Chesapeake takes $8.5 billion Q1 charge on cratered oil prices

Washington — Chesapeake Energy took an $8.5 billion impairment charge against the value of all its oil assets and warned again in its first-quarter report filed with the US Securities and Exchange Commission on Monday that the company may not continue as a going concern.

Chesapeake said the writedown resulted from a crash in oil prices.

The company canceled its usual earnings conference call and withdrew any future guidance, but did say in its filing it had shut almost all its oil activities while continuing to produce natural gas.

The company said it expects to be out of compliance with its loan covenants by the end of this year, which could trigger a waterfall of debt defaults.

Chesapeake said it is working with advisers to look at a number of "strategic alternatives," which could include restructuring, amending or refinancing existing debt through a private restructuring, or Chapter 11 bankruptcy reorganization.

For Q1 2020, Chesapeake posted a net loss of $8.3 billion, or $852.97/share, on a GAAP basis, from a $44 million, or $6.37/share, net loss a year ago.