What Caught Our Attention in the Investment World? – Week of June 29 – July 2, 2020

By Kuldip K. Ambastha

Chesapeake Energy Corporation (CHK) of Oklahoma City, OK was in the news this week. The company was founded by Tom L. Ward (currently the Chairman and CEO of privately held MACH Resources) and the now-late Aubrey K. McClendon in 1989 with an initial funding of $50,000. Robert D. Lawler (aka: Doug Lawler) is currently the President and CEO of the company, plus a Director on the company’s Board of Directors. Chesapeake Energy became a pioneer in the natural gas exploration and production space, spending aggressively and borrowing heavily to grow the company over time. The company used hydraulic fracturing (aka: fracking) to unleash energy deposits which were previously economically unviable to take out of the ground’s shale rock.

On Sunday, June 28, 2020, the company filed for Chapter 11 bankruptcy due to a heavy debt load combined with a significant drop in oil and gas demand caused by the coronavirus pandemic. Chesapeake Energy has received $925 million in debtor-in-possession (DIP) financing, which will be used to fund operations as part of the Chapter 11 reorganization proceedings. As part of the reorganization, debt will be cut significantly, the balance sheet will be strengthened, and legacy contractual obligations will be potentially changed. During the trading week, the biggest daily return (from a loss percentage perspective) seen for the stock was -58.6% on Tuesday, June 30, 2020.

Keywords – Chesapeake Energy Corporation, Chesapeake Energy, Chesapeake, CHK, Oklahoma City, Oklahoma, OK, The Sooner State, State of Oklahoma, Tom L. Ward, MACH Resources, Aubrey K. McClendon, Robert D. Lawler, Doug Lawler, energy, oil & gas, natural gas, shale rock, Chapter 11, bankruptcy, reorganization, coronavirus, pandemic, COVID-19.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in CHK.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

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