• About
    • Which Energy Mix is this?
  • Climate News Network Archive
  • Contact
Celebrating our 1,000th edition. The climate news you need
No Result
View All Result
The Energy Mix
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
No Result
View All Result
The Energy Mix
No Result
View All Result
  FEATURED
Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use June 26, 2022
BREAKING: UN Nature Summit, the ‘Paris Conference for Biodiversity’, Moves to Montreal in December June 19, 2022
‘LET’S SUE BIG OIL’: Legal Team Launches Class Action Campaign for B.C. Municipalities June 17, 2022
‘It Could Have Been Any of Us’, Colleague Says, After Brazil Confirms Murders of Bruno Pereira, Dom Phillips June 17, 2022
Infrastructure Gap a ‘Life and Death’ Matter as Northern Canada Warms June 17, 2022
Next
Prev
Home Climate & Society Community Climate Finance

U.S. Fracking Giant Chesapeake Energy Sees Share Value Crash as it ‘Drowns’ in Debt

November 11, 2019
Reading time: 3 minutes
Primary Author: Compiled by The Energy Mix staff

Joshua Doubek/Wikimedia Commons

Joshua Doubek/Wikimedia Commons

34
SHARES
 

The accelerating decline of the U.S. fracking industry looked likely to claim its highest-profile victim to date as Oklahoma City-based Chesapeake Energy, once the country’s second-largest gas producer, warned last week that a crippling, US$9.7-billion debt might prevent it from continuing as a viable business.

The news came less than a week before colossal fossil ExxonMobil, another company closely associated with fracking activities in the U.S. and elsewhere, reported a 49% decline in its profit for the third quarter of the year, though it still walked away with $3.17 billion, industry newsletter Rigzone reports.

“Chesapeake Energy (CHK) has fallen,”’ the Cable News Network declared Wednesday, in a post republished by the Institute for Energy Economics and Financial Analysis. “The company’s early bets on fracking made it a natural gas powerhouse, and at one point it was the nation’s No. 2 natural gas producer. Aubrey McClendon, Chesapeake’s late founder and CEO, was considered one of the leaders of the shale boom.”

But now, CNN said, the company is “drowning” in debt and “struggling to pay it all back, because America is swimming in excess natural gas, keeping prices very weak.” Chesapeake also made a tough situation worse by following one bad investment decision with another.

“The financial problems have been amplified by a bid to diversify away from natural gas by betting big on oil,” CNN explained. “The company’s October 2018 deal for shale oil driller WildHorse Resource Development, valued at $4 billion, including debt, came when U.S. oil prices were trading at nearly $70 a barrel. Weeks later, crude plunged below $45 a barrel. Oil prices have yet to fully recover.”

By now, Chesapeake’s debt is “nearly four times its market valuation, much of which was a result of increased spending when energy prices were high, and for acquisitions aimed at expanding its oil assets to combat falling natural gas prices,” Reuters reported last week. With average gas prices down 11%, to US$2.38 per thousand cubic feet, between July and September, the company said its ability to pay off its debts will be affected if prices don’t recover.

At this point, “a continuous rise in U.S. gas production—a byproduct of the shale oil boom—has prices for the fuel heading toward a 25-year low, with output outpacing U.S. consumption,” the news agency adds.

In the wake of last week’s financial report, “shares of Chesapeake fell nearly 18% to US$1.28 in New York on Tuesday after the company reported a marginally bigger-than-expected loss and a huge shortfall in production for the third quarter,” Reuters stated. Its third-quarter losses stood at $188 million, compared to $8 million over the same period last year. As of Sunday evening, the company’s stock was down to 90¢ per share. 

Now, CNN said, Chesapeake is scaling back its 2020 drilling activities by 30%, cutting production and expenses by 20% in a bid to free up cash flow, and may sell off some of its assets.

Bloomberg reported that “Wall Street isn’t optimistic on Chesapeake’s future,” noting that the financial report had brought its stock to a 20-year low. “Chesapeake’s Haynesville shale asset is the most likely candidate for a sale,” though the news agency had Tudor Pickering Holt & Co. analyst Sammer Panjwani warning clients that “production (and value) is declining by the day as the asset has entered base decline”.The Seeking Alpha investment blog lists several North American pipeline companies at risk as a result of Chesapeake’s collapse, including Houston-based Kinder Morgan and Energy Transfer Partners, the company behind the intensely controversial Dakota Access Pipeline.



in Community Climate Finance, Energy / Carbon Pricing & Economics, Oil & Gas, Pipelines / Rail Transport, Shale & Fracking, United States

The latest climate news and analysis, direct to your inbox

Subscribe

Related Posts

David/flickr
United States

U.S. Supreme Court Expected to Gut Emission Controls as Climate Scientists Petition for Plan B

June 26, 2022
1
Graco/Facebook
Food Security

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use

June 26, 2022
2
Gustavo Petro Urrego/flickr
Forests & Deforestation

Colombia’s President-Elect Has ‘Ambitious’ Plans to Halt Amazon Deforestation

June 26, 2022
1

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Trending Stories

The federal government's Cliff Street Power Plant is at the centre of Ottawa's plans to reduce natural gas demand. Photo: PWGSC

EXCLUSIVE: Ontario Regulator Refuses New Pipeline, Tells Enbridge to Plan for Lower Gas Demand

May 30, 2022
5.2k
Jason Woodhead/Flickr

Trans Mountain Pipeline On Track to Lose $600 Million, Parliamentary Budget Officer Finds

June 24, 2022
341
Ben_Kerckx/Pixabay

Plastics Cited as ‘Fossil Industry’s Plan B’ as Guilbeault Announces Partial Ban

June 24, 2022
219
Bruce Reeve/Flickr

Opinion: Ontario’s New ‘Carbon Tax’ Looks Like the One Doug Ford Fought

June 7, 2022
1.6k
eloialferez66/pixnio

Toronto’s New Backyard Homes Will Help Fight Sprawl

June 24, 2022
70
Greg Goebel/Wikimedia Commons

Canadian Pension Board Invests $141M in Chinese Coal Projects, Undercutting Federal Phaseout Policy

July 29, 2020
2.3k

Recent Posts

David/flickr

U.S. Supreme Court Expected to Gut Emission Controls as Climate Scientists Petition for Plan B

June 26, 2022
1
pxhere

Environmental Racism Bill Passes Second Reading in House of Commons

June 26, 2022
1
Graco/Facebook

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use

June 26, 2022
2
stockvault

Animal Agriculture Could Reduce Future Pandemic Risk, UK Researchers Say

June 26, 2022
1
Gustavo Petro Urrego/flickr

Colombia’s President-Elect Has ‘Ambitious’ Plans to Halt Amazon Deforestation

June 26, 2022
1
Adam E. Moreira/wikimedia commons

Suspend Transit Fares, Not Gas Tax, Climate Advocates Urge Biden

June 26, 2022
1
Next Post
Bryan Alexander/flickr

Home Storage Delivers Back-Up Power in Vermont Blackout, and EV Batteries Could Do Even Better

The Energy Mix

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Navigate Site

  • About
  • Contact
  • Privacy Policy and Copyright
  • Cookie Policy

Follow Us

No Result
View All Result
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}