Chesapeake Layoffs 2024 – Discontinued News

Chesapeake Energy is a major natural gas producer in the United States. The firm announced on Monday that the business began laying off staff this week after selling its oil assets last year. This week’s layoffs result from the company’s disposal of Eagle Ford assets. It is not related to its impending merger with Southwestern Energy Chesapeake. Is Chesapeake Layoffs 2024? Here some details about it.

Chesapeake Energy Corporation is an American exploration and production firm based in Oklahoma City. In June 2020, the business filed for bankruptcy, owing $7 billion in debt. It recovered from bankruptcy in February 2021.

About the company

Chesapeake Energy Corporation is an independent exploration and production business in the United States. It acquires, explores, and develops properties for producing oil, gas, and natural gas liquids from underground reservoirs.

As of December 31, 2023, the business owned a portfolio of onshore unconventional natural gas assets in the United States. This includes interests in roughly 5,000 natural gas wells.

In February 2023, the firm announced that it had sold part of its oil and gas assets in the Eagle Ford shale in south Texas. The deal is US$1.4 billion for Ineos, a UK-based international company.

In January 2024, the business agreed to buy Southwestern Energy for $7.4 billion in equity. When the merger is completed, the combined company will be renamed, with Chesapeake owning 60%.

What went wrong at Chesapeake Energy?

Chesapeake Layoffs

Chesapeake Energy declared bankruptcy in 2020 when oil and gas prices collapsed. Over the last year, it has shifted its strategic focus to its gas assets in the Marcellus shale in Appalachia and the Haynesville shale play in Louisiana. Also, it reduced its Eagle Ford position, in which it held oil assets.

Reports of a Chesapeake-Southwestern merger initially arose in the autumn of 2023. It arose as the US shale patch entered a new considerable consolidation period. The US supermajors Exxon and Chevron announced large purchases worth over $50 billion.

Chesapeake and Southwestern’s merger will establish the largest natural gas production firm in the United States in terms of output and value. Before the deal, Chesapeake sold $1.4 billion in Eagle Ford assets to Ineos Energy and $700 million in shale assets to SilverBow Resources.

Chesapeake posted solid financial data for 2023. It had a net result of $2.4 billion, down from $3.5 billion in 2022. 2024, however, has been weaker due to the drop in US natural gas prices. As a result, Chesapeake failed analyst forecasts for its first-quarter results. But it was not surprising given that natural gas prices fell 20% in the same quarter.

Chesapeake was among the natural gas companies that announced plans to reduce production due to the price decline.

In February, Chesapeake announced, “Given the current state of the market, the business plans to defer placing wells on production. Also, it will reduce its rig and completion activity.”

The business plans to drop a rig in the Haynesville and Marcellus regions in March and around mid-year, respectively, and a frac crew in March. “These activity levels will be sustained through the end of the year,” Chesapeake stated.

Chesapeake Energy Layoffs

Chesapeake Energy began laying off employees this week. This happened after selling off its oil holdings last year, the firm announced on May 20, 2024 (Monday).

This week’s layoffs result from the company’s sale of its Eagle Ford holdings. However, the layoffs are unrelated to its likely merger with Southwestern Energy Chesapeake, as mentioned above.

The business did not reveal the number or depth of the layoffs. Chesapeake said in 2022 that it would quit the Eagle Ford shale basin in south Texas, becoming a pure-play natural gas producer.

The Oklahoma-based firm is concluding a $7.4 billion merger with Southwestern Energy. That transaction is expected to be finalized in the second half of this year. However, it is later than planned, after the US Federal Trade Commission requested more details.

Natural gas producers have been hurt this year by low prices. It dropped by 20% in the first quarter. This decline was due to excessive stocks and lower-than-expected demand. Chesapeake failed to meet Wall Street profit projections. Also, many companies, including Chesapeake, have reduced production.

The business will replace existing General Counsel Benjamin Russ with Southwestern General Counsel Chris Lacy as part of the agreement. This is based on a regulatory filing on May 7.

Conclusion

There is no link between the layoffs at Chesapeake Energy and the company’s planned merger with Southwestern Energy.

The business plans to cut its output to around 2.7 billion cubic feet per day (bcf/d) in 2024 from an expected 3.6 billion bcf/d in 2023. The expected production for 2023 comprises about 95% natural gas and 5% liquids.

Chesapeake Energy is also in the process of ending a $7.4 billion merger with Southwestern Energy. However, the merger was pushed back until the year’s second half due to a second request for more details from a US regulator. Chesapeake Energy announced the acquisition in January, stating it would close in the second quarter of 2024.

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