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Home / Business / The Chesapeake stock drops at the lowest price in 25 years as the "going concern" warning weighs

The Chesapeake stock drops at the lowest price in 25 years as the "going concern" warning weighs



Shares in Chesapeake Energy Corp. took another dive Tuesday, pushing them well below $ 1 to hit their lowest price in more than 25 years, as the natural gas producer's warning of continued operations continued to resonate in stock markets and beyond. [19659002] Chesapeake

CHK, -15.96%

the stock fell 13% to 70 cents, putting it on track for its lowest close since May 9, 1994. It traded as low as 64 cents, the lowest intraday level since February 1999. The stock has been down six straight sessions and lost nearly 55% during that period, and is the worst six-day record.

Last week, the natural gas producer rang the alarm in its quarterly filing with regulators and reported a quarterly loss that was broader than Wall Street expected.

Chesapeakes most actively traded bonds by volume on Tuesday fetched an average of 55.29 cents on the dollar, a record low, according to bond pricing and trading platform MarketAxess.

Bond prices are moving in the opposite direction of return, and the same 8% Chesapeake coupon bonds maturing in 2027 to a return of about 1

9.55%.

"Too big to fail" is still the prevailing view of Chesapeake, "said Paul Sankey, an analyst at Mizuho.

Shares have traded below $ 5 for nearly four years, but having language around the company's solidity in writing may have "been the flashpoint," said James Mick, a portfolio manager with Tortoise Advisors.

Chesapeake "has many options available, and a bankruptcy is not imminent in our view," he said.

See also: Chesapeake Energy's stock breaks money for the first time in 20 years

Chesapeake has long been regarded as a pioneer in causing hydraulic fracturing, or fracking, to widespread use in the United States and other parts of the world.

The technique, which involves the use of a mixture of water, sand and other additives to coax oil and gas from dense rock formations, has unlocked huge oil and gas deposits that were previously trapped in shale rock.

The company has been in bad shape before: In 2016, shortly before co-founder and longtime CEO Aubrey McClendon died, it had to reassure investors that it was not on the verge of bankruptcy.

McClendon died in a burning car accident a day after he was indicted for antitrust charges around allegations that he had conspired to keep Oklahoma's land rent rights low between 2007 and 2012. He had denied the charges and promised to remove his name .

McClendon was the founder of Chesapeake in 1989 and agreed to resign in 2013 after facing intense criticism of Chesapeake's expenses and allegedly seizing the company's finances with its own loans. An internal investigation at that time found no evidence of wrongdoing.

Shares of Chesapeake have lost 68% this year, in contrast to gains of around 24% and 19% for the S&P 500 index

SPX, + 0.32%

and Dow Jones Industrial Average.

DJIA, + 0.12%

Joy Wiltermuth of San Francisco contributed to this report


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