OKLAHOMA CITY – Share prices for Chesapeake Energy stock were down more than 50 per cent for a time Monday after a news report said the Oklahoma City-based company had brought on attorneys who help companies restructure their debt, but rebounded after the natural gas producer told investors that it was not planning to file for bankruptcy protection.
Chesapeake said it has long sought the counsel of attorneys at Kirkland & Ellis, which describes itself as a law firm that works with clients on litigation, taxes, intellectual property and restructuring matters.
“Kirkland & Ellis LLP has served as one of Chesapeake’s counsel since 2010 and continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange. Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders,” the company said in a statement.
Chesapeake issued the statement Monday after its shares fell 50.6 per cent one business day after a report linked Chesapeake to the restructuring lawyers. At the end of the day, shares were off 33 per cent, closing down $1.02 at $2.04. Shares are down about 90 per cent in the past year, as oil and gas prices have plummeted worldwide.
The company, whose name is sprawled across the local arena that is home to the Oklahoma City Thunder of the NBA, has slashed spending, sold assets and cut jobs to save money. Last month, it also ended dividend payments for its preferred stock, a move that saves the company $170 million per year.
Locally, Chesapeake is one of the city’s “bellwether” energy companies, said Chad Warmington, president of the Oklahoma Oil & Gas Association. When the company’s stock price dips as precipitously as it did Monday — it was down to $1.50 for a time — it affects perceptions of the local energy market, he said.
Other Oklahoma City-based energy companies saw their stock prices drop Monday as oil prices continued to slip. Devon Energy Corp. was down 4.7 per cent when the markets closed, while shares of Oklahoma Gas & Electric parent OGE Energy Corp. dropped 1.4 per cent.
Warmington said that when prices rebound, Chesapeake and the others should be in a position to benefit.
“A lot of our companies, Chesapeake included, have some really good assets and have a lot of potential for upward momentum when prices rebound,” Warmington said.
Chesapeake Energy did not respond to requests for comment Monday afternoon.
The company is scheduled to report quarterly results later this month. For the nine months ended Sept. 30, Chesapeake Energy lost $12.63 billion, or $19.07 per share, compared with a year-earlier profit. Results were weighed down by hefty asset impairment charges. Revenue was $8.69 billion, down 45 per cent from the same nine-month period in 2014.