A floor crew pulls steel pipe out of a natural gas well in the Barnett Shale in Fort Worth, Texas. The 11,600-foot well is owned by Chesapeake Energy Corporation. Photo: Photo by Robert Nickelsberg/Getty Images

Chesapeake Energy Corp., a shale gas pioneer that helped launch the country's oil-and-gas boom well over a decade ago, filed for Chapter 11 bankruptcy protection on Sunday.

Why it matters: Oklahoma City-based Chesapeake is the highest-profile oil-and-gas company to file for bankruptcy during the COVID-19 pandemic, which has sapped prices and demand.

  • But it also signals pre-pandemic financial woes that afflicted Chesapeake for years, and to some extent the shale sector overall, which has long struggled with debt and cash flow problems.
  • "This filing has been a long time coming. It was likely going to happen with or without COVID-19," said Alex Beeker, an analyst with the consultancy Wood Mackenzie, in a note Sunday.

Driving the news: Chesapeake said Sunday that it has a restructuring plan with lenders to eliminate roughly $7 billion in debt.

  • Chesapeake, co-founded in 1989 by the late and high-profile fracking pioneer Aubrey McClendon, said the agreement also includes $925 million in new financing and a commitment for $600 million in new equity upon exiting bankruptcy.
  • "We are fundamentally resetting Chesapeake’s capital structure and business to address our legacy financial weaknesses and capitalize on our substantial operational strengths," CEO Doug Lawler said in a statement.

The big picture: The company was once the country's second-largest gas producer, per the Wall Street Journal.

  • "Lawler had been trying to turn around the company by producing more oil and selling gas assets," the New York Times notes.
  • "But the shale drilling boom of recent years has unleashed more crude oil than the world needs, sending prices lower. The coronavirus pandemic and a decision by Saudi Arabia and Russia this year to ramp up production were the latest blows," per NYT.

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