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Shaky business for shale could mean investment opportunities in oil industry

by | Aug 25, 2021 | Oil And Gas |

The gas and oil industry is in a bit of a transitional period. It has shifted in recent years, and those who took out big investments with a focus on shale have found themselves struggling to move forward. Chesapeake Energy Corporation, one of the largest natural gas producers in the country, invested billions in shale oil in 2019. Now it finds itself shifting focus to try to stay relevant.

How is Chesapeake shifting focus?

The oil and gas company will put 85% of its focus on gas fields. It will let the oil side of the business decline, for now. In order to achieve this goal, the business filed for court protections with a restructuring plan — also known as a Chapter 11 plan of reorganization to help manage their debt.

Unfortunately for this industry, this is not a unique situation. As noted in a recent piece by Reuters, oil and gas field operators throughout the country are fighting a debt to equity ratio that is expanding, and not in their favor. This could lead to a need to sell assets, seek out investments, or attempt to renegotiate terms with lenders.

What can others learn from this example?

There are protections available that can help businesses that are struggling to move forward. The restructuring plan used above is one example, but others, like those noted above, could be a better fit depending on the details of the situation. The shift also provides opportunities for investors, but those who are not familiar with the regulatory matters that can accompany this industry are wise to get additional information before moving forward with investments.

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