Chesapeake Energy Was Worth $37 Billion In 2008; 10 Yrs Of Fracking Later, Valuation $1.5 Billion

[hatrack]

Last edited Thu Nov 7, 2019, 09:18 AM - Edit history (1)

EDIT

Over the past decade, the firm also racked up billions of dollars in debts, became the target of a federal antitrust investigation (settled in 2018), and was fined millions for illegally polluting water and causing other environmental harms. Chesapeake also lost its former CEO Aubrey McClendon, once hailed as “The Shale King,” who famously died in a fiery SUV accident in 2016 shortly after being indicted by the Justice Department, leaving behind a maze of debts, assets, and obligations in an estate that has taken attorneys years to sift through.

Chesapeake warned in a Securities and Exchange Commission (SEC) filing on Tuesday that if oil and natural gas prices don’t rise, the company will be at risk of a cascading series of defaults on its debts that could raise “substantial doubt about our ability to continue as a going concern.” Roughly an hour earlier, Chesapeake reported financial results that missed analysts’ earnings expectations — meaning that it’s fallen short of Wall Street’s expectations each quarter this year.

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At its peak in 2008, Chesapeake was valued at roughly $37 billion. But after more than a decade of aggressive drilling and fracking and land acquisition, as the stock market closed today, the company’s market capitalization was $1.48 billion. The price of West Texas Intermediate oil this year has averaged over $56 a barrel (lower than last year, but higher than the average price in 2017, 2016, or 2015, following several years when oil averaged close to $100 a barrel). For drivers, that has translated to gas prices that have stayed between $2 and $3 a gallon on average this year, according to data from GasBuddy.com.

For shale drilling companies, those prices have seemed catastrophically low. Chesapeake Energy is hardly alone in floundering financially. In June, Steve Schlotterbeck, former CEO of EQT, which is now the largest natural gas producer in the U.S., described the industry’s decade of poor financial performance in stark terms. “The shale gas revolution has frankly been an unmitigated disaster for any buy-and-hold investor in the shale gas industry with very few limited exceptions,” Schlotterbeck said. “In fact, I'm not aware of another case of a disruptive technological change that has done so much harm to the industry that created the change.”

EDIT

https://www.desmogblog.com/2019/11/06/debt-fracking-chesapeake-energy-stock-price-dollar

[Botany]

1. Chesapeake Energy

Was ruthless to the people that they leased property from for gas production. They would
say that they would pay the land owners say $2,800 per month put they slipped into their
leases that the land owner was responsible for "post production costs" for things like
drilling, transportation, storage, marketing and so on and that $2,800 soon it was like
$35.00 per month and the land owners had to pay huge legal fees if tried to fight for
their money. I think PA's Attorney General had to take 'em to court.

[TexasTowelie]

2. I know it's not your fault,

but the headline that compares market capitalization with share price is a misleading piece of bullshit. Just make an apples-to-apples comparison instead--probably that would be best with the market capitalization since we don't know if the shares split during the timeframe.

[hatrack]

3. You know, that's a good point - let me tweak that

.

[TexasTowelie]

4. Thanks.

Comparing $37 Billion to 91 cents is a lot more disturbing than comparing $37 billion to $1.5 billion.

[IndyOp]

5. I appreciate your tweak. Dropping from $37 billion to $1.5 billion is still a stunning loss. (n/t)

[TexasTowelie]

6. Agreed.

And regardless of what some members here feel about fossil fuel companies there are still a lot of lives affected when a company fails. From the people that worked for the company, to the people that may have invested in the company through mutual funds and didn't notice the details about that investment, to the taxing entities who will see less revenues, there isn't anything to cheer about when this happens.