Chesapeake Energy has formally made a statement that it would not be seeking to enter bankruptcy protection, as fears of just that spooked many of its stockholders. A news report recently stated that the natural gas producer had retained attorneys who were known to specialize in helping companies restructure their debt. The law firm, Kirkland & Ellis LLP , describes itself as a law firm that works with clients on litigation, taxes, intellectual property and restructuring matters.
Share prices for Chesapeake Energy stock were down more than 50 percent for a time after the news report. Its shares fell 50.6 percent in one business day. The shares later rebounded after the Oklahoma City-based company announced to investors that there were no plans to file for bankruptcy protection. In a statement, the company said, “Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders.”
Chesapeake said it has long sought the counsel of the attorneys at Kirkland & Ellis. Since 2010, Kirkland & Ellis has served as one of Chesapeake’s counsel, according to a statement by the company. The rebound in the company’s stock after the statement was tepid. By the end of the day, its shares were off 33 percent, closing down $1.02 at $2.04.
As oil and gas prices have plummeted worldwide, Chesapeake’s stock has been pummeled. The company’s shares are down about 90 percent in the past year. In response, the company has slashed spending, sold assets and cut jobs to save money. It has also ended dividend payments for its preferred stock, saving the company roughly $170 million per year.
For the nine months ended Sept. 30, Chesapeake Energy lost $12.63 billion, or $19.07 per share, compared with a year-earlier profit. Revenue was $8.69 billion, down 45 percent from the same nine-month period in 2014. The company is scheduled to report quarterly results later this month.