Chesapeake Energy (CHKA.Q) has reportedly hired debt restructuring advisors to help it address its balance sheet following a historic crash in crude oil prices. According to a report by Reuters, Chesapeake hired restructuring lawyers at Kirkland & Ellis LLP and investment bankers at Rothchild & Co that specialize in reworking debt. The company is reportedly studying its options. 

Chesapeake Energy entered this year with $8.92 billion in debt, an increase from $8.17 billion at the end of 2018 due to the acquisition of Wildhorse Resource Development. It did, however, take several steps last year to improve its financial situation, including eliminating $900 million in debt during the fourth quarter through several exchange transactions. 

Oil pumps with a red sky in the background.

Image source: Getty Images.

Those moves also pushed out most of the company's upcoming debt maturities. However, it still had $302 million in debt maturing this year. Chesapeake initially planned to sell between $300 million and $500 million in non-core assets this year to pay off that debt. However, with oil prices collapsing, it has upended asset values, which will make it much harder to achieve that target. 

Chesapeake does have $1.35 billion of borrowing capacity remaining on its $3 billion credit facility to address its 2020 debt maturities. However, while its lenders reaffirmed that facility last November, they'll likely reduce borrowing capacity at the next redetermination, given how far crude prices have fallen since that time. 

Chesapeake has struggled under the weight of its hefty debt load over the last several years. While it has taken many small steps to eliminate some debt while pushing out other maturities, it still has a significant hill to climb. Because of that, it might have no choice but to restructure through bankruptcy.