Bankruptcy Rumors Send Chesapeake's Stock Tumbling; Company Attempts to Tamp Down Fears

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From Bloomberg:
Chesapeake Energy Corp., the U.S. natural gas driller that’s been slashing jobs and investor payouts to conserve dwindling cash flows, lost half its value after a report that it hired restructuring attorneys. 
The shares dropped a record 51 percent after Debtwire reported that Chesapeake retained Kirkland & Ellis to help restructure a $9.8 billion debt load. The plunge triggered three circuit-breaker halts during the first half hour of trading and extended Chesapeake’s 12-month loss to about 93 percent. The free fall wiped out $838 million in market value in the first hour of trading on Monday. 
Burdened with a debt load eight times larger than its market value, Chesapeake has been canceling drilling projects, trimming its workforce and closing offices to slow the rate at which it burns through cash. Gas, which accounts for about 80 percent of Chesapeake’s production, has averaged about $2.56 per million British thermal units during the past year, down 38 percent from a year earlier.

Chesapeake is the latest U.S. shale driller to flirt with collapse as a crushing glut of gas and crude renders companies increasingly desperate to avoid insolvency. Houston-based Halcon Resources Corp, retained the Weil, Gotschal law firm to explore bankruptcy, TheDeal.com reported on Feb. 5, citing a person it didn’t identify. Chesapeake and Halcon both suspended dividend payouts on preferred shares last month.
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Here is what Chesapeake said in a release to try and stop the slide:
Chesapeake Energy Corporation (NYSE:CHK) stated today that Kirkland & Ellis LLP has served as one of Chesapeake's counsel since 2010 and continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange. Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders.
The bottom line continues to be that Chesapeake is facing huge problems, and the low commodity prices aren't providing any relief.

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