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Chesapeake Stock Crash: What’s Next?

TUNKHANNOCK — The stock price of the largest natural gas driller in the region has plunged in recent days, and that could spell trouble for landowners in ...
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TUNKHANNOCK -- The stock price of the largest natural gas driller in the region has plunged in recent days, and that could spell trouble for landowners in four northern tier counties who lease land to them.

On Monday, Chesapeake Energy's stock fell so fast, regulators had to stop trading on its stocks.

If you bought $1,000 of Chesapeake Energy stock in 2008, the value of that stock today is about $30.

One expert says the drop is not only killing investors, it could harm landowners with Chesapeake leases and their communities.

How will Chesapeake's problems on Wall Street hit area landowners if the company goes bankrupt?

"I would expect we'll lose two months of royalties because we are paid normally two months past the production month," said Paul Sidorek of Tunkhannock.

Sidorek leases 100 acres in Susquehanna County to Chesapeake Energy. He's seen falling natural gas prices pull down stock prices of drilling companies doing business here.

Since their stock prices reached their peaks, Cabot Oil and Gas is down 48 percent.

But nothing compares to Chesapeake, which operates 787 wells in Bradford, Sullivan, Susquehanna and Wyoming Counties. Its stock is down 97 percent from its peak in 2008.

"The uncertainty is very scary to me and the clients I represent," said Doug Clark.

Attorney Doug Clark represents hundreds of natural gas leaseholders and says a possible Chesapeake bankruptcy would not only hurt landowners but also local businesses.

"If you're owed money now, you're probably going to be an unsecured creditor. So if they go through this process, you're last in line to get your money."

Clark adds bankruptcy could jeopardize a recent $18 million settlement between Chesapeake and area landowners over the company's controversial royalty check deductions.

"If Chesapeake goes bankrupt, I have very little doubt that you're ever going to see any landowners recover any of that money," Clark said.

According to a company statement, "Chesapeake currently has no plans to pursue bankruptcy," also saying, "it seeks to further strengthen its balance sheet."

In Tunkhannock, Paul Sidorek believes Chesapeake will avoid bankruptcy and hopes its troubles force the driller to change the way it does business.

"There are so many landowners, attorneys general, department of justice, all investigating them for various practices. If that's not resolved, Chesapeake can't continue."

Sidorek says few people with Chesapeake leases are worried about bankruptcy right now, but he says low gas prices and several deductions mean he and his neighbors are getting small royalty checks.