Chesapeake cuts additional staff
Chesapeake Energy shed about 15% of its staff this week as it nears the finish line in its bankruptcy process.
The decision to lay off 220 workers, mostly from its Oklahoma City headquarters, is tied to ongoing economic factors created by COVID-19 that are impacting demands for oil and natural gas, company officials said.
At the same time, the company is wrapping up what it needs
to accomplish before it officially emerges from bankruptcy, which is expected to happen sometime next week.
On Monday, it announced it was able to successfully raise $1 billion of unsecured debt.
Layoff particulars
Employees were informed of the latest round of cuts to Chesapeake Energy's staff in an email sent to them by CEO Doug Lawler that was obtained Wednesday morning by The Oklahoman.
While L awl er wrote the Chesapeake made significant progress in restructuring its operations so that it would be a stronger and more competitive company after bankruptcy, he added that current price environments for oil and natural gas warranted this latest round of reductions.
That point was emphasized by a statement spokesman Gordon Pen no y er issued Wednesday.
“As we prepare to conclude our restructuring, we continue to prudently manage our business and staffing levels to adapt to challenging market conditions and position Chesapeake for sustainable success,” Pennoyer said.
Affected employees are getting a severance package that includes a cash payment and the final cash installment of the company's 2020 bonus program and the offer of career transition assistance. Lawler wrote that he personally thanks each departing employee for their service to the company.
“We must continue to focus
on building efficiencies across our enterprise. These factors have resulted in the painful decision to reduce our workforce,” he wrote.
In the email, Lawler stated affected Oklahoma City workers were being notified by phone this morning, while field personnel who were cut were notified Tuesday afternoon.
“We would prefer to make these difficult notifications in person, but we are unable to do so because of the current health concerns that are well known to all.”
After the lay offs, Chesapeake Energy' s employee count stands at about 1,300, with 800 people working in Oklahoma City, a spokesman said Wednesday.
About that debt
If reported interest is any indication, it would seem that investors are confident about Chesapeake Energy' s future.
On Tuesday, the company announced investors acquired $1 billion through an offering of unsecured debt the company issued to raise cash for its post-bankruptcy operations.
This debt offering, compared to one Chesapeake issued in December of 2019, signals a new attitude from investors.
The December 2019 offering of $2.3 billion carried a coupon (interest) rate of 11.5%, and the debt offering had to be secured with Chesapeake assets.
This latest deal offered investors unsecured debt at a weighted coupon rate of just 5.68% with $500 million of the notes maturing in 2026 and the remainder maturing in 2029.
At least one fin anci al reporting service published an item on Wednesday that stated there was far more interest in acquiring the debt from investors than there was debt available, with investors placing orders worth more than $12 billion.
Business writer Jack Money covers Oklahoma's energy and agricultural beats for the newspaper and Oklahoman. com. Contact him at jmoney@oklahoman. com. Please support his work and that of other Oklahoman journalists by purchasing a subscription today at oklahoman.com/subscribe.