Chesapeake Energy (NYSE:CHK) is having an abysmal month. Shares of the energy company have tumbled a gut-wrenching 43% over the past few weeks after it reported its third-quarter results. Not only did those numbers come in a bit below expectations, but the company also raised doubts about whether it can continue as a going concern. In a worst-case scenario, it could file for bankruptcy to address its mountain of debt.
However, while shares of the oil and gas driller have tumbled, insiders have been buying. Those purchases likely have investors wondering if they should join them in scooping up shares of the beaten-down company.
The $9.7 billion elephant in the room
Chesapeake Energy ended the third quarter with $9.7 billion of debt outstanding. That’s above the $8.2 billion in debt it had to start the year. Driving the increase was its nearly $4 billion acquisition of WildHorse Resource Development — which included some cash as well as the assumption of debt — and the company’s continued practice of outspending cash flow to drill new wells.
That’s an enormous amount of debt for a company that currently has an enterprise value of $12.8 billion. The biggest concern in the near term, however, is that it has $301 million of debt maturing next year that it needs to…