Unsecured Creditors Committee Secures Chapter 11 Valuation $1 Billion Greater Than Proposed By Chesapeake Energy
The Challenge
Chesapeake Energy Corp. (“the Company” or “Debtor”) engages in domestic exploration and production of oil, natural gas, and natural gas liquids. The Company holds interests in natural gas resource plays, including the Marcellus in the Northern Appalachian Basin in Pennsylvania; Haynesville located in Northwestern Louisiana; Eagle Ford in South Texas; Brazos Valley in Southeast Texas; Powder River Basin in Wyoming; and Mid-Continent in the Anadarko Basin of northwestern Oklahoma. The company was founded in 1989 and is headquartered in Oklahoma City, Oklahoma.
Opportune was engaged by the Official Committee of Unsecured Creditors (“UCC”) to serve as a financial advisor during Chesapeake’s Chapter 11 bankruptcy filing dated June 28, 2020.
The Solution
- Wrote, filed, and defended two separate expert reports; one of which focused on valuation and the other on solvency at various points in time over the Company’s history.
- The Debtors’ asset base was large and complex with material value located in different asset basins with unique geology and extraction techniques. Opportune’s team of engineers analyzed the reserves on an individual basis and completed a full valuation of the Company under multiple valuation methodologies.
- In the years before filing, the debtors consummated a significant acquisition and completed various other transactions to de-lever and improve cash flows. Opportune analyzed the solvency of the debtors at various points in time to determine whether a fraudulent transfer existed.
- As the UCC’s advisor, Opportune completed complex valuations, and solvency analyses, assisted on various ad hoc requests, and provided strategic advice throughout the long, difficult confirmation hearing.
Client Impact
- Opportune’s Managing Partner provided expert witness testimony regarding solvency at specific points in time.
- Opportune’s Managing Partner provided expert witness testimony regarding valuation, focusing on certain entities held by the Company, as well as the whole enterprise.
- The UCC team’s efforts compelled the judge to approve a total enterprise value (“TEV”) that was approximately $1 billion higher than the Debtors’ proposed value, which increased the general unsecured claimants' recovery by almost 50% when compared to the Debtors’ proposed plan of reorganization.
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