Sources tell Reuters the pioneering fracking firm Chesapeake Energy could seek bankruptcy protection as soon as Thursday.
They say the debt-ridden company is negotiating a roughly $900 million loan. The so-called debtor-in-possession financing would help it fund its day-to-day operations under Chapter 11 protection.
Chesapeake is also talking with creditors to "roll up" some of its existing debt of more than $9 billion and make it part of the bankruptcy loan.
A source says the company is also trying to get creditors to take an equity stake.
If the company were to emerge from bankruptcy, sources say, one plan under negotiation calls for creditors to take over Chesapeake in exchange for eliminating more than $7 billion of its debt.
Bankruptcy would be a huge reversal of fortunes for a company that had helped spearhead the U.S. shale revolution. Founded in 1989, it quickly grew to become the second-largest producer of natural gas in the U.S. behind Exxon Mobil.
But a natural gas glut hammered prices, Chesapeake's co-founder Aubrey McClendon got indicted over a bid-rigging scheme, and he died the next day in a car crash. The company tried to shift from gas to oil production, but the coronavirus outbreak and a Saudi-Russian oil price war upended those plans.
Shares fell by roughly a fifth Monday morning, making Chesapeake an outlier amid a big broad market rally.