The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm investigating potential sales practice violations by financial advisors who were recommending Callon Petroleum (NYSE: CPE), Chesapeake Energy (NYSE: CHK), Diamond Offshore (NYSE: DO), and Occidental Petroleum (NYSE: OXY) and other energy sector-related investments to investors.
Potential energy sector companies under financial pressure include:
The list below includes four companies that have the following characteristics in common:
- High debt levels
- Limited cash reserves
- Having been assigned a “junk” credit rating by at least one major ratings agency
- Significant exposure to U.S. shale
- Having discussed or taken steps to restructure debt
Table of Contents
Callon Petroleum Company (NYSE: CPE)
CPE is believed to have recently hired advisors to help restructure debt. CPE stock is down over 85% year-to-date. Looking back, the CPE stock price was generally in the $5.00 to $20.00 range since mid-2016 and through most of 2018. In 2019, the CPE price range was generally between $3.00 and $10.00 as well. In the beginning of 2020, CPE was in the $4.00 range. More recently, CPE is trading under $0.75. Although the reference here is to the stock price, some investors have exposure in high yield bonds (or junk bonds) and other securities.
CPE was recently downgraded to B-/B3 or “highly speculative”
Callon Petroleum Company (CPE) – an independent oil and natural gas company, focuses on the acquisition, exploration, and development of oil and natural gas properties in the Permian Basin in West Texas. The company was founded in 1950 and is headquartered in Houston, Texas.
Chesapeake Energy Corp. (NYSE: CHK)
is also believed to be working with debt restructuring advisers or investment banks to shore up cash reserves. The recent trading in CHK has been in the $0.20/share range. Looking back, through most of 2016 and into mid-2017, CHK stock was trading between $5.00/share and $7.00/share. Although it began declining in value in mid-2017, it was still trading between $2.50/share and $5.00/share through the first half of 2019. By early 2020, it was trading in the $0.80/share to $0.90/share range.
Chesapeake Energy Corporation (CHK) is an independent exploration and production company, which engages in acquisition, exploration, and development of properties for the production of oil, natural gas and natural gas liquids from underground reservoirs. It focuses on projects located in Louisiana, Ohio, Oklahoma, Pennsylvania, Texas, and Wyoming. The company was founded by Aubrey K. McClendon and Tom L. Ward on May 18, 1989 and is headquartered in Oklahoma City, OK.
Diamondback Offshore Drilling, Inc. (NYSE: DO)
Do just announced it will be skipping an interest payment for senior bondholders. Looking back, the DO stock price was generally in the $14.00 or higher range since 2016. In the beginning of 2020, DO was in the $6.00 to $7.00/share range. More recently, DO is trading around $2.00 and even lower since announcing the upcoming bond interest payment. That payment was a semi-annual interest payment due on DO’s 5.7% 2039 notes.
By the market close on Friday, April 17, 2020, DO was trading under $1.00 and reports suggested it was in the process of retaining restructuring advisors as a result of the “double-whammy” from the Covid-19 related demand decrease combined with an unsustainable debt level. In addition to DO’s stock trading under $1.00/share, its $2 billion in bond debt is now reflecting massive discounts as well, some trades at 15% of face value or even lower.
- The 5.7% bonds are rated B/Caa2 and priced around $13.75
- The 3.45% bonds are rated B/Caa2 and priced around $15.875
- The 4.875% bonds are rated B/Caa2 and priced around $13.75
- The 7.875% bonds are rated B/Caa2 and priced around $14.00
Diamondback Offshore Drilling, Inc. (Symbol: DO) – provides contract drilling services to the energy industry worldwide. The company operates a fleet of 15 offshore drilling rigs. It serves independent oil and gas companies, and government-owned oil companies. The company was founded in 1953 and is headquartered in Houston, Texas. Diamond Offshore Drilling, Inc. (DO) is a subsidiary of Loews Corporation. Based on some recent changes in the corporate officers, as well as various change of control provisions, a bailout by Loews Corporation appears unlikely.
Occidental Petroleum Corporation (NYSE: OXY)
Looking back, the OXY stock price was generally in the $60.00 to $85.00 range since mid-2016 and through most of 2018. In 2019, the OXY stock price range was generally between $40.00 and $65.00 as well. In the beginning of 2020, OXY was over $40.00. More recently, OXY is trading under $12.00. Although the reference here is to the stock price, some investors have exposure in high yield bonds (or junk bonds) and other securities.
Occidental Petroleum Corporation (NYSE: OXY) – together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, and Latin America. The company operates through three segments: Oil and Gas, Chemical, and Marketing and Midstream. The Oil and Gas segment explores for, develops, and produces oil and condensate, natural gas liquids (NGLs), and natural gas. The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates, and calcium chloride; vinyls comprising vinyl chloride monomer, polyvinyl chloride, and ethylene. The Midstream and Marketing segment gathers, processes, transports, stores, purchases, and markets oil, condensate, NGLs, natural gas, carbon dioxide, and power. This segment also trades around its assets consisting of transportation and storage capacity and invests in entities. Occidental Petroleum Corporation was founded in 1920 and is headquartered in Houston, Texas.
NOTICE TO STOCK and BOND INVESTORS in CPE, CHK, DO, and OXY
The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm (www.investmentfraudlawyers.com) investigating potential sales practice violations by financial advisors who were recommending Callon Petroleum (CPE), Chesapeake Energy (CHK), Diamond Offshore (NYSE: DO), and Occidental Petroleum (NYSE: OXY) and other energy sector investments sold to retail investor clients.
For investors, these recent events are a particularly tough blow as these are the types of investments that were often recommended by financial advisors to clients who were looking for income in their portfolios (often retirees or similarly conservative investors). This was likely a recommendation that was expected to be low volatility and fairly conservative, and now investors are faced with substantial losses as a result of a level of risk to their original investment principal that was probably never properly disclosed (if it was ever disclosed at all) by their financial advisors.
Although Financial advisors may claim that these were unforeseen market events, the reality is that these are similar risks to those experienced in the 2008-2009 financial crisis and similar to risks in the energy sector that arose in the 2014-2016 time frame. These potential risks were material risks that should have been properly disclosed to clients before recommending these investments individually or as part of a portfolio or investment strategy.
In cases where these were recommended to retirees or similar conservative income-seeking investors there is the potential for sales practice abuse as a result of misrepresentations, but more often as a result of omissions of material fact, or due to a lack of proper supervision.
Investors Seeking to Recover CPE, CHK, DO, and OXY Losses
For some investors, a private FINRA arbitration customer dispute enables them to bring a claim and potentially recoup their investment Callon Petroleum (CPE), Chesapeake Energy (CHK), Diamond Offshore (NYSE: DO), and Occidental Petroleum (NYSE: OXY) losses. These customer disputes typically involve only paper discovery and no depositions, and they are generally faster and more efficient compared to traditional court litigation, as they provide a private forum to resolve disputes more quickly and efficiently.
Haselkorn and Thibaut, P.A. is a nationwide law firm specializing in handling investment fraud and securities arbitration cases. The law firm has offices in Palm Beach, Florida, on Park Avenue in New York, as well as in Phoenix, Arizona, Houston, Texas, and Cary, North Carolina. The two founding partners have nearly 45 years of legal experience.
Haselkorn & Thibaut, P.A. has filed numerous (private arbitration) customer disputes with the Financial Industry Regulatory Association (FINRA) for customers who suffered investment losses relating to issues similar to those matters mentioned above. There are typically no depositions involved, and those cases are typically handled on contingency with no recovery, no fee terms. Experienced attorneys at Haselkorn & Thibaut, P.A. are available for a free consultation as a public service. Call 1 888-628-5590 for a free consultation.