Chesapeake Energy Announces It 'Successfully Emerges From Financial Restructuring'

Tuesday, February 9th 2021, 3:31 pm
By: News 9


Chesapeake Energy Corporation has "successfully concluded its restructuring process and emerged from Chapter 11," the company announced Tuesday.

Chesapeake Energy said it satisfied all of the conditions precedent under its plan of reorganization.

Highlights of the plan include:

  1. Anticipated cumulative free cash flow of more than $2 billion over the next five years, providing stability and optionality to return cash to shareholders
  2. Targeting long-term net debt to EBITDAX ratio of less than 1.0 times
  3. Issued $1 billion senior unsecured notes at a weighted average coupon of less than 5.7%
  4. Disciplined capital reinvestment strategy of 60% to 70% of cash flow; 2021 activity focused on world-class natural gas assets
  5. The permanent elimination of over $1 billion in annual cash costs from 2019 levels with opportunities for additional reductions; top-quartile operating performance metrics vs. peer group
  6. Commitment to achieving net-zero GHG direct emissions by 2035, eliminating routine flaring on all wells completed on a go-forward basis, and meaningfully reducing methane and GHG intensity by 2025
  7. New Board of Directors nominated by long-term value-focused equity holders; newly formed ESG Committee dedicated to ESG oversight and excellence.

Under the court-approved plan, approximately $7.8 billion of debt has been equitized and the company's preferred and common equity interests have been canceled as of Feb. 9, 2021.

Chesapeake CEO Doug Lawler released the following statement:

"Today marks a new day for Chesapeake. We have fundamentally reset our business, and with an improved capital and cost structure, disciplined approach to capital reinvestment, diverse asset base and talented employees, we are poised to deliver sustainable free cash flow for years to come. Additionally, our unwavering resolve to leading a responsible energy future has never been greater, and our pledge to achieve net zero GHG direct emissions by 2035, eliminate routine flaring on new completions immediately, and significantly reduce our methane and GHG emission intensity by 2025, place Chesapeake on a path toward setting a new standard of environmental excellence in our industry."

Click here to read more about Chesapeake Energy Corporation's financial restructuring.