In order to get a new $4 billion line of credit this week, executives at Oklahoma City-based Chesapeake Energy Corporation nearly had to sell their souls. What they did was to put up nearly all of the company’s natural gas fields to reach an agreement with its credit lenders, a deal that matures in three years.
In addition, the company also pledged as collateral, all of its hedge contracts, property, deposit accounts and securities. The pledge, according to a filing with the Securities and Exchange Commission included mortgages encumbering 90 percent of the firm’s proved oil and gas properties as collateral.
It must have had a resounding affect on investors as Chesapeake rose in Monday’s trading, cutting the company’s slide in value that has occurred over the past year. Last year, according to a report by Bloomberg News, the company shares plummeted 77 percent and 2015 turned out to be the worst annual performance since 1998.
Chesapeake is still the nation’s second largest natural gas driller but its debt load is three times larger than its existing market value.
