( Reuters) – Chesapeake Energy Corp ( CHK.N), the oil and gas exploration and production company that was at the forefront of the previous decade’s U.S. shale boom, is preparing a potential bankruptcy filing as it faces an unprecedented thrashing in energy costs, people familiar with the matter said on Wednesday.
FILE PICTURE: Chesapeake Energy Corporation’s 50 acre campus is seen in Oklahoma City, Oklahoma, April 17,2012 REUTERS/Steve Sisney
The Oklahoma City-based business, cofounded by late wildcatter and outspoken gas supporter Aubrey McClendon, has actually held conversations with financial institutions about a possible loan that would assist operations while it navigates bankruptcy proceedings, the sources said. The loan could total approximately $1 billion, though its size remains in flux, among the sources included.
Such loans, referred to as debtor-in-possession funding, are essential to companies seeking Chapter 11 insolvency defense due to the fact that they assist them sustain as much of their organisation as possible throughout court proceedings.
Chesapeake’s discussions about possibly acquiring bankruptcy financing remain in early phases, and the company has actually made no final decisions about how it plans to address its debts, the sources cautioned. It might try to encourage creditors to restructure its financial obligation outside of bankruptcy procedures, said the sources, who asked not to be identified due to the fact that the matter is personal.
Chesapeake did not immediately respond to an ask for comment.
Chesapeake was attempting to pivot from gas to a greater focus on oil production when a Saudi-Russian energy cost war earlier this year overthrew its plans and the larger crude mar