Analyst believes Chesapeake is a ‘dead man drilling’
Monday, January 20, 2020
In a recent contribution to InvestorPlace, Dana Blankenhorn writes, “Chesapeake Energy is the very definition of a ‘dead man drilling,’” believing the company’s situation is hopeless.
Blankenhorn’s analysis of Chesapeake’s financial situation takes notice of its troubling annual interest expense. The company paid $286 million to service its loans, on revenue of nearly $7.9 billion in 2016. It paid $518 million in annual interest expenses last year. It is projected to pay nearly $700 million with revenue expected to remain under $10 billion this year.
Meanwhile, shares are trading for under a dollar as investors are realizing the only ones receiving payouts are Chesapeake’s bankers, to whom it owes roughly $9 billion in debt.
Learn more: InvestorPlace > Chesapeake Energy is drowning in debt, without a life raft in sight
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Shale FAQ
What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.