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Chesapeake Energy, a Shale Pioneer, Files for Bankruptcy Protection

Chesapeake Energy, a Shale Pioneer, Files for Bankruptcy Protection


Chesapeake Energy, a Shale Pioneer, Files for Bankruptcy Protection

HOUSTON — Chesapeake Energy, a pioneer in extracting natural gas from shale rock across the country, filed for bankruptcy protection on Sunday, unable to overcome a mountain of debt that became unsustainable after a decade of stubbornly low gas prices.The company helped convert the United States from a natural gas importer into a major exporter under the swashbuckling leadership of Aubrey McClendon, a company co-founder and former chief executive.But Mr. McClendon overextended the company and amassed over $20 billion in debt before he was forced out in 2013, and Chesapeake, based in Oklahoma City, never fully recovered.Chesapeake lost $8.3 billion in the first quarter of this year, and had just $82 million in cash at the end of March. With $9.5 billion in debt at the end of last year, it has bond payments of $192 million due in August.In a statement, Chesapeake said it was filing for Chapter 11 protection to facilitate a complete restructuring. As part of its agreement with lenders, the company said it had secured $925 million in financing under a revolving credit facility, and eliminated roughly $7 billion of debt. It also secured a $600 million future commitment of new equity.“We are fundamentally resetting Chesapeake’s capital structure and business to address our legacy financial weaknesses,” said Doug Lawler, Chesapeake’s president and chief executive. “Chesapeake will be uniquely positioned to emerge from the Chapter 11 process as a stronger and more competitive enterprise.”Chesapeake has 1,900 employees.It is the latest heavily indebted oil and gas business to seek bankruptcy protection since the coronavirus pandemic crippled demand for energy.Under its former chief executive Mr. McClendon, the company drilled across Texas, Oklahoma, Ohio, Wyoming and Louisiana. Mr. McClendon was audacious as he aggressively outbid competitors on land leases and explored widely in the early 2000s, although he also drilled many wells that disappointed investors. By 2011, he and others who followed in his footsteps had produced a glut of natural gas that sent Chesapeake and other companies to the brink of collapse.To find a use for all that natural gas, Mr. McClendon went on a campaign to promote compressed natural gas vehicles, but the effort went nowhere. He tried to make alliances with environmentalists, arguing that gas could replace coal and be a bridge fuel to a cleaner energy future.Before his ouster in 2013, Mr. McClendon built a luxurious campus for the company in Oklahoma City, complete with a community garden, deluxe dining facilities and two parking garages that alone cost $100 million to build.He acquired trophy assets like the Oklahoma City Thunder basketball team, interests in a French winery and a $12 million antique map collection. The basketball team still plays in Chesapeake Energy Arena, which was a symbol of Oklahoma City’s revival as a gas hub.From 2010 to 2013, the company spent approximately $30 billion more on leasing and drilling than it made from its production.Mr. McClendon was also known to cut corners, which got him and his company in trouble. Chesapeake executives complained of a lack of a formal budgeting process or employee performance management system. The company borrowed money to fund charities and real estate projects.

Updated June 24, 2020

Is it harder to exercise while wearing a mask?
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

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The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

What is pandemic paid leave?
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

Does asymptomatic transmission of Covid-19 happen?
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

What’s the risk of catching coronavirus from a surface?
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

How does blood type influence coronavirus?
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

How many people have lost their jobs due to coronavirus in the U.S.?
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

What are the symptoms of coronavirus?
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

How can I protect myself while flying?
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

What should I do if I feel sick?
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

Mr. McClendon was charged in 2016 with conspiring to suppress prices for oil and natural gas leases. The indictment said he had orchestrated a conspiracy in which two oil and gas companies colluded not to bid against each other for several leases in northwestern Oklahoma from late 2007 to early 2012.A day after the indictment, Mr. McClendon, at age 56, died in a crash in Oklahoma City after his car hit a bridge at high speed. On news of Mr. McClendon’s death, the oil tycoon T. Boone Pickens, who died in 2019, said, “No individual is without flaws, but his impact on American energy will be long lasting.”When Mr. Lawler, a veteran Anadarko executive, took over the company in 2013 he called his new job “the biggest challenge in the entire industry.”Mr. Lawler had been trying to turn around the company by producing more oil and selling gas assets. But the shale drilling boom of recent years has unleashed more crude oil than the world needs, sending prices lower. The coronavirus pandemic and a decision by Saudi Arabia and Russia this year to ramp up production were the latest blows.Meanwhile the economic downturn has cut demand for natural gas in the United States, and slashed exports to foreign markets.There had been rumors of a bankruptcy for months. Roughly 20 American oil and gas producers have already filed for bankruptcy this year, including Ultra Petroleum and Whiting Petroleum. A total of 227 producers have filed for bankruptcy in the five years that ended May 31, involving more than $134 billion in aggregate debt, according to the Haynes and Boone Oil Patch Bankruptcy Monitor.

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