Amid an unprecedented drop in oil prices, one of the state’s largest oil and gas companies could be preparing to file bankruptcy, according to a national news report.
Chesapeake Energy Corporation stock prices fell 32% Thursday after a report by Reuters saying the company is in the early stages of preparing to file for chapter 11 bankruptcy.
“If the virus didn't happen and if the Saudis continued to work with the Russians to keep their output restricted, we would not be in this situation,” Oklahoma City University, Meinders School of Business Dean Steve Agee said.
He said the company was heading in a positive direction under CEO Doug Lawler, reducing its debt from $21 billion now down to around $9 billion.
“It's just a terrible circumstance he's been caught up with here, when you look at things that are completely outside of his control,” Agee said.
He said chapter 11 typically forces out the board of directors and operating officers. Agee said whether the company’s 2,300 other employees are in jeopardy is yet to be seen.
“Chesapeake is a big company and they need employees, they need field employees, they've got to have accountants,” he said. “This is a big deal and so they're going to have to require employees to continue to run that company.”
According to, Reuters the company is now in talks to take out a loan of roughly $1 billion to help them through bankruptcy. Sources tell the news service they are even considering skipping a $192 million debt payment due in August.
Chesapeake declined to provide a comment for this story.
Agee said in times like these, no oil and gas company is immune from financial struggles.
“These companies in Oklahoma City have no control over that, but they're having to deal with the repercussions, and it may be very severe,” he said.