US-based hydrocarbon exploration firm Chesapeake Energy is set to emerge from bankruptcy after a court approved its reorganisation plan.
According to a Reuters report, a US judge has approved the company’s Chapter 11 bankruptcy plan, handing over the ownership to its investors.
The restructuring reduces its debt and gas processing and pipeline costs by $7bn and $1.7bn respectively. It will also enable Chesapeake to emerge from bankruptcy with nearly $3bn in new financing.
In June last year, Chesapeake Energy voluntarily filed for bankruptcy in the US Bankruptcy Court for the Southern District of Texas after the Covid-19 pandemic crushed oil prices.
At the time of the announcement, Chesapeake president and CEO Doug Lawler said: “We are fundamentally resetting Chesapeake’s capital structure and business to address our legacy financial weaknesses and capitalise on our substantial operational strengths.
“By eliminating approximately $7bn of debt and addressing the legacy contractual obligations that have hindered our performance, we are positioning Chesapeake to capitalise on our diverse operating platform and proven track record of improving capital and operating efficiencies and technical excellence.”
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By GlobalDataA spokesperson of the company told the news agency that the new plan will help Chesapeake to emerge as ‘a stronger and more competitive enterprise’.
According to the company website, Chesapeake’s portfolio includes unconventional oil and natural gas assets in top US onshore plays.
A judge hearing the bankruptcy case said that the recent rebound in prices has increased the company’s value to $5.13bn.
