Chesapeake Energy, which has warned that it's unsure if it can survive much longer, failed to make $13.5 million in interest payments that came due this week, according to a federal filing.
The pioneering energy company grew to become one of the largest natural gas producers in the U.S., but it's racked up nearly $9 billion in debt. The Oklahoma City driller warned in May that “there is substantial doubt about the company’s ability to continue as a going concern” with natural gas losing about a quarter of its value this year alone.
Chesapeake had struggled for years before the pandemic hit. Now, demand for energy has fallen in tandem with global economic growth due to a global pandemic. That has exacerbated weaknesses across the energy sector.
If Chesapeake fails to make its interest payments within 30 days, it could be declared in default, according to a regulatory filing with the Securities and Exchange Commission.
That would make it even more difficult for Chesapeake to fund operations because the cost of securing new loans will grow.