Thunder-related Chesapeake Energy Corporation files for bankruptcy
Chesapeake Energy Corporation, which owns the naming rights to the Oklahoma City Thunder arena, announced Sunday that it had filed for Chapter 11 bankruptcy, pointing to a sharp drop in oil prices and gas demand during the coronavirus pandemic.
The company said in a statement that it plans to continue operating during its restructuring process.
The Oklahoma energy giant was co-founded by the late Aubrey McClendon, who was also a founding owner of the Thunder and a key part of relocating the franchise from Seattle.
McClendon left the company in 2013 amid controversy over its business practices. He then founded a new company, American Energy Partners.
In 2016, McClendon was indicted by the federal government for conspiracy to rig bids on oil and gas leases. He died the following day in a single-car crash when his SUV slammed into a concrete overpass at 90mph.
Chesapeake Energy owns the naming rights to the downtown arena in which the Thunder play, signing a 12-year contract with the franchise in 2011 that was due to expire after the 2022-23 season. The deal cost Chesapeake $3 million in the first season and was expected to grow 3% each year thereafter.
It is currently unknown what impact Chesapeake’s bankruptcy will have on the arena’s naming rights deal. A Thunder team spokesperson declined to comment.
Chesapeake’s financial troubles have been well documented for years, and the announcement of its bankruptcy filing came as no surprise. The company’s debt currently stands at $9 billion, and with the bankruptcy filing, it will reach an agreement with lenders to reduce its debt by $7 billion.
“We are fundamentally redefining Chesapeake’s capital structure and operations to address our legacy financial weaknesses and capitalize on our substantial operational strengths,” CEO Doug Lawler said in a statement. “By eliminating approximately $7 billion in debt and addressing legacy contractual obligations that have hampered our performance, we are positioning Chesapeake to capitalize on our diverse operating platform and proven track record of improving efficiency. capital and operating and technical excellence.With these demonstrated strengths, and the benefit of an appropriately sized capital structure, Chesapeake will be in a unique position to emerge from the Chapter 11 process as a stronger and more competitive company.”
Led by McClendon, Chesapeake pioneered the use of fracking as a technique, an unconventional drilling method to extract oil and gas from the ground. Fracking has been the subject of criticism due to its impact on the environment.