How Chesapeake Energy's Bankruptcy Could Affect Pipeline Stocks

The rumors of Chesapeake Energy's (NYSE: CHK) demise have turned out to be true. The deeply indebted oil and gas producer has officially filed for bankruptcy protection. These proceedings will have a significant fallout for the company's existing investors and other stakeholders, since it plans to restructure its debt and legacy contractual obligation. This latter factor could have far-reaching impacts, including affecting the sporting world.

One of Chesapeake's biggest contractual obligations is with midstream companies, which gather, process, and transport oil, gas, and natural gas liquids (NGL) for the company. It spends more than $1 billion per year on these services. While that's a burdensome cost to Chesapeake, these companies provide a vital market link for its oil and gas output. A big battle appears to be brewing between the company and these service providers, with their dividend payments potentially hanging in the balance.

Image source: Getty Images.

Source Fool.com