The financial problems plaguing Chesapeake Energy Corp. are stirring doubts on credit markets, Reuters reports.
The Oklahoma City-based oil and natural gas producer faces a multi-billion dollar cash crunch this year, so it is trying to sell some of its heralded assets to fill the gap.
“They need too large of an asset sale over too short of a time, otherwise they are going to have a liquidity crisis,” said Marc Gross, portfolio manager at RS Investments’ high-yield and floating-rate bond funds. “All of the problems they are having today is because they didn’t expect $2 gas, and it’s hurting them a lot more than they are letting on. The company is under stress.”
Chesapeake’s stock has plummeted nearly 30 percent in the past month since Reuters reported CEO Aubrey McClendon had secured up to $1.1 billion in personal loans using his stake in company wells as collateral.
Low natural gas prices also have hampered Chesapeake’s ability to meet its funding shortfall.