Page 16 - NorthAmOil Week 23

NorthAmOil PROJECTS & COMPANIES NorthAmOil

Chesapeake reportedly close

to filing for bankruptcy

US CHESAPEAKE Energy was reported to be June 11, the company’s share price was trading
preparing a potential filing for Chapter 11 below $17.
bankruptcy protection this week as it runs out Chesapeake was already struggling before its
of options for staying afloat and an interest woes were compounded by the failure of OPEC+
payment deadline looms. Analysts have been talks in March and the impact of the coronavi-
warning that the debt-laden company has risked rus (COVID-19) pandemic on energy demand.
bankruptcy since oil prices collapsed in March. Chesapeake’s CEO, Doug Lawler, had spent
And Chesapeake said in May that it was con- around seven years trying to pay down an exten-
sidering a bankruptcy court restructuring of its sive debt load amassed by his predecessor, the
debt, which totals over $9bn, as it was unable to late Aubrey McClendon. He also tried to pivot
access financing. the company away from natural gas, as prices for
On June 8, citing sources familiar with the the fuel languished, to more profitable tight oil.
matter, Bloomberg reported that Chesapeake These efforts also led to little success, however, as
was negotiating a restructuring support agree- crude prices stayed relatively weak before their
ment that could see holders of its “first in, last latest collapse.
out” (FILO) term loan take a majority of the For the first quarter of 2020, Chesapeake
equity in bankruptcy. However, the sources recorded $8.5bn in impairments as the value of
added that the support agreement remained its fields, a sand mine and other assets shrank
fluid and that the terms could change. along with crude prices.
The day this was reported, the compa- The company is now considering whether to
ny’s shares more than tripled at one point skip interest payments due on June 15 and invoke
to $84.75, then slumped after Bloomberg a grace period while it talks with creditors,
reported the potential bankruptcy filing. according to Bloomberg’s sources. One source
Trading of company shares was also halted for said it had also begun soliciting lenders to pro-
volatility 22 times during that session and the vide debtor-in-possession financing to fund its
volatility continued the following day. As of operations during bankruptcy.™

NEWS IN BRIEF

UPSTREAM of this transaction is May 1, 2020, and the and the board of directors of Black Stone’s
sale is expected to close in July of 2020. general partner intend to evaluate increasing
Black Stone Minerals The other agreement involves the sale of a distribution levels after closing the
transactions in July.
57% undivided interest across parts of the
announces asset sales Company’s Delaware Basin position and a BLACK STONE MINERALS, June 04, 2020
32% undivided interest across parts of the
totalling $155mn, further company’s Midland Basin position to Pegasus Baker Hughes announces
Resources, LLC, a portfolio company of
strengthening balance EnCap Investments, for gross proceeds of May 2020 rig counts
approximately $100mn. The effective date of
sheet and liquidity position this transaction is July 1, 2020, and the sale is Baker Hughes announced today that the
Baker Hughes international rig count for
also expected to close in July of 2020. Black
Black Stone Minerals today announced it has Stone estimates the production associated May 2020 was 805 down 110 from the 915
entered into two separate agreements to sell with the properties to be sold, in total, to be counted in April 2020, and down 321 from the
certain mineral and royalty properties in the approximately 1,800 boe per day. 1,126 counted in May 2019. The international
Permian Basin for gross proceeds totalling Proceeds from the sale will be used to offshore rig count for May 2020 was 195,
approximately $155mn. reduce the balance outstanding on the down 33 from the 228 counted in April 2020,
One of these agreements involves the company’s revolving credit facility. Black and down 45 from the 240 counted in May
sale of Black Stone’s mineral and royalty Stone expects its total debt levels to be under 2019.
interests in specific tracts in Midland County, $200mn after closing the two transactions. The average US rig count for May 2020 was
Texas to a private buyer for gross proceeds The asset sales accelerate Black Stone’s debt 348, down 218 from the 566 counted in April
of approximately $55mn. The effective date reduction goals, and therefore management 2020, and down 638 from the 986 counted in

P16 www. NEWSBASE .com Week 23 11•June•2020