Chesapeake Energy

[Jamie Morin 0]

Any idea if there will be supply disruptions from the Chesapeake energy restructuring possible bankruptcy. They produce a substantial amount of oil and gas in the lower 48. Most recent quarter they were producing 3.5 Bcfd Nat gas, 500,000 barrels oil , 55,000 barrels Nat gas liquids daily. Whiting petroleum recently filed and assured partners there would not be any disruptions during the bankruptcy.  IF anyone has an idea of how the the possible restructuring would affect ongoing day/day business please chime in.

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[Gerry Maddoux + 3,627]

I have some wells that are operated by Whiting. They have not interrupted payment. In fact, they drilled and completed a couple of wells right before declaring bankruptcy and those wells came on very well. 

I would imagine Chesapeake will be equally careful. As I recall, Whiting had to appear before the bankruptcy judge and make their case for payment to royalty owners, which was granted, because not to have it would usher in a flurry of lawsuits. 

Unfortunately, I have dealt with a great number of companies that had to declare bankruptcy: Linn Energy, Whiting, Enervest, now Chesapeake. Most treat the royalty owners right. It's just a sad thing to see. 

I would like to see Chesapeake get Tom Ward in there to run it. He could turn it around in a New York minute. Hope that answers your questions. I think you'll be fine. Good luck.

[Jan van Eck + 7,558]

13 hours ago, Gerry Maddoux said:

Whiting had to appear before the bankruptcy judge and make their case for payment to royalty owners, which was granted, because not to have it would usher in a flurry of lawsuits. 

Just a note to mention that there would have been no "flurry of lawsuits," as the US Bankruptcy Code specifically forbids that.  Look up 11 U.S.D. 362(a)   ["automatic stay"].   Instead, what the Court would be confronted with would be an avalanche of Motions for Relief from Stay, each one of which would have to be individually adjudicated and resolved  (unless the Judge basically said or implied, "Look, fellas, there are not going to be any stay-reliefs granted."  And that happens, sometimes!}. 

What I suspect you will find is that the Whitings of the world would file "reaffirmation agreements" with the Court, declaring that they will re-affirm the royalty arrangements and will continue pumping.  But, whatever is owed in past payments will go into the pile of unsecured claims.  Cheers. 

[Jamie Morin 0]

thx guys