From MarketWatch:
Chesapeake Energy's stock drops after 'going concern' warning, less than 3 months after warning was removed
Shares of Cheseapeake Energy Corp. CHK, -5.11% dropped 3.4% in premarket trading Monday, after the oil and gas production company added the "going concern" warning back into its quarterly filing with the Securities and Exchange Commission less than three months after removing the warning from its annual report. The company said in its 10-Q filing that as a result of volatility in commodities prices as a result of the COVID-19 pandemic and uncertainties supply, and the likelihood of a restructuring or reorganization, "management has concluded that there is substantial doubt about the company's ability to continue as a going concern." .......MORE
Previously:
April 29
Reuters "Exclusive: Chesapeake Energy preparing bankruptcy filing" (CHK)
April 15
Natural Gas: After 1 for 200 Reverse Split Chesapeake Falls Another 37% (CHK)
...As noted back on February 26:
U.S. #3 Natural Gas Producer, Chesapeake Crushed, Down 32% (CHK)
I think CHK is still #3 after OXY bought Anadarko but it's possible Chesapeake has slipped to #4.
This is one of the three or four most likely bankruptcies among the gas Exploration & Production companies....MORE
March 17
Natural Gas: "Exclusive: Shale gas pioneer Chesapeake Energy taps restructuring advisers - sources" (CHK)
If interested see also some of the links in March 26's "Goldman: "Why Natural Gas Prices Could Double by Next Winter".
The newly 1 for 200 reversed shares are at $13.85 down $0.85 (-5.78%)
Here's the 10Q:
....Note 2 Going Concern
Fluctuations
in oil and natural gas prices have a material impact on our financial
position, results of operations, cash flows and quantities of oil,
natural gas and NGL reserves that may be economically
produced. Historically, oil and natural gas prices have been volatile;
however, the volatility in the prices for these commodities has
substantially increased as a result of COVID-19 and the OPEC+ decisions
discussed in Note 1.
We expect to see continued volatility in oil and natural gas prices for
the foreseeable future, and such volatility, combined with the current
depressed prices has impacted and is expected to continue to adversely
impact our business. If the current depressed prices persist, combined
with the scheduled reductions in the leverage ratio covenant and an
expected significant reduction in our borrowing base in our scheduled
determination, then our liquidity and our ability to comply with our
financial covenants during the next 12 months will be adversely
affected. Based on our current forecast, we do not expect to be in
compliance with our financial covenants beginning in the fourth quarter
of 2020. Failure to comply with these covenants, if not waived, would
result in an event of default under our revolving credit facility, the
potential acceleration of outstanding debt thereunder and the potential
foreclosure on the collateral securing such debt, and could cause a
cross-default under our other outstanding indebtedness.
As
a result of the impacts to the Company’s financial position resulting
from declining industry conditions and in consideration of the
substantial amount of long-term debt outstanding, the Company has
engaged advisors to assist with the evaluation of strategic
alternatives, which may include, but not be limited to, seeking a
restructuring, amendment or refinancing of existing debt through a
private restructuring or reorganization under Chapter 11 of the
Bankruptcy Code. However, there can be no assurances that the Company
will be able to successfully restructure its indebtedness, improve its
financial position or complete any strategic transactions. As a result
of these uncertainties and the likelihood of a restructuring or
reorganization, management has concluded that there is substantial doubt
about the Company’s ability to continue as a going concern. The
condensed consolidated financial statements (i) have been prepared on a
going concern basis, which contemplates the realization of assets and
satisfaction of liabilities and other commitments in the normal course
of business and (ii) do not include any adjustments to reflect the
possible future effects of the uncertainty on the recoverability or
classification of recorded asset amounts or the amounts or
classifications of liabilities.....
