Chesapeake issues going concern warning alongside Q3 loss

Nov. 05, 2019 10:17 AM ETChesapeake Energy Corporation (CHK)CHKBy: Carl Surran, SA News Editor151 Comments
  • Chesapeake Energy (CHK -13.1%) plunges at the open after posting a larger than forecast Q3 loss and saying it may not be able to continue as a going concern if depressed oil and gas prices persist.
  • In its 10-Q statement, CHK warns "If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern."
  • CHK says it is pursuing various transactions and cost-cutting measures, including a reduction in corporate discretionary expenditures, refinancing transactions, capital exchange transactions, asset divestitures, 30% lower capital spending in 2020 and operational efficiencies, and believes "it is probable that these measures, as we continue to implement them, will enable us to comply with our leverage ratio covenant."
  • “With massive debt, leverage is not going down every quarter you continue to outspend,” SunTrust analyst Neal Dingmann tells Bloomberg. “What is leverage going to look like next year and how are you going to address it internally or externally? That’s the story.”

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