Chesapeake Energy helped change the face of the U.S. energy industry by pioneering the development of unconventional hydrocarbon reserves, paving the way for a surge in domestic oil and gas production. Now, though, the company is saying it may not be able to stay afloat if world fuel prices remain low.
In a quarterly filing dated November 5, Chesapeake explained that it might not be capable of upholding its leverage ratio covenant over the next 12 months if oil and gas prices do not break out of the current slump. “[This situation] raises substantial doubt about our ability to continue as a going concern,” it said in the filing.
Chesapeake’s shareholders have been concerned for some time about the company’s swelling debt portfolio. The firm’s debt load rose from $8.17 billion as of December 31, 2018, to $9.73 billion as of September 30, 2019.