U.S. natural gas giant Chesapeake Energy goes bankrupt

Bankrupt U.S. shale pioneer Chesapeake Energy on Monday laid out its long-term plans and detailed dramatically reduced drilling through the end of the year, with half the rigs as it had to start 2020. Chesapeake on Sunday became the largest U.S. oil and gas producer to seek bankruptcy protection in recent years as it bowed to heavy debt and the impact of the coronavirus outbreak on energy markets.

The company said it aims to run a rig program of six to eight rigs for the next two years, and seven to eight rigs between 2022 and 2024, a regulatory filing showed. It did not specify what proportion was oil or gas rigs.

Chesapeake was operating 15 rigs on average in the fourth quarter last year before the coronavirus pandemic sapped fuel demand and roiled the energy markets. Last quarter, its rig count edged down to 14 rigs.

The filing also showed Chesapeake’s plans to operate an average of just six rigs between Appalachia and the Gulf Coast in the third and fourth quarters, compared with 14 across several U.S. fields in the first quarter. Its second-quarter average is estimated at seven rigs, with 36 gross wells drilled.

The producer, which spent heavily to become the top U.S. producer of natural gas at one point, is still the No. 2 shale gas producer behind EQT Corp, according to data provider Enverus.

One of Chesapeake’s pipeline providers, Crestwood Equity Partners LP, said on Monday it does not expect a financial hit from the bankruptcy – Chesapeake is current on outstanding invoices and additional cash flow protection is in place though letters of credit. Crestwood gathers and processes Chesapeake’s natural gas and liquids in the Powder River Basin and Marcellus fields.

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