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Fracking trailblazer Chesapeake Energy becomes the biggest oil and gas bankruptcy of the pandemic

June 28, 2020. Summarized by summa-bot.

in Bradford County, Pennsylvania, U.S., on Tuesday, April 6, 2010. Photographer: Daniel Acker/Bloomberg

Fracking pioneer Chesapeake Energy Corporation on Sunday became the largest oil-and-gas company to file for bankruptcy protection during the coronavirus pandemic.

New York (CNN Business)Fracking pioneer Chesapeake Energy Corporation on Sunday became the largest oil-and-gas company to file for bankruptcy protection during the coronavirus pandemic.

Aubrey McClendon, Chesapeake's late founder and CEO, was considered one of the leaders of the shale boom that transformed the United States into the world's largest oil and natural gas producer.

But more recently, bankruptcy rumors had swirled around Chesapeake (CHK) as the company grappled with depressed energy prices, a poorly timed push into oil and a mountain of debt.

Chesapeake said in a statement Sunday that the Chapter 11 bankruptcy protection would help it to "strengthen its balance sheet and restructure its legacy contractual obligations to achieve a more sustainable capital structure. "

Chesapeake, founded in 1989 with an initial investment of $50,000, and has long been known as a major natural gas producer.

Continued cheap gas prices persuaded the company to make a big bet on oil, an expansion marked by a $4 billion deal in October 2018 to buy Texas driller WildHorse Resource Development that proved to be poorly timed.

Bankruptcy rumors have swirled around Chesapeake for years as low oil and gas prices made it difficult for the company to repay its pile of debt.

Already this year, 18 oil-and-gas companies have defaulted on their debt, compared to 20 for all of last year, according to a S&P Global Ratings tally from earlier this month.

Chesapeake is just the latest oil company to file for bankruptcy protection.

Former shale star Whiting Petroleum (WLL) sought Chapter 11 in April, marking the first major oil producer to seek bankruptcy since the pandemic struck.

Diamond Offshore (DO), which conducts drilling for major oil companies including Hess (HES) and BP (BP), filed for bankruptcy protection in late April.

Analysts have warned that dozens more US oil and gas companies may succumb as well.

About 30% of US shale operators are technically insolvent at $35-a-barrel oil prices, according to a recent Deloitte study.

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