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A Chesapeake Energy natural-gas well pad rests on a hill in Litchfield Township, Pa., on Jan. 9, 2013.

Brett Carlsen/Reuters

Chesapeake Energy Corp said on Monday it was unable to access financing and was considering a bankruptcy court restructuring of its over $9 billion debt if oil prices don’t recover from the sharp fall caused by the COVID-19 pandemic.

The announcement follows last month’s statement by the pioneering shale gas producer that it was in talks to line up bankruptcy financing and was in talks for a loan to run its operations through the court proceedings.

Company filings showed it had a combined debt of more than $1 billion by way of debt maturities and interest expenses, of which $250 million in senior notes were due this year.

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This is the second going concern warning by the Oklahoma City-based company since November. It said this quarter’s review of the value of its untapped oil and gas reserves is likely to show a decline due to its distressed finances, reducing its ability to borrow against those assets.

Chesapeake last week said it would prepay $25 million in incentives to top executives. Peers Whiting Petroleum Corp and Diamond Offshore Drilling Inc also gave cash awards to senior management just days before filing for Chapter 11 protection last month.

The company said its net loss available to shareholders widened to $8.3 billion, or $852.97 per share, from $44 million, or $6.37, due to $8.5 billion of asset impairments.

A bankruptcy filing would cap a long reversal of fortunes for Chesapeake, a company that helped revolutionize the energy industry through the relentless extraction of untapped oil and natural gas from shale rock formations, an environmentally controversial method that became known as fracking.

The company was trying to pivot from natural gas to a greater emphasis on oil when a Saudi-Russian energy price war earlier this year upended its plans and the wider crude market.

It was dealt another blow by the coronavirus outbreak, which caused energy demand to dwindle by shutting large swaths of the global economy.

U.S. oil prices have tumbled around 60 per cent so far this year and in April turned negative for the first time in history.

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Chesapeake, which had about 2,300 employees at the end of 2019, said it laid off about 13 per cent of its workforce in April. Last quarter, it terminated contracts of majority of the employees who joined through its $4 billion acquisition of Texas oil producer WildHorse in 2018.

Chesapeake also enacted an anti-takeover plan last month to prevent a hostile buyer from acquiring the company to grab its tax-losses that can be used to deduct from future profits.

The company said it had shut-in wells and delayed production of commercial quantities for sales in some areas, all of which will reduce its projected oil output by about 50 per cent and 37 per cent in May and June.

Shares of the company were down about 8 per cent in afternoon trading.

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