A week after it missed interest payments on some of its debt, Oklahoma City-based Chesapeake Energy has received another break. It is being allowed by the government to suspend production from more than 100 federal drilling leases without losing ownership of the assets.
Reuters reported the findings after reviewing a federal database.
The assistance for the cash-strapped shale pioneer, which is widely expected to become the biggest U.S. oil and gas company to go bankrupt since the health crisis hit the global economy, accounts for nearly a third of the lease suspensions granted by the U.S. government in the last two months.
Companies typically are required to forfeit their leases if they stop working on them.
Company officials did not immediately respond to a request for comment.
The U.S. Bureau of Land Management, which oversees drilling on federal lands, has been approving individual requests for lease suspensions and royalty reductions to help companies weather low energy prices.
While suspensions allow companies to stop producing without losing their leases, companies are still required to make rent payments. BLM has approved more than 350 lease suspensions related to fallout from the pandemic, according to the agency’s online database, LR2000.
Chesapeake applied for the lease suspensions in late April and had received 108 approvals by mid-May, according to an analysis of the data by the conservation group Center for Western Priorities.
Most of the suspensions expire on July 1. BLM allows suspensions to be extended “if conditions so warrant,” though it was unclear whether that policy would extend to a company in bankruptcy.
Source: Reuters