Chesapeake Energy Soon To Be Bankrupt?

Chesapeake Energy continues to spend a lot of money in the Barnett Shale zone in its ongoing, relentless propaganda campaign. Late the day before Thanksgiving, likely hoping people would be too busy to notice, Chesapeake Energy filed documents with the SEC (Security Exchange Commission) attempting to raise up to $1.8 billion through stock sales in order to fund its drilling, exploration, propaganda costs and to help cover the impact that lower natural gas prices is having on Chesapeake's cash flow.

In its filing with the SEC Chesapeake had to be truthful about its dire financial state. Reading through most if the filing it seems to me sort of obvious that Chesapeake is drowning and likely will soon have to take dire measures. As in bankruptcy.

Here's a key paragraph from the SEC filing that gives a real clear picture of how dire Chesapeake Energy's situation is....

"The continued credit crisis and related turmoil in the global financial system may have an impact on our business and our financial condition, and we may face challenges if conditions in the financial markets do not improve. Our cash flow from operations, our revolving bank credit facility and cash on hand historically have not been sufficient to fund all of our expenditures, and we have relied on the capital markets and asset monetization transactions to provide us with additional capital. Our ability to access the capital markets has been restricted as a result of this crisis and may continue to be restricted at a time when we would like, or need, to raise capital. The financial crisis may also limit the number of participants in our proposed asset monetization transactions or reduce the values we are able to realize in those transactions, making these transactions uneconomic or harder or impossible to consummate. The economic situation could also adversely affect the collectability of our trade receivables and cause our commodity hedging arrangements to be ineffective if our counterparties are unable to perform their obligations or seek bankruptcy protection. Additionally, the current economic situation could lead to reduced demand for natural gas and oil, or lower prices for natural gas and oil, or both, which could have a negative impact on our revenues."

You can read the SEC filing in its entirety here...