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American shale pioneer Chesapeake Energy files for bankruptcy

(Agence Ecofin) – In the USA, the coronavirus continues to cause damage in the shale industry. Chesapeake Energy, a pioneer in the field has just filed for bankruptcy. He faces an abysmal debt of nearly $ 7 billion and hopes to revive himself by negotiating a restructuring of it.

Sunday, the American shale producer Chesapeake Energy started a bankruptcy process with a Texas court, because its activities are weighed down by a huge debt and the consequences of the coronavirus on the market.

The company will go under the protection of Chapter 11 of the bankruptcy law. It thus becomes the largest producer of oil and gas in the United States to bend the knee in a particularly difficult context for the industry.

“Chesapeake intends to use the procedure to strengthen its balance sheet and restructure its legal and contractual obligations in order to achieve a more sustainable capital structure », said an official statement, adding that activities will continue during the procedure.

The company has found an agreement to restructure its debt of nearly $ 7 billion with senior lenders who, at the end of the procedure could become the owners of this jewel which was at the heart of the American shale revolution. However, sources close to the company told the American press that the conditions have not all been examined and that the agreement found could still be canceled.

The company is currently negotiating the possibility of staying interest payments due on June 15 and invoking a grace period while negotiations continue with creditors. The company also began soliciting lenders to obtain financing from debtors in possession of its assets to finance its operations during bankruptcy.

About a decade ago, Chesapeake was a $ 37.5 billion giant at the forefront of the hydraulic fracturing revolution that transformed the U.S. oil and gas industry. The company has made generous gifts to businesses and residents of Fort Worth in North Texas to be allowed to drill on their land. It was in this area that the first shale field in America was discovered to have had great commercial success.

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