Robert Murray was replaced as CEO after Murray Energy Corporation filed for bankruptcy.
Robert Murray was replaced as CEO after Murray Energy Corporation filed for bankruptcy.
PHOTO: David McNew/Getty Images North America/Getty Images
Now playing
01:29
This coal CEO supported Trump. Now his company is bankrupt
roger mcnamee fb capitol markets now_00013227.png
roger mcnamee fb capitol markets now_00013227.png
Now playing
03:07
Early Facebook investor: Sandberg's denial of Facebook's role is 'laughable'
Democratic presidential candidate and former US Vice President Joe Biden speaks on the state of the US economy on September 4, 2020, in Wilmington, Delaware. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
Democratic presidential candidate and former US Vice President Joe Biden speaks on the state of the US economy on September 4, 2020, in Wilmington, Delaware. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
PHOTO: JIM WATSON/AFP/Getty Images
Now playing
02:02
Why Wall Street is hopeful about Biden despite economic challenges
PHOTO: Shutterstock
Now playing
02:54
Strategist on bitcoin: Pullback is very expected
Democratic candidates for Senate Jon Ossoff (L), Raphael Warnock (C) and US President-elect Joe Biden (R) bump elbows on stage during a rally outside Center Parc Stadium in Atlanta, Georgia, on January 4, 2021. - President Donald Trump, still seeking ways to reverse his election defeat, and President-elect Joe Biden converge on Georgia on Monday for dueling rallies on the eve of runoff votes that will decide control of the US Senate. Trump, a day after the release of a bombshell recording in which he pressures Georgia officials to overturn his November 3 election loss in the southern state, is to hold a rally in the northwest city of Dalton in support of Republican incumbent senators Kelly Loeffler and David Perdue. Biden, who takes over the White House on January 20, is to campaign in Atlanta, the Georgia capital, for the Democratic challengers, Raphael Warnock and Jon Ossoff. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
Democratic candidates for Senate Jon Ossoff (L), Raphael Warnock (C) and US President-elect Joe Biden (R) bump elbows on stage during a rally outside Center Parc Stadium in Atlanta, Georgia, on January 4, 2021. - President Donald Trump, still seeking ways to reverse his election defeat, and President-elect Joe Biden converge on Georgia on Monday for dueling rallies on the eve of runoff votes that will decide control of the US Senate. Trump, a day after the release of a bombshell recording in which he pressures Georgia officials to overturn his November 3 election loss in the southern state, is to hold a rally in the northwest city of Dalton in support of Republican incumbent senators Kelly Loeffler and David Perdue. Biden, who takes over the White House on January 20, is to campaign in Atlanta, the Georgia capital, for the Democratic challengers, Raphael Warnock and Jon Ossoff. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
PHOTO: JIM WATSON/AFP/Getty Images
Now playing
02:11
Economist: Even with a blue wave, Biden's tax ambitions could stall
FILE - The New York Stock Exchange is seen in New York, Monday, Nov. 23, 2020.   Stocks are ticking higher on Wall Street Wednesday, Dec. 23,  following a mixed set of reports on the economy.   (AP Photo/Seth Wenig)
FILE - The New York Stock Exchange is seen in New York, Monday, Nov. 23, 2020. Stocks are ticking higher on Wall Street Wednesday, Dec. 23, following a mixed set of reports on the economy. (AP Photo/Seth Wenig)
PHOTO: Seth Wenig/AP
Now playing
02:07
Dow falls on first trading day of the year
Now playing
01:02
Scaramucci: Bitcoin is due for a correction
Now playing
05:05
MoneyGram CEO: Our digital platforms are driving growth
PHOTO: CNN
Now playing
04:34
Airbnb CEO: People still yearn to travel
NEW YORK CITY- MAY 12: People walk through a shuttered business district in Brooklyn on May 12, 2020 in New York City. Across America, people are reeling from the loss of jobs and incomes as unemployment soars to historical levels following the COVID-19 outbreak. While some states are beginning to re-open slowly, many business are struggling to find a profit with the news restrictions and a population that is fearful of the contagious virus.  (Photo by Spencer Platt/Getty Images)
NEW YORK CITY- MAY 12: People walk through a shuttered business district in Brooklyn on May 12, 2020 in New York City. Across America, people are reeling from the loss of jobs and incomes as unemployment soars to historical levels following the COVID-19 outbreak. While some states are beginning to re-open slowly, many business are struggling to find a profit with the news restrictions and a population that is fearful of the contagious virus. (Photo by Spencer Platt/Getty Images)
PHOTO: Spencer Platt/Getty Images
Now playing
02:22
Economist: It's going to take years for jobs to recover
Now playing
01:29
Chewy's CEO expects growth to continue post pandemic
Now playing
02:04
These pot stocks are poised to win big under Biden
Specialist Patrick King works at the New York Stock Exchange on Monday, Nov. 23, 2020. Stocks rose in early trading Monday after investors received several pieces of encouraging news on COVID-19 vaccines and treatments, tempering concerns over rising virus cases and business restrictions.  (Nicole Pereira/New York Stock Exchange via AP)
Specialist Patrick King works at the New York Stock Exchange on Monday, Nov. 23, 2020. Stocks rose in early trading Monday after investors received several pieces of encouraging news on COVID-19 vaccines and treatments, tempering concerns over rising virus cases and business restrictions. (Nicole Pereira/New York Stock Exchange via AP)
PHOTO: Nicole Pereira/New York Stock Exchange/AP
Now playing
02:15
Dow crosses 30,000 mark for the first time ever
The Federal Reserve is seen in Washington, Monday, Nov. 16, 2020. President Donald Trump
The Federal Reserve is seen in Washington, Monday, Nov. 16, 2020. President Donald Trump's unorthodox choice for the Federal Reserve Board of Governors, Judy Shelton, could be approved by the Senate this week, according to Majority Leader Mitch McConnell's office. (AP Photo/J. Scott Applewhite)
PHOTO: J. Scott Applewhite/AP
Now playing
03:39
Alan Greenspan on the Fed's pandemic response
Now playing
02:54
GoodRx Co-CEO says Amazon Pharmacy isn't a competitor
Now playing
02:45
Moderna chairman: We don't need deep-freeze conditions for vaccine
(CNN Business) —  

Chesapeake Energy helped pioneer America’s shale natural gas revolution. Now, the company is warning that it may not survive the era of cheap gas it helped to usher in.

The Oklahoma-based energy company said Tuesday in a filing to the Securities and Exchange Commission that if “depressed prices persist,” there is “substantial doubt” about its ability to continue as a “going concern.”

The warning underlines just how far Chesapeake Energy (CHK) has fallen. The company’s early bets on fracking made it a natural gas powerhouse, and at one point it was the nation’s No. 2 natural gas producer. Aubrey McClendon, Chesapeake’s late founder and CEO, was considered one of the leaders of the shale boom.

But the company now is drowning in $10 billion of debt. And it’s struggling to pay it all back, because America is swimming in excess natural gas, keeping prices very weak. Chesapeake’s average realized natural gas price dropped nearly 12% during the third quarter.

Chesapeake’s share price plunged 15% on Tuesday to $1.34 following the warning and a weak earnings report. The stock has lost 98% of its value since closing at a record high of $65.63 in July 2008.

The financial problems have been amplified by a bid to diversify away from natural gas by betting big on oil. The company’s October 2018 deal for shale oil driller WildHourse Resource Company, valued at $4 billion, including debt, came when US oil prices were trading at nearly $70 a barrel. Weeks later, crude plunged below $45 a barrel. Oil prices have yet to fully recover.

Chesapeake’s balance sheet is carrying $9.7 billion of debt, compared with $8.2 billion at the end of 2018 – nearly five times more than Chesapeake’s entire market value.

The company warned in the SEC filing that its leverage ratio could breach certain restrictions over the next 12 months. Failure to comply with these restrictions would cause the company to default on its revolving credit facility and other loans, Chesapeake said.

Chesapeake said that these restrictions could be waived by its bankers. And in the meantime, the company is scrambling to pay down debt.

Citing weak prices, Chesapeake on Tuesday announced plans to slash its drilling and completion activity by 30% in 2020. And the company plans to cut production and general expenses by about 20% in a bid to achieve free cash flow. Executives also said they will consider selling assets to raise cash.

“We’ve been keenly focused on absolute debt reduction, and we’ve made great strides,” Domenic Dell’Osso, Chesapeake’s chief financial officer, told analysts during a conference call.

“The volatile commodity price environment has pressured the speed and timing of accomplishing these goals,” Chesapeake CEO Robert Lawler said during the call, “but we will continue to make incremental progress and improve our competitiveness and profitability”