Oil shale pioneer Chesapeake Energy files for bankruptcy as oil price crash continues to wreak havoc in sector
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Combustion Industry News Editor
The company considered the leading pioneer of the US shale oil revolution, Chesapeake Energy, has declared bankruptcy, the largest victim so far of the drop in the oil price which has “ravaged” the country’s energy sector, in the words of the Financial Times. Chesapeake had skipped interest payments in June, and its bonds were trading at only five cents in the dollar, leading to the need to declare bankruptcy. The company will now restructure, having come to an agreement with the majority of its creditors, and will be able to continue operating through its bankruptcy period. (Chesapeake’s management, which shared a US$25 million ‘retention bonus’ shortly before warning of its need to seek bankruptcy, is expected to stay in place.) Analysts expect many more bankruptcies to come, with 18 already having occurred by the end of May. The West Texas Intermediate price has recovered somewhat since the incredible lows of late April, now being around US$40/barrel, which is nevertheless not high enough for most companies to make a profit.