Chesapeake says it has no plans to file for bankruptcy

Chesapeake Energy Corp., the USA natural gas driller that’s been slashing jobs and investor payouts to conserve dwindling cash flows, lost half its value after a report that it hired a restructuring law firm.

However, Chesapeake’s statement noted that Kirkland & Ellis has served as a counsel since 2010 and continues to advise the company on its balance sheet.

Burdened with a debt load eight times larger than its market value, Chesapeake has been cancelling drilling projects, trimming its workforce and closing offices to slow the rate at which it burns through cash. Late past year, Chesapeake was forced to cut its debt by offering a debt exchange.

Like most oil and natural gas firms, Chesapeake shares have been battered by low oil prices over the past 18 months. Most recently, Chesapeake suspended its preferred dividend, which it estimates will help them to save $170 million annually. Under founder and former CEO Aubrey McClendon, Chesapeake amassed millions of acres of leases and piled up debts of more than $13 billion as it developed both more leasing and more producing wells.

Analysts expect the company to post a loss of 16 cents per share when it posts quarterly results on February 24, widening from a loss of 5 cents last quarter.

Kirkland & Ellis declined to comment.

Chesapeake Energy’s notes due in March plunged by a record amount, to 74.5 cents from 95 cents last week, according to Bloomberg. The company plans to use those funds to repurchase some of its debt, which is trading at steep discounts.

Last month, Standard & Poor lowered its credit rating for Chesapeake Energy to “CCC+”, warning that its debt leverage is unsustainable.