But its fall since the heady days a dozen years ago has been epic. Once valued at $37 billion, Chesapeake, based in Oklahoma City, had been the country’s second-largest producer of natural gas. Its shares closed Friday worth just $115 million.
Under the leadership of the late Aubrey McClendon, Chesapeake swept up leases from Pennsylvania to the Dakotas, from Louisiana to New Mexico. The expansion was entirely fueled by debt, which crippled the company when its own success as a producer — and the success of its later rivals — drove the price of natural gas down nearly 90 percent.
McClendon was forced out in 2013; he died three years later, the day after he was indicted on a charge of price-fixing, when he drove his Chevrolet Tahoe into a concrete abutment.
The company, now led by Robert Lawler, has reduced its debt since then, but not enough to escape bankruptcy court. It has been in negotiations with its primary creditors on a restructuring agreement, the company said in a statement Sunday. Its plan is to eliminate a further $7 billion of debt.
Lawler has been trying to move the company into the oil business, but the pandemic has cut deeply into demand for oil — and thus the price. Chesapeake reported losses of $8.3 billion in the first quarter of this year.
“The legacy debt and contractual obligations that have hindered our performance,” the company said, finally had to be addressed.
“The Chapter 11 process gives us the opportunity to fundamentally reset our business and strengthen our capital structure in a sustainable way, so we can capitalize on our significant strengths and prosper regardless of commodity prices.”
Chesapeake had once been a leading driver of Oklahoma City’s urban renaissance, but it stepped back from that role after McClendon, who helped found the company in 1989 and who named it after the Mid-Atlantic region that he admired, left as chief executive.
McClendon had promoted gas as a replacement for coal and a natural step toward a greener energy culture when technology would allow renewables to take over. But the company’s enthusiastic reliance on hydraulic fracturing — or fracking — has drawn considerable criticism from the environmental movement over the poisoning of water sources and the generation of legions of small earthquakes.
Chesapeake’s creditors include dozens of small oil field service companies, which are already under pressure because of the global collapse in demand. Analysts expect that some of those firms could be joining the 200 or so nationally that have declared bankruptcy or gone out of business since the pandemic struck.