Chesapeake Energy, a fracking pioneer that turned the U.S. from an oil importer to an exporter, is filing for bankruptcy. CNBC’s “Squawk on the Street” crew discusses.
Fracking giant Chesapeake Energy’s bankruptcy filing comes following a financial mess at the company that included no budgets, a massive wine collection and a nine-figure bill for parking garages, sources told CNBC’s David Faber.
CEO Robert D. “Doug” Lawler found in examining the company’s books a $110 million bill for two parking garages, Faber reported Monday. That was part of about $30 billion in spending above cash flow that happened from 2010-12, while the late Aubrey McLendon was CEO and prior to Lawler taking over in 2013.
Other revelations include a wine collection in a cave hidden behind a broom closet in the Chesapeake office. Extravagances further included a season ticket package to the NBA’s Oklahoma City Thunder that was the biggest in the league and a lavish campus that was modeled after Duke University, complete with bee keepers, botox treatments and chaplains for employees.
The company announced its bankruptcy filing on Sunday, amid a brutal time for the energy sector. Prices have tumbled throughout the coronavirus pandemic as demand has crumbled and the economic expansion that began in 2009 ended in February. Chesapeake’s share price has fallen nearly 93% in 2020.
“While today is a challenging day, your leadership team and I are confident that this is the best path forward for Chesapeake, and that we will emerge from the Chapter 11 process as a stronger and more competitive company,” Lawler said in a memo to employees.
In the Chapter 11 announcement, Lawler added that the company is “fundamentally resetting” its capital structure and business “to address our legacy financial weaknesses and capitalize on our substantial operational strengths.”
The CEO praised “the hard work and commitment of our employees, who remain focused on safely and efficiently executing our business. We look forward to working productively with our suppliers, business partners and all stakeholders throughout this process.”
Chesapeake declined comment for this report.
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