagement of Kirkland & Ellis on Friday evening.

About 40 energy companies entered bankruptcy in 2015 and more are expected in the next few months as oil prices have dropped by 75 percent since mid-2014.

Chesapeake recently completed a debt exchange, converting $3.8 billion of unsecured debt into new second-lien notes, but saw the new bonds drop on the secondary market. A limited number of holders of debt with near-term maturities participated in the exchange.

The Oklahoma City-based company also suspended payment of dividends on preferred stock last month, following in lockstep with other oil and gas companies seeking to conserve cash. Chesapeake reported cash and cash equivalents of approximately $1.8 billion on Sept. 30, according to public filings.

Chesapeake did not immediately return emailed requests for comment. A call to Kirkland & Ellis' public relations department was not immediately returned.

The company also has a maturity on bonds looming in March, according to Thomson Reuters Eikon data.

By late last year, Chesapeake had cut about 15 percent of its workforce and wrote down the value of some oil and gas assets, adding to impairment charges the company had already booked.

In the third quarter of 2015, Chesapeake reported a loss of $4.69 billion, compared with a profit of $169 million the same quarter the year before.

The company will provide a 2015 fourth quarter and year-end operational update and financial results on Feb. 24.