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Chesapeake Energy, one of the first companies to take advantage of directional drilling and fracking, filed for Chapter 11 bankruptcy protection in Houston on Sunday, the latest victim of the oil and gas price plunge caused by the COVID-19 pandemic. The company, based in Oklahoma City, was highly leveraged when the oil and gas market collapsed, and now the company is seeking to eliminate as much as $7b of its nearly $12b in outstanding debts. The company will continue to operate as it tries to restructure. On Monday, allegations surfaced of the depth of the financial mess at the company — a lack of budgets, a massive wine collection, and a nine-figure bill for parking garages — according to CNBC.
Why This Matters: This is one of the most high profile firms to fall apart during the pandemic, but due to the long term economics of oil and gas, it won’t be the last. The Wall Street Journal cites industry analysts’ prediction that if oil and gas prices remain flat over the next two years, as many as 200 other shale companies could also file for bankruptcy. But we wonder how Chapter 11 bankruptcy protection can offset the fundamental structural problems of declining oil and gas demand?
Chesapeake’s Excesses Caught Up To Them
CNBC reported that when the current CEO took over Chesapeake in 2013, he found a raft of financial problems including “$30 billion in spending above cash flow that happened from 2010-12,” as well as “a season ticket package to the NBA’s Oklahoma City Thunder that was the biggest in the league and a lavish campus that was modeled after Duke University, complete with beekeepers, botox treatments and chaplains for employees.” (OK we are not so offended by the beekeepers!) But over the last few years, the company’s shareholder returns fell precipitously after a downturn in oil prices five years ago, according to the Wall Street Journal.
By Lew Milford With its recent executive orders on environmental justice, the Biden administration has put energy equity at the front and center of its domestic policy agenda. The challenge now is to put these principles into practice. That job has been made much more critical with the massive power outage that just crippled Texas. […]
by Natasha Lasky, ODP Staff Writer As the domestic electric vehicle market in the United States continues to hit its stride and new competitors vie in the race to electrify, Lucid Motors has emerged as an ultra-luxury competitor to EV darling Tesla Motors. This week, Lucid went public through a SPAC with Churchill Capital Corp […]
The Texas freeze and subsequent blackouts have given the Biden administration the chance to show the country how it will handle natural disasters, and they’ve already done one thing much differently than the Trump administration: acknowledged the role of climate change. And now, due to surge pricing, Texans are facing utility bills in the thousands of dollars for what little heat they got.
Why This Matters: The Biden administration wasted no time declaring an emergency and stating it would review preparation for future storms.
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