Fracking pioneer files bankruptcy

NEW YORK — Chesapeake Energy, a shale drilling pioneer that helped to turn the United States into a global energy powerhouse, has filed for bankruptcy protection.

The Oklahoma City-based company said Sunday that it was a necessary decision given its debt. Its debt load is currently nearing $9 billion. It has entered a plan with lenders to cut $7 billion of its debt and said it will continue to operate as usual during the bankruptcy process.

The oil and gas company was a leader in the fracking boom, using unconventional techniques to extract oil and gas from the ground, a method that has come under scrutiny because of its environmental impact.

Other wildcatters followed in Chesapeake’s path, racking up huge debts to find oil and gas in fields spanning New Mexico, Texas, the Dakotas and Pennsylvania. A reckoning is now coming due with those massive debts needing to be serviced by Chesapeake and those that followed its path.

More than 200 oil producers have filed for bankruptcy protection in the past five years, a trend that’s expected to continue as a global pandemic saps demand for energy and depresses prices further.

Founded in 1989 with an initial $50,000 investment, Chesapeake focused on drilling in underdeveloped areas of Oklahoma and Texas. It largely abandoned traditional horizontal well drilling, employing instead lateral drilling techniques to free natural gas from unconventional shale formations.

It became a colossus in the energy markets, eventually reaching a market valuation of more than $37 billion.

The company closed Friday valued at around $115 million.

As Chesapeake was expanding at breakneck speed, natural gas prices were near $20 per million British thermal units, the benchmark for natural gas trading. But frackers like Chesapeake flooded the market with cheap natural gas, sending prices to well under $2.