Chesapeake Energy was the biggest decliner on the S&P 500 on Thursday after the company said it had received a US justice department subpoena and announced a convertible debt offering.

The Oklahoma-based company said the US Department of Justice was seeking information on its accounting methodology “for the acquisition and classification of oil and gas properties and related matters”.

Chesapeake also said it received subpoenas from the DoJ, US Postal Service and state agency representatives tied to its royalty payment practices and that it was engaged in discussions with them.

Chesapeake had said earlier this year it had received demands for documents, information and testimony from the DoJ and other state governmental agencies tied to possible violations of antitrust laws relating to the purchase and lease of oil and natural gas rights in various states.

Aubrey McClendon, the company’s former chief executive and founder, had been indicted in March on charges of conspiring to rig bids for oil and gas drilling rights in a conspiracy to suppress the cost of those leases. Mr McClendon died in a car crash the following day.

The US gas producer also announced a private sale of $850m in convertible debt due to mature in 2026 which it plans to use for general corporate purposes, including repayment of its outstanding credit facility debt and for debt repurchases.

“In our view, the offering is not a surprise and should help retire maturing debt while improving near-term liquidity,” said Scott Hanold, an analyst at RBC Capital Markets.

The news on Thursday sent shares in Chesapeake Energy, which before the start of the day had climbed more than 44 per cent so far this year, 9.3 per cent lower to $6.12.

The sell-off in the energy group accompanied a broader decline in US stocks.

At the close in New York, the S&P 500 had slid 0.9 per cent to 2,151.1, while the Dow Jones Industrial Average fell 1.1 per cent to 18,143.5. Meanwhile, the Nasdaq Composite declined 0.9 per cent to 5,269.2.

Elsewhere, ConAgra shares jumped 7.2 per cent to $46.25 after the foodmaker behind Slim Jim and Act II popcorn said it swung to a profit in its fiscal first quarter.

The Chicago-based company said it earned $186.2m, or 42 cents a share, compared with a loss of $1.2bn, or $2.68 a share in the year-ago period. Adjusting for one-time items, however, earnings of 61 cents a share topped estimates for 48 cents a share.

Sales slid 4.6 per cent to $2.7bn, broadly in line with estimates.

Meanwhile, PepsiCo shares rose 0.4 per cent to $107.76 after the foodmaker behind Pepsi and Lays chips raised its full-year guidance and posted better than expected fiscal third-quarter results.

Shares in Pier 1 Imports rose 4.7 per cent to $4.47 after the retailer reported a narrower second-quarter loss than analysts had forecast. The loss of five cents a share was smaller than the 6 cent loss that analysts were looking for.

The Texas-based company said sales and merchandise margins have improved through August and September but said it was cautious about its sales outlook.

mamta.badkar@ft.com

Twitter: @mamtabadkar



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