Chesapeake Energy Corporation, which owns the naming rights for Thunder’s Oklahoma City Stadium, announced Sunday that it filed for Chapter 11 bankruptcy, signaling a sharp drop in oil prices and gas demand during the coronavirus pandemic.
The company said in a statement that it planned to continue operating during its restructuring process.
The Oklahoma energy giant was co-founded by the late Aubrey McClendon, who was also a founding owner of the Thunder and a key part of the franchise relocation from Seattle.
McClendon left the company in 2013 amid controversy surrounding his business practices. Then he founded a new company, American Energy Partners.
In 2016, McClendon was federally indicted on charges of conspiracy to manipulate oil and gas lease offers. He died the following day in a car accident when his SUV crashed into a concrete viaduct at 90 mph.
Chesapeake Energy owns the naming rights to the downtown stadium the Thunder plays in, signing a 12-year contract with the franchise in 2011 that was slated to expire after the 2022-23 season. The deal cost Chesapeake $ 3 million the first season and is projected to grow 3% each year thereafter.
It is currently unknown how the Chesapeake bankruptcy will affect the arena’s naming rights agreement. A spokesman for the Thunder team declined to comment.
Chesapeake’s financial troubles have been well documented for years, and the announcement of its bankruptcy filing was not a surprise. The company’s debt burden currently stands at $ 9 billion, and with the bankruptcy filing, it will enter into an agreement with lenders to reduce $ 7 billion of its debt.
“We are fundamentally restoring Chesapeake’s capital structure and businesses to address our inherited financial weaknesses and capitalize on our substantial operating strengths,” CEO Doug Lawler said in a statement. “By eliminating approximately $ 7 billion of debt and addressing the legacy contractual obligations that have hampered our performance, we are positioning Chesapeake to capitalize on our diverse operating platform and our proven track record of improving capital and operating efficiency and technical excellence. With With these demonstrated strengths, and the benefit of an appropriately sized capital structure, Chesapeake will be in a unique position to emerge from the Chapter 11 process as a stronger and more competitive company. “
Led by McClendon, Chesapeake pioneered the use of fracking as a technique, an unconventional drilling method to extract oil and gas from the ground. Fracking has been criticized for its environmental impact.
.
