# OKCpedia > Businesses & Employers >  Chesapeake Business Practices

## MikeOKC

How did this get missed? I haven't seen anything on the forum. Not to mention, The Oklahoman found it unworthy of news. And here we are just 48 hours before the annual meeting.

*ISS advises against McClendon for board*

Influential proxy advisory firm ISS has recommended Chesapeake Energy shareholders oppose chief executive Aubrey McClendon's re-nomination to the board of directors. 

*The group cited an unresponsiveness on McClendons part to investors and compensation issues, Reuters reported.*

*ISS also urges shareholders to vote against the reelection of former US Senator Don Nickles, who is chairman of the governance committee of the US natural gas company.*

*"A pay-for-performance disconnect has been identified at this company," ISS said in a 16 May report. "The company does not use any performance-linked incentive, choosing to rely instead on the discretion of the compensation committee."*

*Chief executive Aubrey McClendon's pay rose 13.4% last year, while one-year total shareholder return was only 1.4%, below the peer median of 35%, ISS said.*

*McClendon also receives excessive perks, the proxy advisory firm wrote.
*
*ISS also recommended holders opposed the company's executive compensation plan, the filing said.
*
In a letter to shareholders, Chesapeake wrote that ISS's reliance on short-term stock performance should instead be focused on the long term.

The company also told investors that its board takes feedback from corporate governance specialists and big shareholders, factors that ISS did not take into account.
-------------------------

He's treated like a God here in Oklahoma City, but McClendon deserves the boot from the board. And he's not the only one, that board is loaded with McClendon lackeys. His compensation package is so far askew from reality that it should be derided by all that care about the future of CHK. The big question - will stockholders_ or the SEC_ bring down Aubrey McClendon first? CHK is rogue and out of control.

http://www.upstreamonline.com/live/article258872.ece

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## MikeOKC

CHKand McClendon still out of control. ISS says McClendon & Nickles should get the boot from the Board of Directors. Thread here.

Edit: At the thread linked above is another link to an MSNBC story* today* from the Motley. "It's Even Worse Than You Think At Chesapeake Energy"

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## Midtowner

With McClendon out, how long before CHK merges with someone or relocates to Houston?

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## MikeOKC

I think the question should be turned around:

*With McClendon still running the show, how long before CHK becomes a prime takeover target and relocates to Houston?*

Remember, ISS just says he should be kicked off the board - he's still CEO. However, I think he's a disaster waiting to happen for Oklahoma City.


(........waiting for Brent Gooden & his "PR" firm to enter the thread and "correct" the record.)

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## MikeOKC

And the piling on begins (and rightfully so).....

MSNBC (today) from Motley's Matt Koppenheffer:

*"It's Worse Than You Think At Chesapeake Energy"*

The governance practices at Chesapeake Energy with regards to its CEO are a complete joke.

"Keep pulling the sweater ... Eventually the thing will unravel."
-- Zoolander

That odd quote from Ben Stiller's classic comedy has been stuck in my head ever since I published a story on the compensation for Chesapeake Energy's Aubrey McClendon.

I got plenty of good feedback on the story, and a number of folks who shared the view of McClendon as the consummate big-spending gambler. I also heard a couple of times that the extent to which McClendon gets rich from Chesapeake only begins with the compensation package that I focused on previously.
The rest of the story:

*http://www.msnbc.msn.com/id/43325721...s-motley_fool/*

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## BoulderSooner

CHK and McClendon are both great and getting better every day .... did/do you read the annual report? ...   ISS is a joke ... clearly you have something personal against AM and or CHK

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## MikeOKC

> CHK and McClendon are both great and getting better every day .... did/do you read the annual report? ...   ISS is a joke ... clearly you have something personal against AM and or CHK


Riigghhhhtttt. That's it. Kill the messenger. Make it about ME. _Is your head in the sand?_

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## okcpulse

I find it rather humorous that anytime anyone ever worries about any company in Oklahoma, their default twitch is "looks like they are relocating to Houston."  If Aubrey gets the boot, maybe they will, or maybe they won't.  Oklahoma City is a completely different environment today than it was during the energy exodus to Texas in the 1980s.  It's even different when Kerr McGee was dissolved, but that company had dried up long before Anadarko swallowed them up.  The city is much more appealing to companies when considering the QOL factor, so the chance is greater they will want to stay.

Now, if CHK DOES become a take-over target by a Texas company... well, let's just put it this way:  Texans only care about Texans.

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## MikeOKC

Here's the original story (from last week) that, after closer inspection, prompted Koppenheffer to write the follow-up (in the MSNBC link above).
*"Is This Company's CEO Worth It: Chesapeake Energy"*
http://www.fool.com/investing/genera...ke-energy.aspx

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## redrunner

Yikes...Trouble in paradise?

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## BG918

> I find it rather humorous that anytime anyone ever worries about any company in Oklahoma, their default twitch is "looks like they are relocating to Houston."  If Aubrey gets the boot, maybe they will, or maybe they won't.  Oklahoma City is a completely different environment today than it was during the energy exodus to Texas in the 1980s.  It's even different when Kerr McGee was dissolved, but that company had dried up long before Anadarko swallowed them up.  The city is much more appealing to companies when considering the QOL factor, so the chance is greater they will want to stay.
> 
> Now, if CHK DOES become a take-over target by a Texas company... well, let's just put it this way:  Texans only care about Texans.


The only companies I could see buying Chesapeake would be Exxon, ConocoPhillips, and Encana.

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## bluedogok

The ISS's of the world are the reason why the financial sector is a complete mess, they are symptomatic of the typical short sightedness that the profit takers (they can no longer be called investors) focus on. It is pretty dang simple, if someone feels that CHK is a bad investment, don't put your money in there and eventually the stock prices will reflect that many people do but evidently most don't. All upper level management types get a ridiculous payday anymore, it isn't just McClendon or energy sector honchos, the worst of the worst are the financial sector upper management who keep granting themselves lavish packages when they lose billions.

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## okcpulse

Well, see here's the problem.  Before the Devon Tower began construction, someone came on here claiming that Devon might be up for sale and there would be no tower.  Yyyyeah.  Then, people speculated that the Devon Tower would be scaled back like the OneOK Tower was in Tulsa after oil prices dropped.  Last time I checked, the forms are coming together for floor 47.  For every piece of good news about OKC we celebrate, there is always a group of people that say "well, that's great, but..."

So when is enough going to be enough?  I am not saying MikeOKC is wrong or right, but we seem to hit these 'The sky might be falling, pack for Texas' conversations every year like clock work.  Am I the only one that sees a problem here?

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## onthestrip

The thing is is that we aren't really the ones saying this. These concerns are coming from national writers and industry experts. One thing that I don't think anyone can disagree with is his $75 mil salary a couple years ago when the stock price tanked. That is complete recklessness.

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## MikeOKC

> So when is enough going to be enough?  I am not saying MikeOKC is wrong or right, but we seem to hit these 'The sky might be falling, pack for Texas' conversations every year like clock work.  Am I the only one that sees a problem here?


Per the the Texas bit.... I was responding to Midtowner more in jest than anything. That's not the issue. The issue is the continued rogue behavior of CHK.

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## MikeOKC

> The ISS's of the world are the reason why the financial sector is a complete mess, they are symptomatic of the typical short sightedness that the profit takers (they can no longer be called investors) focus on. It is pretty dang simple, if someone feels that CHK is a bad investment, don't put your money in there and eventually the stock prices will reflect that many people do but evidently most don't. All upper level management types get a ridiculous payday anymore, it isn't just McClendon or energy sector honchos, the worst of the worst are the financial sector upper management who keep granting themselves lavish packages when they lose billions.


I think the major point from analysts is that CHK was raked over the coals on the now infamous AM compensation package and all the board has done to correct it is -* nothing*. _Did you read those articles?_ It's clear that very many people believe AM is still running CHK like it's a private company and has a board that's doing his personal bidding for compensation-stacking that is unacceptable at a public company. It's obviously very carefully skirting the law. Yes, you are right, there are a lot of ridiculous pay packages out there. _But they aren't the issue._ CHK and Aubrey McClendon are being singled out for a reason. "Horrible corporate governance" in the words of one. Having board directors making $577,000.00 a year is rightfully called "scandalous" for a reason. They're not going to buck you when you're on the board and controlling things like it's a private company and paying them those ludicrous pay days for - literally - a few days of work. I think CHK stockholders better listen. When that one writer quoted Zoolander, I'm afraid he's pretty damn close: "Keep pulling the sweater ... Eventually the thing will unravel." And frankly, Oklahoma City cannot afford problems at CHK with corporate cowboys putting not only CHK, but our city, at risk.

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## Snowman

> The thing is is that we aren't really the ones saying this. These concerns are coming from national writers and industry experts. One thing that I don't think anyone can disagree with is his $75 mil salary a couple years ago when the stock price tanked. That is complete recklessness.


Many 'national writers' analysis is totally/nearly useless, that is why their day job is writing about stocks not trading them.

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## MikeOKC

Today - it's the_ Wall Street Journal_

*Chesapeake CEO Faces Storm*

"Chesapeake Energy Corp., facing calls from an influential advisory firm to oust co-founder and Chief Executive Aubrey McClendon as chairman over executive pay issues, gave ground hours before its annual meeting.

Mr. McClendon has proved a controversial figure, at once admired for building the nation's second-largest natural-gas producer from scratch, but also criticized for appearing to flout normal standards of corporate governance regarding compensation. Unlike many executives in the country, Mr. McClendon's compensation is set solely at the nine-member board's discretion and hasn't been tied to stated performance standards.

Hours ahead of the annual meeting, Chesapeake on Thursday filed a statement with the U.S. Securities and Exchange Commission committing to implement an "executive compensation system that includes objective performance criteria," as recommended by an independent compensation consultant the company engaged in March. The company had eschewed tying compensation to such objective metrics as recently as April, according to regulatory filings."

~

"Mr. McClendon has made more than $152 million in cash, stock and perquisites since 2008, according to federal filings, making him one of the nation's highest-paid chief executives in any industry."

~

"Directors' pay for 2010 averaged above half a million dollars, including their personal use of corporate aircraft."

http://online.wsj.com/article/SB1000...181597036.html

A McClendon apologist is also quoted - _there's few of them_. Many of my friends here at OKCTalk don't realize this man's hubris has made him the poster boy for all that's wrong with corporate governance.

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## MikeOKC

Today - it's the _Wall Street Journal_. "
*"Chesapeake CEO Faces Storm"*
http://www.okctalk.com/showthread.ph...389#post437389

Yes, Aubrey, we keep telling you _it's a public company now!_

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## onthestrip

> Many 'national writers' analysis is totally/nearly useless, that is why their day job is writing about stocks not trading them.


Well now its just another writer, from the nobody newspaper Wall Street Journal. They probably dont know anything either.

Chesapeake may very well be fine and go on to do great things and make shareholders happy but it doesnt have to take any national writer to realize that Aubrey has stocked the board with yes-men that do whatever he wants them to do. Hard for board members to say no when they are getting the compensation he gives them

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## blangtang

but...but...he's helping to bring Whole Foods to the employees!  Isn't that about how it goes in this town?

Or, how about, without McClendon and his cronies on the board, CHK wouldn't have been afforded the privilege of owning an expensive, exotic map collection. The wine is another story.

Wasn't there an article recently ragging on Tom Ward of SD as well for being over compensated, like compensated similarly to the CEO of Exxon Mobil, etc.

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## OKCTalker

I'm trying to see the whole picture here: Aubrey took CHK from nothing to billions, and while he did it mostly with OPM, he and Katie have a ton of skin in the game. Both are heavily invested (time & money) in Oklahoma City business, education, philanthropy, the arts and culture (just look at Bill Gumerson's contributed piece in today's DO praising Aubrey's leadership in bringing the ProCure Proton Therapy Center to OKC). Yes, CHK could be more transparent, use better compensation practices, etc., but if we're going to make this all about tearing down Aubrey McClendon, don't forget that there's a lot of him worthy of being held up.

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## Doug Loudenback

From Forbes today (6/10/11): http://blogs.forbes.com/christopherh...felt-the-heat/



> *Its High Time Chesapeakes McClendon Felt The Heat*
> by Christopher Helman
> Aubrey McClendon, the billionaire co-founder of natural gas giant Chesapeake Energy has responded to pressure from grumpy shareholders and proxy advisory firm Institutional Shareholder Services to overhaul the way Chesapeake doles out unwarranted and unprecedented riches to him. On Thursday, ahead of todays annual meeting, the company agreed to put in place a policy of awarding McClendon (and other execs) according to his performance, rather than just because of his kingly position, august bearing and sweetheart relationships with his hand-picked board members. Too little, too late. Shareholders should follow the recommendation of ISS and refuse to reelect McClendon to Chesapeakes board of directors.
> * * *
> The highest profile among dozens of complaints against Chesapeake involved Oklahoma bilionaire Harold Hamm, ceo of Continenatal Resources (see: Chesapeake Lawsuits Pit Billionaire Against Billionaire). McClendon personally arranged a contract the Hamm for Chesapeake to buy Continentals acreage in Michigan, then months later tried to weasel out of the deal without paying anything. Hamm sued Chesapeake for $20 million, the value of the contract. McClendon settled that case with Hamm a month or so ago, with Chesapeake finally paying what it owed and McClendon trying to make amends. Hamm is a big enough guy to stand up to McClendon and win; smaller fry will face years of legal wrangling. A small operator, Frontier Energy, has sued Chesapeake for welshing on $24 million in contracts. Other plaintiffs include pensioners and farmers who bought new equipment in anticipation of Chesapeakes money coming in, only to lose their farm when Chesapeake refused payment.
> * * *

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## Pete

It's entirely possible to respect and appreciate what McClendon and CHK have done for the community and it's employees while also being concerned about steady independent reports and opinions about the company's spending habits, compensation and governance.

It's also entirely possible to run an innovative, fast-growing successful company without absurd salary packages for the top brass and constantly calling attention to yourself in a less than positive way.


As much as everyone loves Aubrey and Chesapeake for what they have done for OKC and still plan to do, the simple fact is that the community has a real stake in their long-term viability and there seems to be a steady stream of these types of articles while other companies (like Devon) flourish with hardly a ripple of criticism.

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## MikeOKC

AM and Nickles survived - but the message was sent. 78% voted for AM. He received around 98% last time. In the financial world of corporate governance, 78% is actually a scare. 

Here's the first I've seen of news on the web:
http://www.ft.com/intl/cms/s/0/50290...#axzz1Ov9XwdOi

I'll leave it at this....now that the shareholders have not taken care of their own housekeeping, the SEC's official investigation into CHK practices begins in 3....2....1....

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## bombermwc

CHK is also moving more into the fracing world outside of their own in-house operations. They recently bought into a company based in Houston but that has one of their larger operations centers in Chickasha. I have a friend that has been working for Frac Tech for a few years now. Word is an IPO is on their radar soon, but if CHK is getting their paws in the mix, who knows. 

From what I understand, FracTech is a great one to side with though for CHK. They use a mixture that is NOT harmful and all the stories you hear about groundwater contimination are apparently done by pretty crappy companies that do little to look at the environmental side. So in terms of being clean and green (as far as you can be when you're sucking crap out of the ground), they at least chose a good company to side with. 

http://uk.reuters.com/article/2011/0...21850820110509

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## soonerguru

> CHK is also moving more into the fracing world outside of their own in-house operations. They recently bought into a company based in Houston but that has one of their larger operations centers in Chickasha. I have a friend that has been working for Frac Tech for a few years now. Word is an IPO is on their radar soon, but if CHK is getting their paws in the mix, who knows. 
> 
> From what I understand, FracTech is a great one to side with though for CHK. They use a mixture that is NOT harmful and all the stories you hear about groundwater contimination are apparently done by pretty crappy companies that do little to look at the environmental side. So in terms of being clean and green (as far as you can be when you're sucking crap out of the ground), they at least chose a good company to side with. 
> 
> http://uk.reuters.com/article/2011/0...21850820110509


This is what I've suspected. Let's be honest, here. Fracking is a potential environmental disaster and water is a precious resource. This is why I don't understand why responsible owners like Chesapeake and Devon are so hostile to regulation. To me, regulation protects responsible operators and provides punishment to those who do it wrong. Virtually every industry that "self regulates" fails at doing so, and energy companies are notoriously bad at it.

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## ou48A

> This is what I've suspected. Let's be honest, here. *Fracking is a potential environmental disaster and water is a precious resource*. This is why I don't understand why responsible owners like Chesapeake and Devon are so hostile to regulation. To me, regulation protects responsible operators and provides punishment to those who do it wrong. Virtually every industry that "self regulates" fails at doing so, and energy companies are notoriously bad at it.


Many problems that are attributed to a bad frac job are really a bad Cement job.
There are very few problems with fracing and what few there are often highly exaggerated.


There is a  micro cap  Canadian Co called GASFRAC (GSFVF) who  issued its IPO several months ago who uses no water in its frac jobs.
They claim a lower overall cost for several reasons. There is no water disposal..... Because there is no de watering the well can be put on line quicker and there is no wasteful flaring. 
GASFRAC says that its frac jobs can achieve up to 20% better well production. They use far fewer vehicles and associated equipment.
However unfounded they are…… there is no reason to fear ground water contamination. For reasons that have nothing to with graound water contamination GASFRAC is a greener way to frac.
GASFRAC uses propane that is liquefied instead of water. Most of the propane is recovered, what is not is sent down a pipeline. 

GASFRAC is a company that is so small that it’s not very well known company nor is its method of fracing.

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## blangtang

A. McClendon is scheduled to be interviewed on CNBC this afternoon during Jim Cramer's Mad Money.

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## dankrutka

> A. McClendon is scheduled to be interviewed on CNBC this afternoon during Jim Cramer's Mad Money.


How'd it go?

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## blangtang

hmm, i think it was good.

A.M said they are gonna hire 2000 people this year and average compensation of those jobs is ~75K/year

they discussed energy policy in the US, how CHK is increasing their dividend, and how they are one of the biggest drillers in the world...

I can't remember, maybe Cramer said to buy the stock!

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## urbanity

'Peake performance

Aubrey McClendon retains his Chesapeake CEO position, despite an advisory firm's recommendation.

http://www.okgazette.com/oklahoma/ar...html#dComments

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## Snowman

> 'Peake performance
> 
> Aubrey McClendon retains his Chesapeake CEO position, despite an advisory firm's recommendation.
> 
> http://www.okgazette.com/oklahoma/ar...html#dComments


Rarely do outside shareholders vote, unless their is several of the key investors already against them (which will come over time not some story published shortly before a vote) or major internal conflict does any CEO get fired/not elected.

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## MikeOKC

> 'Peake performance
> 
> Aubrey McClendon retains his Chesapeake CEO position, despite an advisory firm's recommendation.
> 
> http://www.okgazette.com/oklahoma/ar...html#dComments


One of the most eye-opening things in this entire drama is told beautifully in the Gazette article you linked to. The no-coverage decision by _The Oklahoman_  was a big step back to the days of E.K. and Edward Gaylord - playing like the old _Pravda_ (Problems? What problems?). I have grown to respect and appreciate a lot about the newer _Oklahoman_, so to see this blatant pandering to Aubrey McClendon with his hometown newspaper not covering (censoring) what was a major corporate business story nationally was very disappointing.

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## MikeOKC

CHK is center stage in page one NYT piece, Sunday, 6-26-01.
Posted story as it concerns a lot more than CHK in Current Events/Open Thread:
http://www.okctalk.com/showthread.php?t=26245

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## mugofbeer

So, exactly why is it so important that you publish any negative information or article about CHK?  There's a clear trend here.  Head in the sand?  Over what?  Unless you work there you've got no horse in the race so what does it matter?  What is it that you are trying to achieve?  CHK does an enormous amount of good in this city and employs thousands of people.  CHK will have a hard enough time trying to remain independent as time goes on.  As big as it is, if Exxon-Mobil or BP or someone decided they wanted to absorb CHK, they could do it easily.  Then OK would ahve about a zillion square feet of really nice EMPTY office space up on western.

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## Pete

CHK fires back at the NYT:




> Chesapeake Energy Corp. CEO Aubrey McClendon has responded to what he considers to be a misleading article published Sunday in the New York Times.
> 
> Read more: http://newsok.com/chesapeake-strikes...#ixzz1QWQOLbjG

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## MikeOKC

> CHK fires back at the NYT:


Isn't it interesting how _The Oklahoman_ goes to bat for Aubrey, but - literally - _not a peep_ concerning the the national news story after the ISS recommended his ouster from the board of directors? I said then, and I still believe, The no-coverage decision by The Oklahoman was a big step back to the days of E.K. and Edward Gaylord - playing like the old Pravda (Problems? What problems?). I have grown to respect and appreciate a lot about the newer Oklahoman, so to see this blatant pandering to Aubrey McClendon with his hometown newspaper not covering (censoring) what was a major corporate business story nationally was very disappointing. But now? After the _NYT_ story? _The Oklahoman_ goes to work as an offshoot of the CHK PR department. There's so much 'Enron' written all over Chesapeake Energy. People want to deny and act like nothing is wrong. Look where that got Enron - _and their investors._




> So, exactly why is it so important that you publish any negative information or article about CHK?  There's a clear trend here.  Head in the sand?  Over what?  *Unless you work there you've got no horse in the race so what does it matter?*  What is it that you are trying to achieve?  CHK does an enormous amount of good in this city and employs thousands of people.  CHK will have a hard enough time trying to remain independent as time goes on.  As big as it is, if Exxon-Mobil or BP or someone decided they wanted to absorb CHK, they could do it easily.  Then OK would ahve about a zillion square feet of really nice EMPTY office space up on western.


Why does it matter to me? The last part of your post says it all. It's not time to turn a blind eye to all the problems of corporate (mis)governance at CHK.
It is very important that CHK succeed for the future of Oklahoma City. Right now, the padding of wealth of Mr. Aubrey McClendon is job #1 at CHK. 
I agree with many, many analysts who believe AM should be gone - before he's forced to go and ruins CHK (and a good chunk of OKC) in the process.
Greed is an old story. On what planet are BILLIONS not enough, Aubrey?

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## Snowman

Why you are expecting some groundswell of investors action for this. Even giving you every points you make the company has higher percent returns on investment over the last twenty years than most stocks. Plus outside of start-ups,  forced changes in CEOs most of the time do not increase shareholder value until many years out (assuming the new CEO can show a dramatic improvement) and most of the time leads to something between no improvement but more often years of lost value, with the exception of when their are far more people than currently would want him out than words in the annual report. Do you have someone in mind that will assure investors that they will do a better job?

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## MikeOKC

> Why you are expecting some groundswell of investors action for this. Even giving you every points you make the company has higher percent returns on investment over the last twenty years than most stocks. Plus outside of start-ups,  forced changes in CEOs most of the time do not increase shareholder value until many years out (assuming the new CEO can show a dramatic improvement) and most of the time leads to something between no improvement but more often years of lost value, with the exception of when their are far more people than currently would want him out than words in the annual report. *Do you have someone in mind that will assure investors that they will do a better job?*


No, I just know the current CEO is good with start-ups and running a private business, but is running the public CHK like it's still his private business and is _endangering_ Chesapeake Energy Corp. He simply is too much of a corporate cowboy to run a public company. This truly is not personal - I'm simply outraged at what AM gets away with and I know the time will come when I will say, "I told you so." We'll see, huh?

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## Dustin

His personal letter to employees..

http://www.facebook.com/note.php?not...50305143547565

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## onthestrip

> So, exactly why is it so important that you publish any negative information or article about CHK?  There's a clear trend here.  Head in the sand?  Over what?  Unless you work there you've got no horse in the race so what does it matter?  What is it that you are trying to achieve?  CHK does an enormous amount of good in this city and employs thousands of people.  CHK will have a hard enough time trying to remain independent as time goes on.  As big as it is, if Exxon-Mobil or BP or someone decided they wanted to absorb CHK, they could do it easily.  Then OK would ahve about a zillion square feet of really nice EMPTY office space up on western.


This response is foolish. We should ask no questions or be critical of anybody as great as OKCs savior, Mr McClendon? Please. The guy obviously does some shady stuff. We should definitely ask questions. I also don't have to work there to be concerned. If Chpk failed it would have a huge impact on the entire city, not just employees. But wait, what am i doing? I shouldn't question Aubreys actions, he's bringing us Whole Foods, developed Classen Curve that has only siphoned tenants from other OKC centers, built some boathouse stuff and has a nice looking campus. When he does that why should I ever question the risky business practices he uses.

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## Dustin

http://www.cnbc.com/id/43564235

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## MikeOKC

*This time....Aubrey is accused of blatantly buying the Governor of Pennsylvania to the tune of $450,000.00..Takes "grooming" to a new level*



"In the-oil-and-gas business, it's called a wildcat well - when a prospector takes a big risk drilling deep in an unexplored area.

In 2004, a flamboyant Oklahoma City multimillionaire took out his hefty checkbook for what you could call the political equivalent of a wildcat well - and he struck a gusher, right here in Pennsylvania.

The $450,000 in campaign checks that energy mogul Aubrey McClendon wrote that fall helped elect a man he said he'd never even met - a relatively obscure GOP candidate for Pennsylvania attorney general, Tom Corbett."
http://articles.philly.com/2011-06-2...arcellus-shale

http://www.investorvillage.com/group...g&mid=10665001

*And how does it all touch the people of Pennsylvania?*
http://dearsusquehanna.blogspot.com/...d-time-at.html
(This person actually heard some of the reports of people on the ground in PA about AM and his control-freak personality. Take note.)

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## MikeOKC

And...fast on the heels of the above. Connect the dots and surprise! 2+2 really does = 4!

PA Governor Corbett threatened a veto of the budget bill if it included a natural gas tax after the PA State Senate passed a budget that included the tax. A little political maneuvering and Aubrey learns he picked this boy well. Aubrey, aren't you proud to be so blatant about buying off political leaders? Just like Uncle Bob, you think your wealth gives you *entitlements*. (Yes, many don't know his maternal bloodline is KERR. Aubrey is a nephew of Robert S. Kerr -- you don't think he had advantages with his _"startup"_ way back when?) 
http://thinkprogress.org/politics/20...udget-gas-tax/

I'm embarrassed by this man.

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## Pete

CHK to Invest $1 Billion In Clean Energy

OKLAHOMA CITY, Jul 11, 2011 (BUSINESS WIRE) -- In an effort to help break OPEC's 38-year stranglehold on the U.S. economy and to lower energy costs to American consumers, enhance national security, stimulate economic growth, create hundreds of thousands of high-paying jobs and improve the environment, Chesapeake Energy Corporation (NYSE:CHK) today unveiled its plan for an achievable, scalable and affordable pathway toward a transportation future that runs on America's own abundant supplies of natural gas and oil from deep shale and other unconventional formations. Central to this private-sector initiative to stimulate world-class technological innovation and stronger economic growth is the creation of a $1.0 billion venture capital fund, Chesapeake NG Ventures Corporation (CNGV), dedicated to identifying and investing in companies and technologies that will replace the use of gasoline and diesel derived primarily from OPEC oil with domestic oil, natural gas and natural gas-to-liquids (GTL) fuels.

To fund this effort, Chesapeake will redirect approximately 1-2% of its forecasted annual drilling budget away from efforts to increase natural gas supply toward projects that will instead stimulate increased natural gas demand. Over the next 10 years, the company anticipates committing at least $1.0 billion to CNGV initiatives.



BTW, they are investing heavily in two companies; one based in Southern California and the other in Colorado.

----------


## ou48A

> CHK to Invest $1 Billion In Clean Energy
> 
> OKLAHOMA CITY, Jul 11, 2011 (BUSINESS WIRE) -- In an effort to help break OPEC's 38-year stranglehold on the U.S. economy and to lower energy costs to American consumers, enhance national security, stimulate economic growth, create hundreds of thousands of high-paying jobs and improve the environment, Chesapeake Energy Corporation (NYSE:CHK) today unveiled its plan for an achievable, scalable and affordable pathway toward a transportation future that runs on America's own abundant supplies of natural gas and oil from deep shale and other unconventional formations. Central to this private-sector initiative to stimulate world-class technological innovation and stronger economic growth is the creation of a $1.0 billion venture capital fund, Chesapeake NG Ventures Corporation (CNGV), dedicated to identifying and investing in companies and technologies that will replace the use of gasoline and diesel derived primarily from OPEC oil with domestic oil, natural gas and natural gas-to-liquids (GTL) fuels.
> 
> To fund this effort, Chesapeake will redirect approximately 1-2% of its forecasted annual drilling budget away from efforts to increase natural gas supply toward projects that will instead stimulate increased natural gas demand. Over the next 10 years, the company anticipates committing at least $1.0 billion to CNGV initiatives.
> 
> 
> 
> BTW, they are investing heavily in two companies; one based in Southern California and the other in Colorado.


I hope this Chesapeake plan is successful because it would have profound implications for our nation, state and city.
 Others would be sure to follow. Our various governmental agencies need to help facilitate this and put this on fast track.

  I believe this is a plan that we could all support.

----------


## MikeOKC

> CHK to Invest $1 Billion In Clean Energy
> 
> OKLAHOMA CITY, Jul 11, 2011 (BUSINESS WIRE)....


CleanER does not mean it's clean. Another Audrey McClendon-led disinformation campaign. The CHK-written press release which ends up on Business Wire (PR outlet) and runs verbatim by mainstream media shows how effective those things can be. The fact is that the this latest round of CHK disinformation is nothing more than the beginning of _another_ huge multimillion dollar marketing campaign to make people believe natural gas is "clean." It's too bad Aubrey & Co. can't make their billions with intellectual honesty.

----------


## MikeOKC

As I expected, the move by CHK does nothing for the stock price and is seen as little more than a PR move.

Some snippets from story from _The Street_.

*Chesapeake's Largesse Does Little for Stock*

"For Chesapeake, though, there's really only one major potential benefit from supporting the natural gas vehicle market: Impacting the supply/demand balance in the natural gas market to such a degree that natural gas prices finally break out of the doldrums. That's not going to happen as a result of Chesapeake's $1 billion investment, according to several analysts in the energy markets, and that leaves the Chesapeake move as a yawner for investors." 

"It doesn't mean the natural gas vehicle investment isn't a great PR move though, and it came at a good time. The New York Times stopped just short of describing Chesapeake as a Ponzi scheme in a recent article, prompting CEO Aubrey McClendon to write an letter to employees defending the company."


*"Energy analysts pointed to the first sentence of the Chesapeake announcement as the first sign that the $1 billion investment was more PR than IRR [internal rate of return] for Chesapeake shareholders, and from a CEO, Aubrey McClendon, who has never been shy about marketing: "In an effort to help break OPEC's 38-year stranglehold on the U.S. economy and to lower energy costs to American consumers, enhance national security, stimulate economic growth, create hundreds of thousands of high-paying jobs and improve the environment..." Chesapeake began its press release."* 

*"It's PR more than anything else," said Phil Weiss, analyst at Argus Research and a constant critic of Chesapeake management. "The T. Boone Pickens supported NatGas Act has lost steam and so the ball was tossed to Aubrey and he wrote a big check," Weiss said."* 

*"Several other energy analysts didn't want to be quoted on Chesapeake's motivation but echoed Weiss's sentiment. "It's Aubrey's ego at work here," said one analyst. "It doesn't impact Chesapeake shares or the way any investor thinks about the company."*

The stock was up *1.5% to $30.22* in recent trades.http://www.thestreet.com/story/11184...for-stock.html

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## MikeOKC

Here's a fascinating piece about the practice of PR/News morphing. Using, guess who (?), as an example --- yep - Chesapeake Energy. She's 100% right. This is an excellent article. It all goes back to what I wrote a post or two back about intellectual honesty. She looks at the recent back and forth between the NYT and CHK and those that support fracking. Also, she is spot-on about CHK's use of PR as "news" and how, repeated often enough, it _becomes_ "news."
*News Coverage Vs. PR: Is Fracking a Panacea or a Ponzi Scheme?*

I have to include the end of the article, as it so clearly shows how incredibly clueless and cocky AM can be:

*But in the end, it all boils down to values, as McClendon makes clear his own lack of interest in the free press, in journalism, and in environmental accountability. In his open letter, he asks "What value has the NYT or environmental activists created during these same past seven years? You either create value in this world or you consume/destroy it -- we are value creators, please never forget that."*

Wow.

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## MikeOKC

For continuity and to show the pattern of contempt shown to stockholders, please see my post concerning CHK's latest outrage (Chesapeake Arena):
http://www.okctalk.com/showthread.ph...328#post451328

----------


## MikeOKC

And the hits just keep on comin'!


*5 Outrageous CEO Spending Abuses & Perks*
http://www.sfgate.com/cgi-bin/articl...pedia56111.DTL

AND (same day)

"Chesapeake Energy (NYSE: CHK  ) occasionally enters the spotlight for the egregious pay CEO Aubrey McClendon rakes in. My Foolish colleague Matt Koppenheffer recently asked whether Chesapeake Energy is run for McClendon's benefit, rather than shareholder value. *So it's no surprise to find Chesapeake on the list of jet-set offenders as well. Its corporate aircraft payout adds up to $500,000, with its TCL compensation score denoting "very high concern," although its AI risk rating is just "average."*
http://www.fool.com/investing/genera...ur-stocks.aspx

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## MikeOKC

OUCH! The truth hurts...This should wake-up some prospective CHK buyers. Aubrey, probably time for another Cramer puff piece.

*Chesapeake: The Lost Decade*

http://seekingalpha.com/article/2878...he-lost-decade

and.....

*this exclusive Reuters report on Aubrey's sweetheart FWPP deal which allows him to - personally - cash-in on every well...*
http://www.reuters.com/article/2011/...77E4BT20110815

"Paul Hodgson, senior research associate and an expert in executive compensation at GMI Ratings, a corporate governance research and ratings firm, expressed skepticism about the FWPP. *Chesapeake's behavior and governance raise concerns that over the long term "significant shareholder loss" may occur*, he said." 

So much smoke, all the time, _when and where is the fire?_ Poor Jim Cramer, Aubrey's big buddy, must think all his work for CHK is destined to be for nothing.

----------


## Maynard

> OUCH! The truth hurts...This should wake-up some prospective CHK buyers. Aubrey, probably time for another Cramer puff piece.
> 
> *Chesapeake: The Lost Decade*
> 
> http://seekingalpha.com/article/2878...he-lost-decade
> 
> and.....
> 
> *this exclusive Reuters report on Aubrey's sweetheart FWPP deal which allows him to - personally - cash-in on every well...*
> ...

----------


## MikeOKC

All I saw was the headline and I _knew_ that CHK and Aubrey McClendon would be on the list.

*Banana Republic USA: Meet the 25 CEOs Who Make More Than Their Companies Pay In Taxes*

Sure enough - #3 on the list.

----------


## mugofbeer

So MikeOKC, do you pay more taxes every APril than the IRS code requires?

----------


## MikeOKC

> So MikeOKC, do you pay more taxes every APril than the IRS code requires?


No, I don't. Apples and oranges, Mug. The article and chart simply pointed out that AM was paid more in compensation in 2009 than taxes paid by the company he heads and CHK had $7.7 *billion* dollars of revenue. It's saying more about what your CEO is being paid than anything. Not to mention, his sweetheart FWPP deal, where he makes money - _personally_ - on every well (see 3 or 4 posts back) isn't even counted in that compensation. With that FWPP, seriously, no telling how much McClendon rakes in as the CEO of this public company. But again, the issue is that even without that, he personally made more money than all of CHK paid in corporate taxes. That's pretty hard to fathom.

----------


## okcpulse

So what was he paid in 2010?  And you lost me on your source from sfgate.  sfgate is about as liberal leaning as a conservative paper, which blows their credibility.  You've spent post after post going after a production company who over-compsensated their CEO two years ago.  Again, you are not wrong in voicing your concerns, but it DOES seem that you are singling out CHK.  If you're an industry insider like myself, my resources contradict what is floating around in the papers.  Yes, CHK took a black mark, but when NG prices plummeted, the had to do damage control.

And yes, natural gas is clean energy.  Sounds to me like the only clean energy on your agenda is a pure EV.  Far from sustainable.  Natural gas emits far less CO2 than gasoline.

----------


## MikeOKC

> So what was he paid in 2010?  And you lost me on your source from sfgate.  sfgate is about as liberal leaning as a conservative paper, which blows their credibility.  You've spent post after post going after a production company who over-compsensated their CEO two years ago.  Again, you are not wrong in voicing your concerns, but it DOES seem that you are singling out CHK.  If you're an industry insider like myself, my resources contradict what is floating around in the papers.  Yes, CHK took a black mark, but when NG prices plummeted, the had to do damage control.
> 
> And yes, natural gas is clean energy.  Sounds to me like the only clean energy on your agenda is a pure EV.  Far from sustainable.  Natural gas emits far less CO2 than gasoline.


It's not just post after post going after Aubrey Kerr McClendon's 2009 salary. It's post after post of breaking AubreyNews. I "single" him out because his corporate governance (along with his sweetheart board of directors) is one of the worst in all of America. That's not a particularly controversial position. That's pretty much a given. Even when CHK stock is rising - the threat of an AM bombshell always looms - as the SeekingAlpha story posted earlier this month discusses.

----------


## MikeOKC

Always something new. This was actually published by _Investor Place_ on the 1st, but I waited until after Labor Day to mention it here:

*Chesapeake Energy: Natural Gas or Hot Air?* 

"Chesapeake is legendary for its total contempt of shareholders. Whether it’s the amount spent on corporate jets for top executives, including CEO Aubrey McClendon, or the millions sponsoring the NBA’s Oklahoma City Thunder, McClendon’s personal play toy, shareholder rights are not at the top of its priorities."

"If you want a good-paying part-time job, find a way onto Chesapeake’s board of directors. *All but one of eight were paid $400,000 or more in 2010.* Most impressively, McClendon managed to earn $21 million in 2010 while Chesapeake paid no federal income taxes..."
What a great reputation Aubrey enjoys!?!?! CHK will have a hard time shaking the "rogue CEO" image as long as...well..._as long as they have a rogue CEO_!

Just an aside and I came across this quite accidentally,  I was told that a major newspaper has been or will soon have a reporter in town looking up-close at Aubrey and CHK. Specifically the use of shareholder funds for everything but energy. Think Thunder, retail, buying a neighborhood of Oklahoma City at inflated prices, part-time board directors who are wealthy on their CHK board presence alone (and mere rubber stampers for Aubrey), etc. I doubt it will be pretty. People of this city better wake-up to the fact that Aubrey Kerr McClendon has built a monster - _with contempt for stockholders_ - that may come back to bite our city - big time.

----------


## ultimatesooner

Dude did aubrey steal your wife/gf or something

----------


## MikeOKC

> Dude did aubrey steal your wife/gf or something


Oh....we can post time and again about football or whatever...but I'm not allowed to keep people updated on corporate malfeasance at CHK? By the way, I just can't take anybody who addresses me as "dude" seriously.

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## dankrutka

I'm not a busy expert by any means, but CHK is very important to OKC and McClendon seems to be running the company very recklessly. It is worrisome. For those that are not worried, what do I not know?

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## MustangGT

As long as my stock continues to appreciate I am happy.  I do not give a tinkers hoot as long as my investment continues to on average rise.  A few dips in the road are okay but in the end it is all about profit.

----------


## onthestrip

> I'm not a busy expert by any means, but CHK is very important to OKC and McClendon seems to be running the company very recklessly. It is worrisome. For those that are not worried, what do I not know?


It is quite fine to be worried and you probably should be. There are numerous reports and articles on the risk and bad corporate governance Chesapeake practices. However, most people dont want to believe this because they are either employees that are blind, friends of employees that see chpk as a good company because it employs lots of their friends and other people, or people who love all the good Aubrey and chpk does (thunder, the arena name, boathouses, whole foods, Christmas lights, etc). And while all the above is true, chpk and Aubrey do many good things but it is no reason not to be critical of their ways and be worried if things went south for them. Because if it did they will have left thousands without work and totally wreck the real estate market in okc for many years to come.

I'm happy for all the things this company has done but it doesn't stop me from worrying or paying attention to what others around the country are saying about them.

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## MikeOKC

> As long as my stock continues to appreciate I am happy.  I do not give a tinkers hoot as long as my investment continues to on average rise.  A few dips in the road are okay but in the end it is all about profit.


Mustang, Please read *"The Lost Decade"* - an article about CHK's problem for stockholders. It spells it out very clearly why it's always "almost hot" but fails to deliver. You are right - it is all about profit. Right now, CHK at times seems to be run for only Aubrey's profit and _not_ that of shareholders.

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## MustangGT

MikeOKC I read it and thanks for the posting.  I have bought and sold CHK on a regular basis.  So far I am WAY AHEAD of where I was before.  Sure Aubrey flies high but as long as my pockets are being filled I am only concerned about it if Aubrey was running the company differently would it put more or less money in MY pocket?  I want him and the entire coporation to maximize shareholder profit.  I do not give a crap about being green or environmentally sound.  It does not bother me at all how it occurs as long as it occurs.   I am concerned with corporate governance only if it negatively effects my profit margin.

Somtimes I go long and shometimes I sell short.  Stocks are a lot like shooting Craps.  Sometines you bet with the house and sometimes against.  PROFIT AT ANY COST!!!

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## MikeOKC

> Stocks are a lot like shooting Craps.


You're right about that. I once had a discussion with a gambler (horses) who saw no difference between what he does and buying & selling stocks. He said that, unlike casino gambling, with the ponies you have to become educated - Who's the trainer? Run well in the rain? Mud? Dry track? Bloodline. Leg strength. Recent health issues. He went on and on with what he knows about all these horses and how he spends hours upon hours studying these horses and then matching them up against the other horses he's studied...clearly he knew what he was talking about. The longer he went on the more he sounded like a _good fund manager!_

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## betts

> I do not give a crap about being green or environmentally sound.


Your grandchildren might wish you and a lot of other people felt differently.

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## MikeOKC

> Your grandchildren might wish you and a lot of other people felt differently.


I agree, betts. Part of corporate responsibility - as per the charters (remember them?) - is to do what's best for shareholders _and the "community-at-large."_ There's no excuse to leave our children and grandchildren a world that modern industrialism has possibly rendered uninhabitable for future human beings. I agree we must do everything we possibly can to minimize further damage and hopefully there's still time to reverse the shock to our environment at so many levels. Corporations have a responsibility to do all they can. One day, we might wake-up and wish we had been busy yanking corporate charters, while we still had a chance to save the world as we know it.

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## MustangGT

I stongely DISAGREE.  The community at large phoooeey.  A corporation has only the stockholders to answer to .  If you want to change corporate behavior buy into the business and vote your hearts out.  If you own no stock in a corporation then you have no say and need to but out/shut up.  Uninhabitable for future generations is WAY over the top and NOT reality.  Do you actually think that CHK and their corporate behavior will ruin the environment?   Not hardly.  Betts I bett my grandkids will more than appreciate the financial largesse that befalls them more than the green malarkey.

PROFIT BABY PROFIT.

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## betts

OK.  Neither of us will hopefully be around to see the fallout of what's being done to the environment by corporations and the rest of us, but I don't think future generations will thank us.  You cannot eat money, either.

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## MustangGT

Nope I cannot eat money but I sure CAN eat food it will buy.

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## betts

If there's food to buy.  If we have more summers like this one, we won't be growing much in Oklahoma.  My plants flowered, but there were no vegetables.  I'm guessing it was the heat, because it wasn't lack of water or fertilizer.  I spent the entire summer just trying to keep them alive.

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## dankrutka

> Nope I cannot eat money but I sure CAN eat food it will buy.


Is it possible to sound more selfish and narrow minded? Wow. Pretty pathetic.

----------


## kevinpate

> Is it possible to sound more selfish and narrow minded? Wow. Pretty pathetic.



Of course it is.  Might not be worth the effort, but yeah, it could be done if one were motivated to try.

----------


## mugofbeer

> Mustang, Please read *"The Lost Decade"* - an article about CHK's problem for stockholders. It spells it out very clearly why it's always "almost hot" but fails to deliver. You are right - it is all about profit. Right now, CHK at times seems to be run for only Aubrey's profit and _not_ that of shareholders.


The Lost Decade points out financial facts, however, it does not discuss motivation.  Our society is becoming far too dependent on immediate gratification.  We all want it NOW.  Our government is incapable of doing anything beyond the next election and some on this thread care only about what happens now.  Chesapeake has taken a lot of grief about instituting a long-term strategy that gives up some short-term gain for long-term investment returns.  It's strategy was one of buying up drilling rights for future operations and, perhaps, they overdid it.  However, CHK forcast that the price of NG would hold up better than it has.  Technological advances resulting in greater production industrywide and lower demand than anticipated has resulted in a glut of gas.  Carl Icahn bought into CHK to force them to rid themselves of some of the excess property in favor of better shareholder return and it took them from about $19/sh to over $30.  CHK has a long-term plan with long-term goals that have now been adjusted with more focus on oil production.  If you look into their profit situation, much of the lag has been wrong hedging practices/wrong bets on the price of gas, not general poor management or long-term planning.  You don't get to be the nations biggest producer of NG by being incompetent.  No doubt CHK is not Devon, they are two totally different firms managed in totally different ways but long-term, CHK will continue to thrive as long as gas prices hold up.

----------


## MikeOKC

> The Lost Decade points out financial facts, however, it does not discuss motivation.  Our society is becoming far too dependent on immediate gratification.  We all want it NOW.  Our government is incapable of doing anything beyond the next election and some on this thread care only about what happens now.  Chesapeake has taken a lot of grief about instituting a long-term strategy that gives up some short-term gain for long-term investment returns.  It's strategy was one of buying up drilling rights for future operations and, perhaps, they overdid it.  However, CHK forcast that the price of NG would hold up better than it has.  Technological advances resulting in greater production industrywide and lower demand than anticipated has resulted in a glut of gas.  Carl Icahn bought into CHK to force them to rid themselves of some of the excess property in favor of better shareholder return and it took them from about $19/sh to over $30.  CHK has a long-term plan with long-term goals that have now been adjusted with more focus on oil production.  If you look into their profit situation, much of the lag has been wrong hedging practices/wrong bets on the price of gas, not general poor management or long-term planning.  You don't get to be the nations biggest producer of NG by being incompetent.  No doubt CHK is not Devon, they are two totally different firms managed in totally different ways but long-term, CHK will continue to thrive as long as gas prices hold up.


I understand. But CHK themselves have contributed greatly to the short-term excitement by throwing out (some say ridiculous) projections for even the next year.

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## MustangGT

My motivation in buying stock in a company is long term appreciation in value.  I could not care less about corporate behavior that does not negatively effect long term stock appreciation.  Imbueing companies with human elements such as "good", "bad", "evil" is foohardy at best.  Companies exist to 1.  Increase owner value, 2.  Provide jobs, 3.  Produce a product or service.

If acting "good" increase stock value then fine and nice.  If it negatively effects long term appreciation then nope it has got to got.  I am very realistic/cynical when it comes to investments.  As to my comments on food vs money it is the way it is and is truly pathetic to believe otherwise..

----------


## okcpulse

Chesapeake is also a company that walks the walk when it comes to pushing for Natural Gas as an alternative fuel source.  While the rest of us debate aimlessly over foreign oil and drool over the fact that gasoline is 10 cents cheaper than it was last month, Chesapeake has been actively building NG fueling stations and converting their fleet to run on natural gas.  The company is very aggressive long term on breaking this country's dependence on foreign oil.  That also means aggressively promoting itself as an energy company.  

Some on here are treating Chesapeake like Enron.  But they are two totally different animals.  Chesapeake is a production company.  Despite low natural gas prices, they are still turning a profit on production.  Enron was an energy trading company that was truly hot air.

----------


## dankrutka

> My motivation in buying stock in a company is long term appreciation in value.  I could not care less about corporate behavior that does not negatively effect long term stock appreciation.  Imbueing companies with human elements such as "good", "bad", "evil" is foohardy at best.  Companies exist to 1.  Increase owner value, 2.  Provide jobs, 3.  Produce a product or service.
> 
> If acting "good" increase stock value then fine and nice.  If it negatively effects long term appreciation then nope it has got to got.  I am very realistic/cynical when it comes to investments.  As to my comments on food vs money it is the way it is and is truly pathetic to believe otherwise..


Some American companies helped Nazi Germany crank up their war machine prior to WWII by doing business with them. I guess you believe that businesses should have no ethics? They can feel free to contribute to killing people, oppressing people, destroying our environment as long as you make a couple bucks. So, would you invest in a company that makes money at the expense of people's lives? If the answer is no then maybe it's time you rethink your hardline stance that all that matters is money.

Listen, I want to make money too. Everyone does, but making money off unethical companies can actually bite you in the long run. The problems created can often be more interconnected and holistic than you might think...

----------


## MustangGT

> Listen, I want to make money too. Everyone does, but making money off unethical companies can actually bite you in the long run. The problems created can often be more interconnected and holistic than you might think...


In the past 30+ years I have only been burned once by a companies oops.  Union Carbide at Bhopal.  And even that was not too bad for my portfolio.  Every company that has stock, benefits some and makes money at the expense of others.  I would reconsider an investment only if it can be proven beyond a reasonable doubt (mine) that their behavior is illegal.  If corporate behavior is legal in Macedonia but illegal here the choice is easy.  US laws do not apply in Macedonia and yes I would still invest.  I do not make the intellectual mistake of holding companies accountable for US laws on their overseas behavior.  It is silly to do so.  Our laws do not reach them there why should my concern reach there either?

Do I care that the clothes that we wear, you too KT are made in sweat shops overseas, nope I do not.  Way too many folks blow and crow about their choices about only using products that adhere to their paraochial viewpoints.  We ALL buy gasoline that was refined from petroelum that was imported from countries that support terrorism but we still drive.

KT swear off all petroleum based products, gasoline, plastics etc unless that petroelum was positively produced here in the USA and then your thoughts would have some.  When you and all of us are supporitng the middle eastern emirates with our petor dollars it is really unseemly to be upset about my robber baron profit attitude.

----------


## MikeOKC

> In the past 30+ years I have only been burned once by a companies oops.  Union Carbide at Bhopal.  And even that was not too bad for my portfolio.  Every company that has stock, benefits some and makes money at the expense of others.  I would reconsider an investment only if it can be proven beyond a reasonable doubt (mine) that their behavior is illegal.  If corporate behavior is legal in Macedonia but illegal here the choice is easy.  US laws do not apply in Macedonia and yes I would still invest. * I do not make the intellectual mistake of holding companies accountable for US laws on their overseas behavior.  It is silly to do so.  Our laws do not reach them there why should my concern reach there either?*
> 
> Do I care that the clothes that we wear, you too KT are made in sweat shops overseas, nope I do not.  Way too many folks blow and crow about their choices about only using products that adhere to their paraochial viewpoints.  We ALL buy gasoline that was refined from petroelum that was imported from countries that support terrorism but we still drive.
> 
> KT swear off all petroleum based products, gasoline, plastics etc unless that petroelum was positively produced here in the USA and then your thoughts would have some.  When you and all of us are supporitng the middle eastern emirates with our petor dollars it is really unseemly to be upset about my robber baron profit attitude.


Because, like it or not, we are a country on a planet with other countries. We cannot be a nation that props up rogue companies running around violating the laws of other sovereign nations. We wouldn't tolerate China opening factories in the USA and paying ten cents an hour simply because they're not violating Chinese law - it would be _all important_ that they would be violating US law and we would have every right to do whatever necessary to enforce our laws. The same - _shock of shockers_ - applies to other countries as well.

Your seeming lack of social conscience is troubling. It sounds very much like Mussolini and his contempt for anything that wasn't Italian and his fascist beliefs that what's best for Italy is all that matters - the rest of the world be damned. America, _under every president_, has never had the total disregard for the laws of other sovereign countries that you seem to show. 

To bring this back on topic, CHK seems a very good stock for you. Aubrey Kerr McClendon doesn't give a damn about people in Pennsylvania and other places where he is the modern day plunderer of resources with little care for the people that live there. Google 'Chesapeake' and 'Pennsylvania' and read how CHK deals with local people there (and elsewhere) with complete contempt.

With all due respect, as you've written plainly on your beliefs, you're a perfect match with CHK.

----------


## MustangGT

And you are a not a perfect match but you find excessive time to berate the subject.  That tells an observant person how important you find slamming an OK company.  As to social conscience my first loyalty is to my wallet.  EVERYTHING is secondary to that.  Me doth think you protest WAY too much.  You and I will never agree on this subject and I am okay with that.  You need to be okay with it also.  Mussolini and Facism I guess that is the best you can do, I thought you had higher capabilities, we need to go back to the discourse of CHK.  You hate them and I find them a profitable enterprise.

AND THAT IS THAT!!!

----------


## MikeOKC

> And you are a not a perfect match but you find excessive time to berate the subject.  That tells an observant person how important you find slamming an OK company.  As to social conscience my first loyalty is to my wallet.  EVERYTHING is secondary to that.  Me doth think you protest WAY too much.  You and I will never agree on this subject and I am okay with that.  You need to be okay with it also.  Mussolini and Facism I guess that is the best you can do, I thought you had higher capabilities, we need to go back to the discourse of CHK.  You hate them and I find them a profitable enterprise.
> 
> AND THAT IS THAT!!!


I understand that we can disagree and I'm perfectly comfortable with that. However, I'm not comfortable with the idea that you think I seemingly don't have the right to continue posting material concerning the ongoing question of CHK business practices. Protest too much? I just continue to present the latest AubreyNews and if you want to call that "protesting too much," then that's your right too. I have tried to explain why I am concerned about CHK *because* of my love for Oklahoma City. You can't just pretend that they're not under a critical microscope over there at 63rd and Western. They are. It's worrying at times. _The Oklahoman_ fails to report anything negative about Chesapeake and/or Aubrey Kerr McClendon. I don't think that censoring the news the way they have regarding all the questions regarding CHK corporate governance is a healthy thing. In the long run, it may be a huge disservice to the people of our city that the local newspaper failed to warn us about certain things. I DO. So, it may look like I am protesting "too much," but it's simply trying, in a small way, to bring these things to light.

There's a big misunderstanding about why people watch certain corporations. It's not a "grudge" or anything else - it's a concern for my city in the long-run. Period. Also, and this is important, this business about "If you don't own CHK stock then you shouldn't be worrying about anything." That is so wrong. The hometown for any corporate headquarters has a huge stake in how a major company in the town is being run - for better or worse. Also, pensioners have CHK stock in many, many pension funds. It's not only _buyers of individual stocks_ that have an interest financially. Many people forget that - or don't understand it. 

I feel it's vitally important to keep an eye on how things are run at CHK - it's a public company with a huge presence in Oklahoma City and many people will rise and fall with the actions of CHK - and many times, the actions of just one man, in this case Aubrey McClendon.

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## dankrutka

First off, you probably wouldn't realize if you supported a company that hurt you or people you know because effects are not always direct.

Secondly, you never answered my question: Would you buy stock in a company that helped Nazi Germany fund and supply their war machine? 

Finally, just because I use gasoline that has a bad effect does not mean that you should write off making any ethical decisions ever. Your logic is very either/or.

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## MustangGT

Mike I can see you are passionate about CHK.  I am curious as to why this company interests you so much to the exclusion of others.  I have never seen you berate Devon or any other corporate entity.  Does that mean they are the perfect no bad company?  How about Hobby Lobby any thoughts there?  Generally when I see the type of energy you are expending I immediately conclude "axe to grind" in the majority of cases I am correct or having felt "wronged" by the target entity..

If you are really so concerned about OKC then why not the attention to detail on other companies?  Having been an investor in companies for over 20+ years.  As to the pensioners leave that to the fund managers to deal with they are smarter than everybody on this board put together.  They are pros.  Out of curiousity if CHK were to disappear tomorrow what if any negative situations will you be DIRECTLY be subjected to loss of of, loss of income etc???

KT currently I own stock in the company that produced the poison gas used in the death camps many years ago and my statement to that is SO WHAT?  If I had been alive back in WWII and known then no I would not have owned their stock.  But to say or infer that it is bad to own that companies stock today is hubris/stupidity of the FIRST magnitude.  That is like saying do not own BP becasue of the spill in the gulf which is equally STUPID.

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## MustangGT

> Finally, just because I use gasoline that has a bad effect does not mean that you should write off making any ethical decisions ever.


That makes all of us hypocrites.  At least I have the integrity/character to admit mine.  You kinda/almost admitted yours and that is the first step to betterment.

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## MikeOKC

> Mike I can see you are passionate about CHK. * I am curious as to why this company interests you so much to the exclusion of others.*  I have never seen you berate Devon or any other corporate entity.  Does that mean they are the perfect no bad company?  How about Hobby Lobby any thoughts there?  Generally when I see the type of energy you are expending I immediately conclude "axe to grind" in the majority of cases I am correct or having felt "wronged" by the target entity..
> 
> If you are really so concerned about OKC then why not the attention to detail on other companies?


Hobby Lobby is a private company. Devon is managed rather conservatively. But that's not the right question to even ask, Mustang.

*Again....*

If you weren't an active investor, didn't keep up with the national financial media, etc. there is a _real good chance_ that you wouldn't know *half* of the things I (and a few others) have reported on in this thread. I have explained about the complete blackout (censorship) of negative news about Chesapeake Energy in _The Oklahoman_ and other news outlets here in Oklahoma City. So, and this isn't really that difficult, I have used this thread as a small way to keep people informed about the issue of corporate governance at CHK and the many concerns raised by people throughout the financial community.

Why not another Oklahoma City company? Because, to the best of my knowledge, there's not another company that has a CEO who has become (and unknown to most people in Oklahoma City) *the poster boy* for rogue CEOs and poor/questionable corporate governance among corporate entities _in the entire country!_ There is complete censorship on this issue in OKC because of the influence that Aubrey Kerr McClendon has in our community.

It's worrisome. And if something happens because of all these questions, it won't be because I wasn't warning people. Why do people get involved in anything, MustangGT? I haven't personally been wronged in _any way_ by CHK or AKM - but that's not the litmus test for getting involved in a situation of this magnitude. This has attracted the attention of so many across the country - but the news is censored in CHK's hometown newspaper. So, here I stand. Unapologetically shining the light in Oklahoma City.

It's really that simple and without ulterior motives or intrigue.

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## MustangGT

And here I stand investing in companies that I believe will lead to long term appreciation.  I am well aware of the governance situation at CHK and this thread really educated me about nothing I did not alredy know for quit some time, you were a day late and a dollar short to my office.  I have many frineds who work for CHK and the industry in general.  Still I invest and believe there is a great prospect for long term appreciation.

Aubreys actions are no mystery to people who pay attention and apparently we both do.  The difference is I do not care as long as the stock price is rising long term.  As to the news outlets here in OKC the Oklahoman is no help and the Gazettes is a bottom of the birdcage rag with no redeeming relevance except to social gadflies.  I read that screed to get a laugh at the stupidity of the owner, editor, and writers.

----------


## Pete

This is the cover story for the latest addition of Forbes:



Billionaire Wildcatter, Risk Addict Aubrey McClendon Has Bet It All On Shale
This story appears in the Oct. 24 edition of Forbes magazine.

Before we sit down to a dinner of steak and fries, billionaire wildcatter Aubrey McClendon handles the wine bottles arrayed on the table of Oklahoma City’s well-worn Deep Fork Grill. “This one’s okay, a $10 wine. Here’s another $10 wine.” He grins: “It’s up to you, Chris: We can drink cheap wine, or we can drink good wine.”

McClendon’s proposition was rhetorical. He co-owns the restaurant and had already picked the wine, which was decanted two hours ahead of time. Only the royal stuff: a 1989 Petrus, a 1989 Haut Brion and, conspicuously, a 1982 Lafite Rothschild. Easily ten grand worth of tipple.

Erudite and confident, with rimless glasses pinned to a face that looks far younger than his 52 years, McClendon is charming. And he’s not shy about spending money. Professionally, he’s combined those attributes to stunning effect, building Chesapeake Energy into the nation’s second-biggest producer of natural gas after ExxonMobil, pumping 3 billion cubic feet per day out of the 13.7 million acres it controls—a landholding roughly equivalent to West Virginia.

The more time you spend with *McClendon, the more your head spins, less with classy spirits than dazzling stats. Chesapeake boasts a $17 billion market cap, on track to generate $2 billion in profits on $9.5 billion in revenues. It employs 12,000 people, not including 4,500 land scouts scouring every acre of America for drilling potential and added 3,300 employees so far this year. FORBES estimates McClendon’s personal fortune exceeds $1.2 billion, including his 2.5% personal stake in nearly every Chesapeake well, real estate and 19% of the NBA’s Oklahoma City Thunder, which he helped move from Seattle to his hometown amid much acrimony. He is without a doubt the most admired—and feared—man in the U.S. oil patch.

But he’s also the most reckless, the alpha wildcatter with an off-the-charts risk tolerance. It proved nearly fatal in 2008, when extreme leverage, aggressive financing and plunging oil and gas prices combined to crush Chesapeake shares by 80%. McClendon was forced to sell nearly all of his own shares to meet margin calls. The company had to write down billions.

Even as Chesapeake has rebounded heroically, acquiring and *developing vast new shale formations responsible for boosting gas supplies to alltime highs, I’ve been critical of McClendon, called him everything from dangerous to overpaid and suggested that the company he built would fare better without him.

Determined to show otherwise, McClendon, who maintains that “a key to success in any walk of life is having a short memory and a thick skin,” responded with the Bordeaux-fueled charm offense. He threw open the doors of Chesapeake, making available two dozen executives—the chief operating officer, general counsel, senior engineers, the pipeline chief, even Chesapeake’s athletic director—as well as the mayor of Oklahoma City, the former state attorney general and the architect who helped design Chesapeake’s beautiful campus. We took a helicopter out to a drilling rig. We filled up an SUV at a compressed natural gas station. Chesapeake even unilaterally moved me to a nicer hotel downtown (FORBES picked up the tab, of course).

He may have changed my room, but McClendon didn’t entirely change my view of his company. What’s impressive: He got off the mat to lead the charge of America’s natural gas revolution. What’s troubling: McClendon doesn’t seem to have learned from his near-death experience. (See also “In His Own Words: Aubrey McClendon Answers 25 Questions“)

McClendon could have had an easy life in the energy business. His great uncle Robert Kerr, a governor of Oklahoma, founded oil giant Kerr-McGee; his dad became an executive there. But after graduating from Duke with a major in history, a minor in accounting and a short stint watching a more-entrepreneurial uncle crash out during the 1982 oil bust, McClendon set out on his own as a landman. The lowest level of oil-business dealmakers, landmen scout acreage, figure out who owns the mineral rights and then lease it, paying the owner a bonus plus the promise of a royalty.

After too many bidding wars with another young landman, Tom L. Ward, the 23-year-olds threw in together, and in 1993 Chesapeake went public. (Ward split with McClendon in 2006 and started his own company, SandRidge Energy. Ward sidesteps questions about disagreeing with McClendon: “I have no doubt they know what they’re doing. They’re a smart management team.”)

Through the 1990s Ward and McClendon gobbled up land across Texas and Louisiana and utilized new horizontal drilling techniques. But they mostly came up dry—a huge problem when oil and gas prices slumped, especially as they were wildly leveraged, with debt levels exceeding assets. By the end of the decade company shares had lost 90% of their value.

But McClendon’s landman background would prove fortuitous. Most energy company CEOs are geologists and engineers: For decades successful wildcatting meant figuring out where the oil and gas was. But technology has made finding and extracting the stuff easier, and birthed a boom in drilling shale—thin layers of rock a mile or more underground that reach for miles across the landscape. With enough estimated shale gas to satisfy 20 years of supply, industry greatness now revolves around grabbing vast amounts of land (the biggest field, the Marcellus Shale, stretches from New York to West Virginia). “I felt like I had a natural advantage over most of them,” says McClendon, “because I understood how to put together a very formidable land machine to capture the flag in big plays.”

McClendon’s land machine was humming along in July 2008, when oil peaked at $147 a barrel and natural gas at $14 per thousand cubic feet. That summer he did a joint venture with Plains Exploration, valuing some of his property in Louisiana’s Haynesville Shale at $30,000 an acre—a level unseen before or since. Its stock flying—it would soon hit $70—Chesapeake raised $2 billion in an equity offering.

Ever confident, McClendon doubled down: His personal balance sheet resembled Chesapeake’s as he borrowed against his existing holdings to buy another 750,000 shares in that offering. Lousy timing: By October, as the economy imploded, with energy prices falling in lockstep, Chesapeake’s stock price halved, and McClendon was hit with margin calls. As 30 million of his shares (more than 90% of his holdings) were liquidated, Chesapeake’s share price halved yet again, down to $12. (A class action alleges the company didn’t clarify the risks posed by McClendon’s margin loans.) As his fortune vaporized, McClendon didn’t flinch. “I never saw him blink,” says Michael Stice, CEO of Chesapeake’s pipeline company. “He was a rock.”

It helped, of course, that McClendon’s handpicked board quickly salved his hardship. For 2009 he was rewarded with a $100 million pay package, including a $20 million stock grant. The company paid another $12 million in cash to buy his personal collection of antique maps of the American Southwest. Most critically, he also got $75 million, over five years, toward an unusual perk that allows McClendon to invest his own capital (or in this case, the capital that the company gave him for this purpose) alongside Chesapeake for a 2.5% stake in every well the company drills. He can’t pick and choose—it’s all or nothing. He’s been doing this since Chesapeake’s founding, giving him personal well stakes worth some $500 million, key to his resurgent $1.2 billion fortune.

“You could say I’m the only CEO in America who truly participates alongside his company in the day-to-day business activity on the same basis as the company,” says McClendon. Then he adds, a bit sanctimoniously, “Would we have had the financial collapse in 2008 if every CEO of a bank, of a mortgage company or a securities firm had been forced by his board to participate personally in some proportionate part of every loan made, every mortgage-backed security sold or every real estate deal financed by those firms?”

A fair point that Wall Street reformers have made—but one that mischaracterizes his own exposure. Yes, he and his shareholders are aligned when it comes to the wells. But McClendon’s participation has nothing to do with Chesapeake’s exposure above the ground, and it’s those highly complicated land deals that present an enormous risk—and need a deeper look.

On a hot August morning a couple of Chesapeake execs and I take off in a helicopter heading out west from Oklahoma City. Rigs once again dot the landscape, but they’re going after far deeper and trickier targets, like Woodford Shale or the Granite Wash, than drillers did back in the early 1980s heyday. This is Chesapeake’s real estate grab at work.

McClendon’s land machine starts with 4,500 agents supported by a unique database of 20 million property records, scanned from a century’s worth of county courthouse ledgers. McClendon’s team can figure out who owns title to land in prime shale territories—without the competition knowing they’re looking. “It’s hard to compete with them, they send an army,” says Richard Hunter, vice president at Carrizo Oil & Gas, a smaller Houston rival. “You need to get there a couple days before they do.”

Over the past five years Chesapeake has entered into 600,000 leases covering 9 million acres, paying out $9 billion in lease bonuses to landowners in the process—so much land that it would take Chesapeake 30 years to drill it all. And the more new shale plays uncovered, the more land McClendon continues to acquire. Chesapeake has piled on $10 billion in long-term debt and raised billions more through financial finagling to gobble up its acres. McClendon argues it’s money well spent because there’s only a small window to get good acreage for low prices. As Jeff Mobley, his investor relations spokesman, explains: “If we lived within cash flow we’d miss the opportunity.”

But think about it: what value is it to shareholders for Chesapeake to be sitting on gas fields it won’t get around to drilling for a decade or more? Especially when every year it has to pay interest on the debt it took on to acquire the acreage. It’s like if General Electric built a factory to make LED lightbulbs then just kept it in mothballs.

As with other levered financial concoctions, that dicey strategy works only if the price of the underlying asset stays high. When the market booms, it’s fine. Consider the Eagle Ford Shale play in south Texas, where Chesapeake spent $1.7 billion to acquire 700,000 acres in 2010. The industry fell in love with the spot because much of it contains “wet” gas rich in liquids like propane and butane that sell for a big premium to natural gas. In November 2010 McClendon forged a joint venture in which China’s state-owned Cnooc paid $1.1 billion upfront for a one-third stake in Eagle Ford and pledged to put up $1.1 billion more to pay for drilling costs. Presto! Chesapeake got back nearly all its initial investment, hitched a ride on drilling costs, yet still managed to hang on to two-thirds of the play.

Since 2008 McClendon has raised more than $10 billion through asset sales and $6 billion in drilling carries via similar joint ventures with the likes of BP, Statoil and Total. He’s raised billions more issuing stock (expanding shares outstanding by an average 12% a year versus 2% for the industry). But it’s still not enough, and the difference comes from borrowing—Chesapeake’s debt-to-capital ratio of 40% is the highest in its peer group.

It gets more exotic from there, as Chesapeake avails itself of innovative financial tools on a massive scale. Chesapeake is set to raise some $500 million this year in the IPO of a royalty trust, where investors buy the rights to future proceeds from specific fields. And they are big in options and derivatives, collecting premiums today by selling call options down the road. Such hedging has generated $7.7 billion in realized gains since 2006. But some contracts, like selling 2015 crude oil calls at $85 per barrel, would leave a lot of money on the table if oil prices soar again.

More notably, it’s raised $5.6 billion from so-called volumetric production payments, or VPPs—selling the rights to 15 years or so of future production from a particular field in exchange for cash upfront. Ches*a*peake’s peers don’t often engage in such odd financing; they don’t need to. “No one’s done as many as we have,” boasts finance chief Domenic Dell’Osso. Adds investor relations guy Mobley: “If there’s incremental value to be gained, we’re willing to be more complicated.”

Some Chesapeake skeptics compare the company to Enron, something that sends the usually affable McClendon into a “highly insulted” rage. “We are the definition of the anti-Enron,” he says. “They sold all their oil and gas assets; that’s all we have.” In the largest sense McClendon is correct: Enron is a two-syllable synonym for fraud, and as much as Chesapeake’s tactics can be criticized, they are transparent, and I’ve never found anything or heard anyone that suggests illegal behavior.

Instead much of the similarity is cultural: Just as Enron in Houston a decade ago, Chesapeake is the surging company in an energy-reliant town, popping its name on the local pro sports arena, filling up the skyline (McClendon’s campus feels more like a university, with 20 low-slung buildings, mostly in Georgian style) and gobbling up the local smartest guys in the room. Some of those comparisons also stem from complicated accounting. Sharp-penciled analysts like Phil Weiss at Argus Research and Bob Brackett of Bernstein Research both consider those VPPs to be off-balance-sheet debt—loans to be repaid in gas instead of cash. Through them, Brackett says, Chesapeake is “effectively helping to achieve [its promised] debt reduction by sweeping debt from on-to off-balance-sheet vehicles.” (The company disputes this.)

S&P and Moody’s also consider VPPs to be off-balance-sheet debt. Last year, when Chesapeake used VPP proceeds to retire debt, Moody’s balanced that out by counting the VPP as new debt. It also tagged Chesapeake on retiring $2.6 billion in debt with proceeds from issuing convertible preferred stock, counting it as 50% equity and 50% debt. Audit Integrity, a watchdog group, ranks Chesapeake’s accounting “aggressive.” Carl Icahn saw the danger. In 2010 the activist investor bought a 6% stake for $1 billion and agitated for slashing the debt. By the spring, he’d convinced McClendon to sell $6.7 billion in assets and sold his own shares—for a $500 million gain.

The land business amounts to a shadow company within Chesapeake, sucking in some $6.5 billion in cash a year for land acquisitions and spitting out $5 billion in proceeds from acreage sales. That’s almost as much cash in and cash out as the supposedly core oil-and-gas business. But you wouldn’t know it from the income statement. No land acquisitions or sales show up there.

That’s because Chesapeake uses the so-called full-cost accounting method rather than the more common “successful efforts.” Full cost is legit, but it has the effect of obscuring the extent of Chesapeake’s land deals and the impact of the debt load it carries to finance them. Instead of being listed as expenses deducted from revenue, all of Chesapeake’s big costs—of land and drilling and its $700 million a year in interest payments—are capitalized on the balance sheet.

The effect is that net income looks higher (or lower, depending on the deal). If Chesapeake used successful efforts, the proceeds of selling land would flow through the income statement and end up as higher earnings per share—$14 billion since 2008. Instead that $14 billion is deducted from its carried costs, effectively reducing its cost basis on the rest of its acreage. This is how Chesapeake can boast the industry’s lowest cost reserves.

The accounting method also hides mistakes—like the $325 million Chesapeake spent buying land in Michigan in 2010, thinking that it had found a hot new play. It hadn’t. Chesapeake now faces 100 lawsuits for trying to back out of some leases.

Even when the company finds gas, it sometimes doesn’t pay to drill. For instance, the company needs natural gas prices of only $2.25 per thousand cubic feet to break even in the Marcellus (prices are currently around $4). But in Louisiana they need $3.50 and in Texas, $4.50. Yet McClendon’s crews have been drilling at a breakneck pace in the latter two, even at a loss.

Why? Use it or lose it: Chesapeake must contractually sink at least one well on each leased section within three years or forfeit the rights. Extrapolate this across the nation’s gas plays and it’s easy to see why prices may stay low and why McClendon’s land machine, the heart of Chesapeake’s greatness, could take the company over a cliff.

The other possibility, the tantalizing one that makes McClendon such a magnetic figure, is that he could solve America’s short-term energy needs. Shale plays are thought to hold enough gas to satisfy 20 years of U.S. demand, and McClendon tirelessly boosts plentiful, clean-burning natural gas as a magic bullet that can rid America of dirty coal and imported gas. He has taken his case to state houses, Congress and the public, through his ubiquitous TV ads.

Listening to him proselytize, while sipping the finest wine on Earth, it’s easy to forget the epic paychecks or that Chesapeake has twice gone into cardiac arrest on his watch. “We have found something that can liberate us from the influence of OPEC, that can put several million Americans back to work, liberate us from $4 gasoline,” McClendon says. “Is it too good to be true? Sometimes it seems that way.”

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## urbanity

Read Chesapeake's reaction to the Forbes piece:
http://www.okgazette.com/oklahoma/ar...ur-guest_.html

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## Bailey80

> Read Chesapeake's reaction to the Forbes piece:
> http://www.okgazette.com/oklahoma/ar...ur-guest_.html


If Chesapeake has disputed several parts of the Forbes story as being inaccurate, as the company told the Gazette, then why is it posted on the front page of its website?
Chesapeake has also been promoting the Forbes story on twitter too. Makes no sense. 

http://www.chk.com/News/Articles/Pag...01_Forbes.aspx

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## urbanity

Update: Chesapeake spokesman, Forbes journalist respond to posted article:

http://www.okgazette.com/oklahoma/ar...st-part-2.html

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## Pete

There is an article in today's Journal Record reporting that CHK is going to pay a settlement in the 2008 lawsuit brought by shareholders regarding the huge compensation Aubrey received that year.

You may recall he was the highest paid CEO that year despite the fact the CHK stock price struggled.  The big payout also came immediately after he lost most his fortune through a CHK stock margin call.

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## Bailey80

I wasn't able to find out much as far what the terms of the settlement are, which still has to be approved by the trial court. Nobody is talking. I'd be interested in hearing from anybody out there who knows more. 


Chesapeake to settle shareholder lawsuit

By Brianna Bailey
Oklahoma City reporter - Contact 405-278-2847

OKLAHOMA CITY  Chesapeake Energy Corp. is in the process of settling a shareholder lawsuit over CEO Aubrey McClendons 2008 compensation package that topped $112 million, according to court records.

Attorney Marc Gross, who represents shareholders in the lawsuit, and Jim Gipson, a spokesman for Chesapeake, both declined to comment on the pending settlement this week.

The parties agreed to settle the lawsuit and dismiss all claims soon after the shareholders petitioned the Oklahoma Supreme Court to look at the case in September, according to court documents filed in the case.

Several large investors filed lawsuits over McClendons 2008 pay, including pension funds for Louisiana school employees, New Orleans municipal workers and employees of York County, Pa. The lawsuits were later consolidated in Oklahoma County District Court.

McClendons compensation package in 2008 included a $76.9 million bonus and a $32.7 million stock award, drawing the ire of many investors in a year the companys stock price fell 60 percent. His 2008 earnings made McClendon the highest-compensated CEO in the country that year.

The shareholders claimed in the lawsuit that Chesapeakes board of directors breached its fiduciary duties to the company by awarding the generous pay package for McClendon.

The board approved McClendons compensation soon after he was forced to sell off most of his stock in the company to meet margin calls in October 2008.

District Court Judge Twyla Mason Gray tossed the lawsuit out of court in February 2010, ruling that the shareholders hadnt asked Chesapeakes board of directors to return McClendons 2008 pay package to the company before suing.

The Oklahoma Civil Court of Appeals upheld Grays ruling in August. The shareholders then petitioned the Oklahoma Supreme Court in September, but have since reached a settlement with the company, according to court records.

The settlement still has to be approved in Oklahoma County District Court, according to court records.

Two more investors, Lee Arnold of Missouri and California resident James Clem, filed separate lawsuits in September in U.S. District Court for the Western District of Oklahoma over McClendons pay. Both of the lawsuits are still pending.

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## Pete

Thanks as always, Brianna.  You do a great job.


I would expect the terms of the settlement will never be made public; that is usually a required condition of the party that is settling.  However, since pension funds were involved and they have to report to those their participants, some information may be available down the line.

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## Bailey80

[QUOTE=Pete Brzycki;477491]Thanks as always, Brianna.  You do a great job.


I would expect the terms of the settlement will never be made public; that is usually a required condition of the party that is settling.  However, since pension funds were involved and they have to report to those their participants, some information may be available down the line.[/QUOTE

Many thanks

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## Pete

UPDATE 2-Chesapeake CEO to repay $12 mln for map sale
Wed Nov 2, 2011 10:53pm GMT Print | Single Page [-] Text [+]
* Settlement needs court approval

* Also places restrictions on executive stock trades

By Anna Driver

Nov 2 (Reuters) - Chesapeake Energy Corp CEO Aubrey McClendon plans to reimburse the company $12 million it paid to purchase his antique map collection in 2008 as part of a settlement with shareholders angered by the transaction.

The preliminary settlement, filed in Oklahoma state court on Tuesday, also places restrictions on senior management's right to hold company stock in a margin account or make speculative trades with Chesapeake shares.

The settlement requires court approval, after which ownership of the maps will revert back to McClendon.

McClendon, who founded the company and is one of the industry's most visible proponents of natural gas, was forced to sell 94 percent of his Chesapeake shares in 2008, amounting to 6 percent of the company's outstanding stock, to meet margin calls.

That same year, the company's board awarded a $75 million bonus to McClendon in a year when its stock fell 60 percent. The sale of his map collection to the company in 2008 also netted McClendon a $4 million profit.

Influential proxy advisory service ISS this year opposed McClendon's reelection to the company's board, citing unresponsiveness to investors and compensation issues.

At this year's annual meeting in June, more than 40 percent of the company's shareholders rejected Chesapeake's executive pay plan, and McClendon was reelected with 78 percent of the vote.

Before the settlement, Chesapeake had already taken some steps in respect to its governance practices. It hired a compensation consultant and a lead independent director this year.

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## blangtang

"At this year's annual meeting in June, _more than 40 percent of the company's shareholders rejected Chesapeake's executive pay plan_, and McClendon was reelected with 78 percent of the vote."

------
how bout them maps!

anyway i havent paid too close attention lately, but...

Cramer had him on again on Mad Money today.  I didnt realize they (CHK) were trying to play catch up, change strategy,  and shift their company focus toward the oil plays to become more "balanced".  It sounds like a bit of a  scramble to diversify now with nat gas at 52 week lows....fair enough.

Sandridge was ahead of the game in this regard, so i find it interesting that CHK is sort of loosely following the SD gameplan as far as spinning off these MLPs which are high yielders but somewhat murky, for funding needs....all in all it can't hurt to be diversified energy wise.  However regarding the CHK share price, i was surprised to hear Aubrey say they are going to be spending more in 2012 than they expect to take in, but its all due to fund the ventures into the oil plays, which is what SD has been doing for a few years, but its in a murky financing environment and thats why the share price of CHK is under some pressure lately.

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## MikeOKC

This is an all-in-one potpourri  of AubreyNews......some will make you laugh. Some will make you cry.


As for AKM being on Mad Money (again)...Cramer is laughed at for his constant love for Aubrey McClendon. Man crush in the extreme.

_Seeking Alpha_ opened a recent article with, "Aubrey McClendon, Chesapeake Energy's (CHK) flamboyant (some say reckless) CEO..."

Blangtang: The 78% approval was a black-eye for Aubrey. Most are re-elected by 98-99%. That was his wake-up call. Time will tell if he heeds the warning.

CHK has had to make some fairly big changes due to the legal settlement:
http://online.wsj.com/article/SB1000...040781488.html

Pennsylvania: don't speak his name without boxing gloves on. Several states it's the same story.

This article today from the _Fort Worth Weekly_:

The biggest turkey in Fort Worth flew the coop in 2011, his tail feathers still singed from our frequent rounds of birdshot. Yep, Mayor Mike Moncrief resigned after eight years of running Fort Worth like his own personal fiefdom. We don’t have him to kick around anymore. More importantly, he doesn’t have us to kick around. *However, one of his favorite allies in steamrolling residents and neighborhoods is still alive and clucking. Chesapeake Energy enjoyed a banner year for bullying.*

Chesapeake is a mighty power in the Barnett Shale. The Oklahoma City-based company bills itself as the country’s most active driller of new wells. *Those who try to stand in its way quickly find themselves staring at a battery of attorneys willing to litigate to the death.* There’s nothing wrong, in principle, with drilling for natural gas. The industry creates jobs, infuses money into the economy, and provides an important energy source. Plus, many residents own their mineral rights and want to be able to earn royalties.

*The problem is that Chesapeake, like so many other drillers, doesn’t care about the needs and wishes of the folks whose territory Chesapeake is moving into, nor the long-term environmental messes it creates (and will leave behind). The Weekly has written a litany of articles in the past several years about Chesapeake’s willingness to manipulate laws and politicians, exploit eminent domain laws for its own private gain, and turn neighborhoods into industrial armpits.*Much more: http://www.fwweekly.com/index.php?op...ory&Itemid=375

I saved the best for last. In a new interview in the print edition of _The Economist_, Aubrey said, 

*"There’s a little too much emphasis on wind here for my taste,”* said Aubrey McClendon, the CEO of Chesapeake." 

Oh....right. We put _so much_ emphasis on wind around here.  Wind. Is. Bad. Aubrey can't make billions from the wind.
http://www.economist.com/node/21538772

Meanwhile, Aubrey Kerr McClendon continues constructing the City of Chesapeake in NW OKC and is beloved by many. But fewer each day.

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## RadicalModerate

Were Bernie Madoff or Bob Nardelli ever guest speakers at a Heritage Hall or Duke University advanced studies seminar?  
Dave Del Dotto?
Nah . . . That's impossible . . . Nevermind . . .

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## ou48A

This is a great idea. As somebody who has spent a lot of time around major compressor stations I always wondered why something like this wasn’t done before. The exhaust temperatures were often over 1000 degrees with the heat vented to the atmosphere.
There will be a good number of places were this could be done and transferred to other industries.

……………………………………………………………………………………………………………………………………  ………….

A Chesapeake Energy Corp. subsidiary has inked a deal with an Illinois company that will develop a system to convert waste heat into electricity at a natural gas compression facility in Pennsylvania.


KGRA Energy and subsidiary Liberty WHR Partners LLC will build and install a customized 2-megawatt waste heat-to-power system at an Appalachian Midstream Services LLC facility in Bradford County, Pa.

“KGRA is pleased to have been selected by Chesapeake, a company that views waste heat recovery as a realistic way to increase efficiencies utilizing an emissions-free power source,” CEO Jason Gold said.

The system will convert waste heat from a series of compressor engines into retail-grade electricity. That power can be used on site or sold back into the electrical grid by KGRA.

Two megawatts is enough electricity to power more than 1,600 homes in Bradford County.

Gold said the project is expected to create and sustain numerous jobs.

“We look forward to breaking ground early next year and building a long-term partnership with Chesapeake,” he said.

Chesapeake officials were interested in the potential applications of KGRA Energy's heat-recovery technology.

“We view this as a trailblazing opportunity for not only Chesapeake, but for the midstream industry, to convert a heat byproduct into emissions-free electric power,” said Mike Stice, the company's senior vice president for natural gas projects. “Chesapeake is known to develop and champion new technology, and likewise supports novel technology applications such as KGRA's that can create a visible, sustainable impact in our business and in our community.”

KGRA will begin installation of the power generation project as early as the first quarter of 2012.

The project is expected to produce more than 16.6 million kilowatt-hours per year of emissions-free electricity, while displacing about 16,000 metric tons of carbon dioxide emissions per year that might otherwise be produced by a typical coal-fired power plant. 

KGRA's power generation project at the Chesapeake site will feature a custom-designed waste heat recovery unit that harvests exhaust from five reciprocating engines using interposing oil loops, which have been designed with various levels of redundancy to meet the safety and back-pressure demands of lean-burn gas engines.

The system is closed-loop, requires no water and uses a non-ozone depleting refrigerant approved by the U.S. Environmental Protection Agency.



Read more: http://newsok.com/chesapeake-looks-t...#ixzz1fuRuJefE

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## MikeOKC

I know, I know....leave it to me to point to this story. But no Oklahoma City media outlet will touch it, so....

If you ever had any questions about the ethics of Aubrey Kerr McClendon, I point you to this Reuters Special Report which lays out what a fine man this corporate rogue is. And this is one of our city's "leaders." To think our arena has the name of Chesapeake Energy attached to it - a company that is despised by more people across the country with each passing year. Aubrey McClendon is clearly one of the most hated CEOs in all of America...and here's another reason why....

*Reuters Special Report: 'Energy giant hid behind shells in "land grab"*

*Business Insider: US Energy Giant Allegedly Screws Over Hundreds Of Michigan Farmers
*
*USA Today: Energy giant's shell firm cancels 800 Mich. leases*

Most people would call this fraud. But, apparently it's _possibly_ technically legal - though McClendon's defense on  lawsuits against Chesapeake regarding this is that CHK isn't responsible because the leases were signed with the paper-only, shell company, "Northern Michigan Exploration."  Stand-up guy, that Aubrey McClendon. 

Now, we can say that _The New York Times_ was absolutely right to use the name of 'Enron' in their story about Chesapeake. Aubrey/CHK - like Ken Lay - is not only playing the 'shale' game - but the 'shell' game, too. That's not uncommon, but they both have now used the shell companies_ as a legal defense_. That's the 'Enron Way.' Now, it's also Aubrey's Way.

Disgusting.

I know, I know. He puts up pretty Christmas lights and brought Whole Foods to Oklahoma City. Well, I'm embarrassed to darken the doors of Classen Curve and the old 'Ford Center' -- now sullied with the name of the Chesapeake Energy Corporation.

*And...never forget this cover about this corporate rogue:*

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## Bellaboo

Mike,

If you are that embarrassed about Classen Curve or the old Ford Center, now the Peake, then you should do yourself a favor and stay away......I don't think anyone will miss you.

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## dankrutka

> Mike,
> 
> If you are that embarrassed about Classen Curve or the old Ford Center, now the Peake, then you should do yourself a favor and stay away......I don't think anyone will miss you.


Classic example of someone putting their fingers in their ears and screaming "la la la." Criticism like this is important because people clearly need to hold Aubrey (and others) accountable so he doesn't go down like Enron. There is mounting evidence that he might have some ethical issues. If that evidence is wrong then great, but this larger discussion can also serve to force Aubrey to clean up the way he does things. Classen Curve and Chesapeake Arena do not absolve one of moral responsibility. What did the Astro's baseball stadium used to be called? That's right, Enron Field. Criticizing Mike for bringing this up is classic misdirection because you don't like what you hear. No one will miss your inability to consider multiple perspectives, Bellaboo. Feel free to stay away. No one will miss you.

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## Bellaboo

> Classic example of someone putting their fingers in their ears and screaming "la la la." Criticism like this is important because people clearly need to hold Aubrey (and others) accountable so he doesn't go down like Enron. There is mounting evidence that he might have some ethical issues. If that evidence is wrong then great, but this larger discussion can also serve to force Aubrey to clean up the way he does things. Classen Curve and Chesapeake Arena do not absolve one of moral responsibility. What did the Astro's baseball stadium used to be called? That's right, Enron Field. Criticizing Mike for bringing this up is classic misdirection because you don't like what you hear. No one will miss your inability to consider multiple perspectives, Bellaboo. Feel free to stay away. No one will miss you.


Trout,

Maybe you are the one with ZERO clue on how a lot of businesses operate....take a close look at all the unethical crap that George Sorros puts out. 
Now if you want to examine an individual with no conscience. Even in the articles, did you read them by the way ?, they state that tons of American companies setup shell corporations for many reasons. No I don't like how some of these shells sell their product at a lower price just to short the royalty owners (i'm in that boat by the way), then sell to another subsidary at higher value. We've covered this before, and what i'm saying is stop being a jealuos crybaby. If you don't like the rules.....take the appropiate measures to change them.....some folks on this board have no real life experience, other than to just whine and complain.

Now the Michigan farmers are taking them to court, like they should if they feel they've been cheated. They are doing something about it the way it should be done.

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## Bellaboo

Maybe I've been a little harsh here, and maybe too closed in the thought process. Sorry to all if offended.

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## dankrutka

No worries. I appreciate your apology. Your original post just seemed to disregard any push back against possible wrongdoings or at least unethical behavior. You're right that the farmers should sue, but I disagree that dialogue is pointless whining. I have no work experience in this area and it is not practical that I'm personally going to change everything... It doesn't mean I shouldn't be concerned as a citizen. (BTW, notice that I've not once said Aubrey or CHK are guilty, but that it seems something we should be paying attention to...).

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## Bellaboo

> No worries. I appreciate your apology. Your original post just seemed to disregard any push back against possible wrongdoings or at least unethical behavior. You're right that the farmers should sue, but I disagree that dialogue is pointless whining. I have no work experience in this area and it is not practical that I'm personally going to change everything... It doesn't mean I shouldn't be concerned as a citizen. (BTW, notice that I've not once said Aubrey or CHK are guilty, but that it seems something we should be paying attention to...).


I've actually read the Forbes article and the other 3 also.....he has recanted and bought the maps back from the Forbes article.... and the board has done some manipulation with the bonuses, but it is all public record and can be challenged. I worked for a major company for 23 years, and OMG do they cross the line, back then and still today....example, they refuse to pay their bills the last month of each quarter just to show a cash flow...

My point is that it is not just CHK....and I won't go to bat for them....but again some people take pleasure trying to find fault, and questioning practices that are prevalent throughout business.....General Electric pays ZERO taxes...huge profits but they use every implied loophole for their benefit......GE is the company that needs to be exposed down to the core. Are their practices just as wrong as CHK ?

----------


## dankrutka

So, your philosophy is that if Company A is doing something unethical and Company B is doing something more unethical that you should deride posters on a message board that question the unethical practices of Company A because they are not concurrently criticizing company B. I'm sorry. I don't understand your logic.

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## Bellaboo

> So, your philosophy is that if Company A is doing something unethical and Company B is doing something more unethical that you should deride posters on a message board that question the unethical practices of Company A because they are not concurrently criticizing company B. I'm sorry. I don't understand your logic.


Didn't say that, I'm saying until the rules are redefined, then so what, change the business rules if they are allowing unethical practices. If they are breaking the rules, then expose and go after them. Most companies walk a fine line and what most complain about CHK is AKM's board collusion. Those articles above are really not that bad for a major corporation. There are reasons they retained multiple attourneys. Anyways, lets move on.

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## Pete

I think it's fair to say that CHK operates on the edge and that is scary to many because OKC has so much on the line with them.

If their gambling nature was ever to backfire and they came crashing down, it would be devastating to the community in lots of different ways.


Simply put, the way they operate makes many understandably nervous.

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## G22

Sometimes great companies push the envelope in order to be great and many times they are criticized.  Steve Jobs didn't make numerous friends and at one point he was kick out of Apple but he build a great company.  CHK pays employees great and gives them numerous incentives.  I could think of a lot more CEOs to talk about how they are reckless or bad for their respective communities.  I'm thankful for all that AM has done and hopefully he will make great business choices in the future.

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## ou48A

Argus Research took a dim view of the outlook for Chesapeake Energy , specifically, based on the weak natural gas pricing environment. As TheStreet noted earlier this year, Chesapeake sold off all of its natural gas hedges at the end of 2011, and said it believed nat gas pricing had reached a bottom. Chesapeake left itself exposed to the whims of the spot market, and the direction has been straight down in spot market prices since it removed all of its nat gas hedges. 

Argus Research analyst Phil Weiss, who has a sell rating on Chesapeake, lowered his earnings outlook for 2012 to $1.81 from $2.50 a share based on natural gas market pricing. While natural gas pricing has continued to fall this year -- it was a dog in 2011 -- the real red flag in the Argus report was a warning that Chesapeake may have to write-off natural gas assets in its fourth-quarter 2011 report. 

"Given that natural gas prices fell about 9% year-over-year in 2011, we also think it is possible that CHK will announce impairment charges against some of its natural gas assets when it reports 4Q11 earnings in February," Argus said. 
http://finance.yahoo.com/news/wall-s...162653805.html

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## MikeOKC

Aubrey's stock predictions look now to have been nothing but hyperbole. In fact, most everyone knew that except Jim Cramer at CNBC and those who respect his advice (fewer & fewer). So many people don't realize that a lot of informed people believe CHK is in a position that one analyst has called "perilous." Aubrey has put everything into one or two buckets and praying. He puts everything else that's not producing on the company credit card. Debt is CHK's problem and Aubrey McClendon is having a hard time trying to do everything he wants to do with what he really has.

Another warning sign within the past week or so was a move that raised more than a few eyebrows - Chesapeake had to "partner" with TOTAL to help fund its huge Ohio adventure. Read: they were bailed out, as TOTAL bought 25% of CHK's Ohio leases. CHK simply didn't have the money - again. 

From The _Cleveland Plain-Dealer_: (emphasis is mine)

CLEVELAND, Ohio -- Chesapeake Energy Corp. has received a crucial cash transfusion from a global French oil company to enable the development of Ohio shale gas.

Total S.A., a multinational company with operations in 130 countries, is buying a 25 percent stake in Chesapeake's oil and gas leases in Ohio for more than $2 billion.

*Announced Tuesday, the joint venture will give cash-short Chesapeake* the funds to drill for gas and oil in 10 eastern Ohio counties.

*Chesapeake has lease rights to more than 1.5 million Ohio acres and has permits to drill 99 wells. But it has drilled less than 30 and has three producing wells, according to state records.*

These are the same leases that Chesapeake or its agent land companies paid a fraction to acquire as long ago as five years ago, talking unsuspecting landowners into signing lease rights for a few hundred to a few thousand dollars.

*The rest of the article is here.*
Warning people in Oklahoma City about Chesapeake has to be done here, and the national financial press, because no local news outlet will dare touch anything negative about this company. It's the same old story: Power. Influence. Money. Make no mistake, I do not want CHK to fail. Period. That would be catastrophic for this city. It is *because* of my love for our city that I bother posting here about Aubrey Kerr McClendon. All the good he's done (and he's done some) will come unraveled in a heartbeat if CHK - _the public corporation_ - hits rough times with a merger/acquisition...or worse. This is about Aubrey's mismanagement of Chesapeake, his unethical (if not illegal) behavior, hubris and arrogance. CHK needs new leadership and Aubrey can go play with his shopping centers, basketball team, and other (sometimes) personal business. It's about the good of the company - _and Oklahoma City_.

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## Questor

Interesting story over at Forbes....

"Most of the plaintiffs are landowners in Texas and Michigan who agreed to lease their land to Chesapeake (often at prices more than $5,000 an acre) for oil and gas exploration. They signed contracts with Chesapeake, or one of its agents and received orders for payment in amounts totaling millions of dollars. So imagine their surprise when a few weeks later instead of getting cash the landowners instead got letters from Chesapeake claiming to void the leases and stating “we will not be funding the order of payment.” Try doing that with your landlord sometime and see what happens."

http://www.forbes.com/sites/christop...hese-lawsuits/

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## ou48A

It’s always wise to hire an experienced (oil & gas) attorney to read over any contract like this before you sign.

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## MikeOKC

> It’s always wise to hire an experienced (oil & gas) attorney to read over any contract like this before you sign.


Especially with dealing with CHK - the king of fine print and shell companies. Many use shell companies, but they don't use them as legal defense which Chesapeake is doing. Who got brought down by their lies and deceptions partly in regards to their shell companies? Enron. There was a reason the NYT lumped the two companies together.

The article posted above has a message - that many have been warning about for years:

*Attorneys say they are set to file “hundreds” of suits against Chesapeake. Though most of them appear to be brought by individual landowners, there are also some other oil and gas companies unhappy with Chesapeake. I think this story is only just beginning, and as we learn more about these lawsuits we’ll bring you the juicy details.*
Doesn't it make you feel proud that the old Ford Center now has the name of this company, headed by a rogue CEO, emblazoned in lights for all the country to see?

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## Easy180

My guess is this sort of practice is not limited to Cheapeake...Likely standard business with all oil and gas company land grabs

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## ou48A

> Especially with dealing with CHK - the king of fine print and shell companies. Many use shell companies, but they don't use them as legal defense which Chesapeake is doing. Who got brought down by their lies and deceptions partly in regards to their shell companies? Enron. There was a reason the NYT lumped the two companies together.
> 
> The article posted above has a message - that many have been warning about for years:
> 
> *Attorneys say they are set to file “hundreds” of suits against Chesapeake. Though most of them appear to be brought by individual landowners, there are also some other oil and gas companies unhappy with Chesapeake. I think this story is only just beginning, and as we learn more about these lawsuits we’ll bring you the juicy details.*
> Doesn't it make you feel proud that the old Ford Center now has the name of this company, headed by a rogue CEO, emblazoned in lights for all the country to see?


The need to hire an attorney to review a contract of significance before signing should be considered standard business practice regardless of the company or industry. It’s just being smart.

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## dankrutka

> My guess is this sort of practice is not limited to Cheapeake...Likely standard business with all oil and gas company land grabs


Do you know this or are you just assuming everything is okay? I'm honestly asking because I don't have enough business acumen to know whether CHK is being reckless tom itself and thus OKC, but I'd like for people to have this conversation so pressure could be put on them to right the ship (if need be)... What do others think? Shoud we be worried?

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## Midtowner

> Especially with dealing with CHK - the king of fine print and shell companies. Many use shell companies, but they don't use them as legal defense which Chesapeake is doing. Who got brought down by their lies and deceptions partly in regards to their shell companies? Enron. There was a reason the NYT lumped the two companies together.
> 
> The article posted above has a message - that many have been warning about for years:
> 
> *Attorneys say they are set to file “hundreds” of suits against Chesapeake. Though most of them appear to be brought by individual landowners, there are also some other oil and gas companies unhappy with Chesapeake. I think this story is only just beginning, and as we learn more about these lawsuits we’ll bring you the juicy details.*
> Doesn't it make you feel proud that the old Ford Center now has the name of this company, headed by a rogue CEO, emblazoned in lights for all the country to see?


Hundreds of individuals, you say?  Perhaps this is why McClendon, a few years ago stormed into Gov. Henry's office and yelled at and threatened him after his veto of a tort reform measure which would have disallowed class actions to be filed over oil and gas royalties?

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## Easy180

> Do you know this or are you just assuming everything is okay? I'm honestly asking because I don't have enough business acumen to know whether CHK is being reckless tom itself and thus OKC, but I'd like for people to have this conversation so pressure could be put on them to right the ship (if need be)... What do others think? Shoud we be worried?


I have just a limited knowledge of the practice but I do know land grabs are extremely competitive and the oil companies aren't exactly looking out for the land owners...Wouldnt surprise me at all that Chesapeake would be one of the worst just fairly certain they are not alone is all

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## MikeOKC

I love it - people are now sending _me_ links to post. I admit, I did miss this, so it's a few days old.

From _Foreign Policy (Oil & Gas)_: *When You Are Betting on Shale Gas, Watch the Dealer's Eyes.*

This was right after CHK's bailout by TOTAL in Ohio.

When someone invites you to a party but leaves before dessert, it might be time to locate your own coat and hat. Such are the suspicions generated by Chesapeake Energy, which after selling numerous billion-dollar pieces of its vast shale gas holdings to the world's largest energy companies has abruptly announced that it is drawing down. 

<->

"...we have found McClendon temperamental and ideologically self-destructive to a degree that risked the entire shale-gas bonanza, but that's just us." 


<->

But last week, Chesapeake announced that the risk is too high. The shale-gas rush had resulted in the historical boom-bust bane of the oil patch -- massive over-production, and a price collapse -- and McClendon was moving on; oil, for example, was looking pretty good, the company said. In an amusing piece at the Financial Times, John Dizard, a long-time shale gas skeptic, quotes from Catch-22, and goes on to describe Chesapeake's announcement: _"The Wall Street maxim is that they never ring a bell at the top. However, on Jan. 23, Chesapeake Energy did ring a bell at the bottom. The undoubted leader of the shale gas revolution announced that it would reduce drilling expenditures this year by more than 70 per cent, curtail its gas production by 8 per cent, cut land buying by $2 billion, and allow uneconomic gas leases to expire."_

<->

*One only notes that McClendon was not signaling his new religion as recently as a month ago, when he was helping himself to Total's billions.* According to calculations by Bloomberg's Joe Carroll and Jim Polson (who relied on numbers provided by the consultants IHS Inc.), Total paid $15,000 an acre for the Chesapeake property, or "more than four times the average per-acre price from seven Utica shale transactions tracked by IHS from March 2011 to September 2011." This seemed like a bubble. The Jan. 18 Bloomberg piece quotes IHS analyst Sven Del Pozzo: "I don't feel confident that the prices being paid now are justified. I'm wary."
*AubreyNews Part Two...*

And finally, this from _The State Journal_, West Virginia's Business Journal. Whether you agree, disagree, have no opinion, whatever, it seems to always come back to not what Aubrey is necessarily doing - *but how he's doing it*. This guy is just more of an embarrasment with every passing week.

*Coal industry wants answers from Chesapeake on anti-coal funding*

The link above is worth the read. Such hypocrites at CHK - _and they do it so well_. Also, on the same subject: http://dailycaller.com/2012/02/04/si...coal-industry/

When will the people of Oklahoma City wake-up and realize that we have corporate Masters of Deception operating over at 63rd & Western? It's so embarrassing. God, how I wish their name wasn't attached to the old Ford Center. People see that emblazoned in lights, and those who follow business must _cringe_ to see that sordid name of Chesapeake Energy Corporation. Yet, people around here? We rarely hear any of this news. I'm hoping the new owners of _The Oklahoman_ will open up and allow a little of the truth about these outlaws to be heard in their hometown.

In the end, it's _our city_ they are sullying and putting at risk.

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## blangtang

Thanks for sharing the links.  A little sunshine can't hurt.  

I'm too dumb to figure out what CHK is up to, but it seems trendy to follow the Sandridge way and shift toward the oils and away from natty gas.  Gotta hand it to Sandridge, they were ahead of the curve on that strategy.

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## mugofbeer

Regarding the parts prior to the coal story - - - I'm not sure what you are trying to insinuate that is particularly wrong.  McCLendon has pitched NG all along but right now there is such a glut that the price has plummeted.  What half-intelligent business person in his shoes wouldn't cut production faced with that.  Second, CHK has too much debt...we all know that.  So he sells a stake of a field to Total.  I am sure Total has many wise financial folks in their employ who would have said not to do it if they didn't feel it wasn't going to be a profitable deal in the long run.  Unless there is more that is not here, I don't see the problem.  He is doing everything he can to get government and the people to buy into NG cars until better technology comes along.  Seems a good bridge from gasoline to electric or whatver comes down the road

Now, let me just say, I don't think McClendon is by any means the best CEO that has ever walked the face of the earth, but I'm not seeing the problem on this issue.

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## Bellaboo

'And finally, this from The State Journal, West Virginia's Business Journal. Whether you agree, disagree, have no opinion, whatever, it seems to always come back to not what Aubrey is necessarily doing - but how he's doing it. This guy is just more of an embarrasment with every passing week.'

West Virginia has been mad since CHK shut down their regional headquarters in Charleston several years ago for other reasons. You don't have to look to hard to find all kinds of negatory from them. Maybe they should have developed better drilling policies. ?

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## BoulderSooner

you don't like CHK or Aubrey   we get it

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## MikeOKC

> *you don't like CHK or Aubrey   we get it*


Why would you waste the time to post that? 

Do you really think I post the news I do here about CHK  because I want everyone to know that *I* "don't like CHK or Aubrey?" Really?

I've posted time and time again why I post the news that I do in this thread. From another post:

"Warning people in Oklahoma City about Chesapeake has to be done here, and the national financial press, because no local news outlet will dare touch anything negative about this company. It's the same old story: Power. Influence. Money. Make no mistake, I do not want CHK to fail. Period. That would be catastrophic for this city. It is *because* of my love for our city that I bother posting here about Aubrey Kerr McClendon. All the good he's done (and he's done some) will come unraveled in a heartbeat if CHK - _the public corporation_ - hits rough times with a merger/acquisition...or worse. This is about Aubrey's mismanagement of Chesapeake, his unethical (if not illegal) behavior, hubris and arrogance. CHK needs new leadership and Aubrey can go play with his shopping centers, basketball team, and other (sometimes) personal business. It's about the good of the company - _and Oklahoma City_."

This isn't about *me*, BoulderSooner. I'm reporting news and passing along links about CHK that's being reported everywhere else _except_ Oklahoma City media.  Why would you have a problem with that? If you read or watch other Oklahoma City media, you already know the positive news - most act as an extension of CHK's PR department. It's about POWER, MONEY, and the ability to silence critics in the hometown of Chesapeake Energy. So, I'm here --- I don't sell advertising and bow at the feet of the great Aubrey KERR McClendon.

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## Bellaboo

> Why would you waste the time to post that? 
> 
> Do you really think I post the news I do here about CHK  because I want everyone to know that *I* "don't like CHK or Aubrey?" Really?
> 
> I've posted time and time again why I post the news that I do in this thread. From another post:
> 
> "Warning people in Oklahoma City about Chesapeake has to be done here, and the national financial press, because no local news outlet will dare touch anything negative about this company. It's the same old story: Power. Influence. Money. Make no mistake, I do not want CHK to fail. Period. That would be catastrophic for this city. It is *because* of my love for our city that I bother posting here about Aubrey Kerr McClendon. All the good he's done (and he's done some) will come unraveled in a heartbeat if CHK - _the public corporation_ - hits rough times with a merger/acquisition...or worse. This is about Aubrey's mismanagement of Chesapeake, his unethical (if not illegal) behavior, hubris and arrogance. CHK needs new leadership and Aubrey can go play with his shopping centers, basketball team, and other (sometimes) personal business. It's about the good of the company - _and Oklahoma City_."
> 
> This isn't about *me*, BoulderSooner. I'm reporting news and passing along links about CHK that's being reported everywhere else _except_ Oklahoma City media.  Why would you have a problem with that? If you read or watch other Oklahoma City media, you already know the positive news - most act as an extension of CHK's PR department. It's about POWER, MONEY, and the ability to silence critics in the hometown of Chesapeake Energy. So, I'm here --- I don't sell advertising and bow at the feet of the great Aubrey KERR McClendon.


It's not like I'm going to buy their stock.....I have a lot of friends that work for CHK though...... I hope they make it.   Besides, I like Aubrey's effort with the Thunder.....he helped make it happen. This isn't worth having a burr under your saddle is it ?

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## onthestrip

Maybe you chpk apologists don't have to read this but I for one like the fact that mikeokc posts news stories about chpk. Like he says, you won't get anything negative written about them in Oklahoma.

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## Easy180

Just something about Chesapeake that reminds me of CFS in Tulsa...Not sure why I'm suspicious of them but something just ain't right with that company

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## Bellaboo

> Maybe you chpk apologists don't have to read this but I for one like the fact that mikeokc posts news stories about chpk. Like he says, you won't get anything negative written about them in Oklahoma.


I saw that Forbes issue on the grocery store Aisle before Christmas, here in Oklahoma.....

Not apoligizing, just don't think much of the issues raised. Like, why lose sleep over something you have no control over....?

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## MDot

> I saw that Forbes issue on the grocery store Aisle before Christmas, here in Oklahoma.....
> 
> Not apoligizing, just don't think much of the issues raised. Like, why lose sleep over something you have no control over....?


Exactly. Haha

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## dankrutka

I'm worried. I've been worried for a long time.

----------


## BG918

I know people that work for CHK and even they think it's a House of Cards.  Unless natural gas makes a comeback, and fast, they are setting themselves up for a big fall or takeover by a larger company.  One friend would leave but can't let go of his high salary and unbelievable (and unsustainable) benefits.

----------


## MikeOKC

Again...don't kill the messenger. The Oklahoman/NewsOK obviously didn't think this first item important(!)

*Standard & Poor's Downgrades Chesapeake*


NEW YORK -- Standard & Poor's Rating Services has downgraded its outlook to negative on Chesapeake Energy Corp., citing depressed natural gas prices and the heavy debt the company carries.
http://business-journal.com/standard...e-p20954-1.htm

Interestingly, the AP story which is on CBSNews.com and others *is missing* from _The Oklahoman_ which usually just rolls out the AP business feed online. You would think the hometown newspaper of a Fortune 500 company might report this news? Or, maybe not.

--------------------------------------------------------------------------

And...talk about developing a reputation. Same song, losing track of the verse. (Emphasis in bold inside the story is mine.)

*Chesapeake Energy Pulls A Fast One In North Dakota?*

*Chesapeake Energy pulling back, won't honor lease agreements
*

Chesapeake Energy is not only pulling back to analyze results from six confidential oil wells in southwestern North Dakota, it also is sending notices to mineral owners in Hettinger and Stark counties that it won't honor lease agreements signed months ago.

<->

Attorneys for mineral owners in Hettinger and Stark counties said they've recently been contacted by clients who have had lease agreements returned by Chesapeake, saying the company doesn't plan to honor the contract and is releasing the lease, or the clients are holding signed leases that are delinquent past when the company agreed to pay bonuses.

<->

Dickinson attorney Charles Peterson said he has seven or eight clients, primarily with minerals in Hettinger County, who have either had leases returned, or lease bonuses that are delinquent.

Peterson said all the leases are with Chesapeake Energy or its entities. He said the leases are for between $450 and $700 an acre.

He said the situation is unique and covers a fair amount of acreage.

*"I've not seen any of the other major companies do this. This is unusual to take the lease and refuse to honor it," he said.
*
*State Mineral Resources Director Lynn Helms said anyone who's offered a lease should have it evaluated by an attorney. He said lease problems "would not be atypical for Chesapeake" which has had similar problems in other states where it does business.
*

Chesapeake spokeswoman Kelsey Campbell said the company doesn't talk about its leases.

http://bismarcktribune.com/news/stat...9bb2963f4.html
First the downgrade; yes, before someone says it, natural gas prices are in the tank, but the S&P downgrade to 'negative', for CHK and _not other natural gas companies_, is because of "the heavy debt the company carries." Aubrey just can't control  the company credit card. We see this blatantly around town where they pay ridiculous prices for property.

As for the North Dakota problem, _a state that is booming right now_, it's pretty sad when the ND State Mineral Resources Director flat-out states, "lease troubles would not be atypical for Chesapeake." A government official in Maryland had it right when they said something along the lines of Chesapeake being the titans of sneaky fine-print in the oil and gas fields. 

This is all just....sad.

----------


## fromdust

im no cheerleader for chesapeake, but i will say their environmental practices at their well sites for frac jobs is the best ive seen. most likely in the top of the industry.

----------


## MikeOKC

> im no cheerleader for chesapeake, *but i will say their environmental practices at their well sites for frac jobs is the best ive seen. most likely in the top of the industry.*


This is strange timing, right after your post. 


From _Bloomberg/BusinessWeek_ (also at Fox Business, Reuters, _L.A. Times_ and many others) today:
*Chesapeake Energy Fined $565,000 for Pennsylvania Violations
*
Feb. 9 (Bloomberg) -- Chesapeake Energy Corp., the biggest leaseholder in Pennsylvania’s Marcellus Shale, was fined $565,000 by state officials for environmental violations, including an April incident in which hydraulic fracturing fluids entered a local creek.

<->

Chesapeake, based in Oklahoma City, was fined for three separate violations in 2010 and 2011, the Pennsylvania Department of Environmental Protection said in a statement today. Chesapeake has rights to drill on 1.78 million acres in Pennsylvania’s Marcellus, according to Bloomberg Industries.

<->

Chesapeake was fined $1.09 million last May for environmental violations related to its drilling in Pennsylvania.
http://www.businessweek.com/news/201...iolations.html


And this....more from just _today_...



*Study Focuses on Marcellus Shale Environmental Violations
*
(February 9, 2012) A report by the PennEnvironment Research and Policy Center shows that, over the past four years, gas operators accumulated 3,355 violations of environmental laws. [PDF] The study was compiled using information from the Pennsylvania Department of Environmental Protection (DEP).

Erika Staaf, clean water advocate with PennEnvironment, claims more than 70 percent of the violations were possibly a direct threat to the environment.

*“Over the last four years, Marcellus Shale gas drillers have demonstrated a track record of pollution that has contaminated our water. It has destroyed public lands. It’s threatened public health,” said Staaf. “And absent of strong state safeguards for air, water, and land, this pattern of pollution is set to continue.”*

*Staaf said the top five companies for total violations were* Cabot Oil and Gas Corp with 412, *Chesapeake Energy Corp. (393)*, Chief Oil and Gas, LLC (313), Talisman Energy USA, Inc. (303) and East Resources, Inc. (170)
http://www.essentialpublicradio.org/...olations-10154

Just passing along the news, folks.

----------


## pw405

Geez, as an avid okctalk lurker, reading this thread really worries me.  It would be a huge loss for our city of chk starts to have lay offs.  They are actually recruiting me away from my current employer and the starting salary is about 25% more than what I earn now!! What do I do?!

----------


## Easy180

No doubt it would be a huge hit but if you are looking for a long term career this might not be your first choice...If you have a nice resume and won't have any problems landing elsewhere if things go south why not...25% ain't nuthin to sneeze at

 You will soon be enjoying valet parking and the Chesapeake indoor waterpark built for employees

----------


## Pete

Chesapeake isn't going anywhere any time soon and the people that work there love the place.  They certainly take great care of their employees.

I wouldn't pass on a good opportunity just because of some of the things posted here.

----------


## dankrutka

> Chesapeake isn't going anywhere any time soon and the people that work there love the place.  They certainly take great care of their employees.
> 
> I wouldn't pass on a good opportunity just because of some of the things posted here.


Why are you so confident? Just curious.

----------


## Pete

CHK has taken on several big joint venture partners which has brought in a bunch of cash lately and they've done a good job of switching their emphasis from gas to oil.

They are risk takers compared to Devon and SandRidge but it doesn't mean they are likely to completely implode.

On the other hand, they still have lots of debt which makes them an unlikely takeover target.

----------


## onthestrip

> CHK has taken on several big joint venture partners which has brought in a bunch of cash lately and they've done a good job of switching their emphasis from gas to oil.
> 
> They are risk takers compared to Devon and SandRidge but it doesn't mean they are likely to completely implode.
> 
> On the other hand, they still have lots of debt which makes them an unlikely takeover target.


I've heard the opposite on switching more to oil. I've heard they haven't switched as much as they allude and that they are still too heavy in gas, which isn't faring too well right now. Let's hope chpk can hang on until some of these gas conversion govt programs come rolling out.

----------


## ou48A

Chesapeake Energy is in a big bind.

http://www.forbes.com/sites/christop...sperate-times/

This morning Chesapeake Energy announced a new financial plan that it hopes will allow it to raise the billions in cash it needs to get through the next year or so without going* bankrupt*.

----------


## Snowman

If they are spinning off the drilling and services that might explain some of the office space purchased away from the main campus.

----------


## Pete

Gulp.

I really hope Aubrey knows what he is doing.

----------


## progressiveboy

> Gulp.
> 
> I really hope Aubrey knows what he is doing.


 Not good. If this happens, then it will be "another" black mark against OKC. I smell Enron or another Penn Square Bank fiasco. I really hope karma does not bite OKC in the butt :Frown:

----------


## ou48A

CHK and other operators are being killed by low natural gas prices.

It would behoove anyone interested in the economic success of CHK & OKC & Oklahoma to actively promote the increased use of NG so that its price might rise. Supporting legislation that would increase the use of CNG / LNG fuel for transportation is probably the single biggest and best thing we could see done to increases prices.

----------


## Pete

I know it's a bigger issue, but in the short term this mild winter has not helped natgas prices.


McClendon and CHK seem to be used to operating on the edge and always seem to come out smelling like a rose.  Hope that streak continues.

----------


## MDot

My heart just fell into my gut...

----------


## ou48A

I very much hope for the success of CHK but as someone who lived the 1980’s oil bust in a hard way, CHK has always reminded me so much of so many of the companies who failed during the bust.

CKH seems to operate so much on the edge so much of the time that it’s hard for me to trust their long team viability. I hope I’m wrong! Analysts have compared CHK to the way a hedge fund operates.

Also... I have found it interesting to compare the management style of CHK & Aubrey McClendon a Duke graduate to CLR & Harold Hamm a high School graduate.

----------


## ou48A

Besides higher NG prices the Utica crude oil shale play is probably CHK’S best hope to turn things around.

----------


## fromdust

well, theres the evidence, but again, they are a big client of ours. when i am on a frac job for them, they by far have the most stringent policies that ive seen.





> This is strange timing, right after your post. 
> 
> 
> From _Bloomberg/BusinessWeek_ (also at Fox Business, Reuters, _L.A. Times_ and many others) today:
> *Chesapeake Energy Fined $565,000 for Pennsylvania Violations
> *
> Feb. 9 (Bloomberg) -- Chesapeake Energy Corp., the biggest leaseholder in Pennsylvania’s Marcellus Shale, was fined $565,000 by state officials for environmental violations, including an April incident in which hydraulic fracturing fluids entered a local creek.
> 
> <->
> ...

----------


## metro

Oh no, not a half million dollar fine for a multi BILLION dollar company.

----------


## ou48A

I have got to wonder if CHK goes the stock dilution route again?
Any ideas on this ?

----------


## Pete

I think the bigger issue is how they plan to fund their on-going cash requirements.  Selling off assets or at least portions of them doesn't resolve perpetual budgetary issues.  In fact, in the longer term it great decreases future revenue streams.

They can only sell off so much but at some point they have to generate revenue that covers the cost of their operations.

If natgas prices don't come up significantly, I'm not sure how they are going to do this.

----------


## MikeOKC

A Fox Business News (TV) analyst said yesterday that *one person* is responsible for CHK's problems right now - its CEO, Aubrey McClendon. 

I hope the day never comes when I have to say to those who have scoffed at me for so long, "I told you so." (Though a case could be made that I've been proved right about the (mal)administration of Chesapeake already.) The success of CHK is absolutely *crucial* to Oklahoma City. The answer? A free and independent board of directors that can look at the executive team, the debt, assets, priorities, etc. Right now, the board looks out for one thing: the well-being of AKM. That has to change - *and fast.*

----------


## fromdust

agree with you mikeokc. crucial to okc and to other companies that service them. my company would take a big hit, albeit a local hit, if something were to happen to them.

----------


## BoulderSooner

if natgas prices stay in the <2.50 range for the mid/long term  chk is in big trouble no matter whom the CEO is

----------


## Pete

Meanwhile, oil prices remain near all-time highs and Devon is setting earnings records.

----------


## OKCTalker

> Meanwhile, oil prices remain near all-time highs and Devon is setting earnings records.


DEV $4.7 billion in earnings for 2011. Holy cow!

----------


## ou48A

This would keep natural gas prices very low, for a very long time and it would be very bad news for companies like CHK

http://rigzone.com/news/article.asp?a_id=115173&hmpn=1

----------


## blangtang

not a good sign when this guy on Bubblevision starts digging into your company

http://video.cnbc.com/gallery/?video=3000073735

----------


## kevinpate

Well, only for the CEO's profit is not fair.  The company does send out quite a bit of funds into the community and the state at large for beneficial projects.
If it were a pure CEO pocket focus, such things wouldn't happen, or would certainly happen less.

I learned this morning, as one example, Chesapeake provided the local BSA council with a 500,000 grant to accomplish a new dining hall at Slippery Falls Scout Ranch, the council's primary older youth camp, located north of Tishomingo.  Compared to other projects, this is a small, but much needed, project.  Dang decent of them in my book.

----------


## Teo9969

Well, Chesapeake reports 4th Q and 2011 earnings today...

----------


## Bellaboo

Well MikeOKC,

I'll have to hand it to you. My son was in town over the weekend, visiting some of his old high school buddies. One works for CHK as a landman and he told him that they got an email stating there would more than likely be cutbacks. This young man has since been out interviewing.

----------


## ou48A

This is a significant development IMO for CHK and for the move to move to use more CNG for transportation.

Click to read more
http://www.bizjournals.com/pittsburg...html?ana=yfcpc

Chesapeake Energy Corp. and 3M will be designing and manufacturing a compressed natural gas tank that will be used in CNG vehicles in the future.

….. right now the most expensive part of a CNG vehicle is the gas tank.

The new technology developed by 3M  is up to 20 percent lighter, carries up to 20 percent more and will be less expensive…..

----------


## OKCTalker

The CHK whisper number is $0.59 EPS, and the stock has been trending up all week. Won't they release their earnings after markets close today?

----------


## catch22

Yes most businesses always report earnings after markets close. Whether that be profit or loss reports. Just so news has time to filter through the market so trades won't happen out of reflex or emotion. Good news will make a market eager to buy the next day, bad news will have time to settle and have a nights sleep to think about selling -- and hopefully not sell.

----------


## MikeOKC

CHK earnings report is out...CHK report from their press release is here:
http://www.marketwatch.com/story/che...ear-2012-02-21

Independent analysis is going on furiously as we speak. A lot to wade through and consider.

----------


## MikeOKC

*A quick bottom line for those just wanting this:*
 Q4 EPS 58c, consensus 59c
 Q4 revenue $2.73B, consensus $3.05B

The revenues would normally be a real shocker, but with prices down...it was expected. This is bad though. Of course, _why are prices down?_ Oversupply. Period. And by doing what Aubrey has been screaming for the last year we need to do* more of* (until recently of course). Some warned of this very thing and they were right. A victim of your own successes and a lesson of poor corporate management and a CEO who is more PR cheerleader than chief executive.

----------


## MikeOKC

Wall Street Cheat Sheet pretty much lays out the basics of the report here:
http://wallstcheatsheet.com/earnings...e-growth.html/

*Looking Forward:* 

Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 56 cents a share to 44 cents over the last ninety days. The average estimate for the fiscal year is $2.81 per share, up from $2.80 seven days ago.

--
My opinion: None of this is good for CHK. Though,* it could have been worse and I was expecting worse.* So, in that respect, for me, there's a silver lining.

----------


## MikeOKC

The good with the bad and all the in-betweens. Fox Business finds this interesting:
http://www.foxbusiness.com/news/2012...-1-bcf-filing/

Who would have thought just a few months back that CHK would be having to cut back on natural gas production by _one billion cubic feet a day_? The effort to halt plunging gas prices is just....ironic is the word that comes to mind.

----------


## Oil Capital

> The good with the bad and all the in-betweens. Fox Business finds this interesting:
> http://www.foxbusiness.com/news/2012...-1-bcf-filing/
> 
> Who would have thought just a few months back that CHK would be having to cut back on natural gas production by _one billion cubic feet a day_? The effort to halt plunging gas prices is just....ironic is the word that comes to mind.


While _one billion cubic feet a day_ sounds huge, especially when italicized  ;-)   according to the linked article, it constitutes only 1.5% of Cheaspeake's daily natural gas production.

----------


## MikeOKC

> While _one billion cubic feet a day_ sounds huge, especially when italicized  ;-)   according to the linked article, it constitutes only 1.5% of Cheaspeake's daily natural gas production.


And 1.5% of CHK daily production is a lot of natural gas. If it wasn't a significant amount, it wouldn't be seen as way to drive down supply, no?

----------


## Oil Capital

> And 1.5% of CHK daily production is a lot of natural gas. If it wasn't a significant amount, it wouldn't be seen as way to drive down supply, no?


Nobody's arguing.  Just wanted to put the number in perspective.  

Also, after a little research, it appears that the Dow Jones Newswire piece posted on Fox Business (linked above), may have misstated the fact.  I _think_ Chesapeake's 1 Billion cubic foot per day reduction probably constitutes 1.5% of the lower 48's total natural gas production, not just Chesapeake's.  Obviously, that makes the reduction a lot more significant.

----------


## MikeOKC

> Nobody's arguing.  Just wanted to put the number in perspective.  
> 
> Also, after a little research, it appears that the Dow Jones Newswire piece posted on Fox Business (linked above), may have misstated the fact.  I _think_ Chesapeake's 1 Billion cubic foot per day reduction probably constitutes 1.5% of the lower 48's total natural gas production, not just Chesapeake's.  Obviously, that makes the reduction a lot more significant.


You know, I think you're absolutely right. That is an error. I didn't realize when I was reading that at Fox Business that it was really a DJN piece. That went to a lot of DJN subscribers in the media. But you're right - that's wrong.

----------


## MikeOKC

Yep. Too bad that News Corp got it wrong as that goes out to so many. Dow Jones is Murdoch, Wall Street Journal is Murdoch, Fox Business is, of course, Murdoch. I see more and more errors from them on business matters and that's a shame.

CHK said it was all production in the lower 48 back in January and the Associated Press got it right today:

The Oklahoma City-based company said In January that it will cut back production by 1 billion cubic feet per day, equal to 1.5 percent of natural gas production in the lower 48 states. http://www.miamiherald.com/2012/02/2...ning-more.html
Good catch, OC.

----------


## ou48A

Apparently CHK has no natural gas hedges in place. 
With so much exposure to low NG prices what will be the impact of no NG hedges ?

----------


## MikeOKC

CHK is one of the most confusing stocks for analysts. It's hard to blame them. A couple of majors downgraded them to either "hold" or "sell" today.

*The Best Reason to Sell Chesapeake Shares*

----------


## jn1780

If Chesapeake fails its because of a global economic depression. "Living on edge" is the cool thing to do nowadays and is not isolated to Chesapeake.

----------


## MikeOKC

> If Chesapeake fails its because of a global economic depression. "Living on edge" is the cool thing to do nowadays and is not isolated to Chesapeake.


I'm sorry, but that's just ridiculous. No, of course it's not "just" Chesapeake, but actually most corporations have taken a decidedly conservative approach since '07. Right here in Oklahoma City we have a perfect example - is Devon "living on the edge" by paying *cash* for their downtown tower? CHK is mismanaged, is considered mysterious and enigmatic by observers for the creative bookkeeping, the seeming debt correction for a year or so (only to be reversed), pushing fracking to the point of oversupply and then having to sell off assets just to stay afloat? CHK is a flagrant outlier among U.S. corporations in its daily operations - and there's nothing "cool" about it.

----------


## jn1780

> I'm sorry, but that's just ridiculous


 The current economic environment is ridiculous that's for sure. Yet somehow it keeps going.




> but actually most corporations have taken a decidedly conservative approach since '07.


So they say. Conservative compared to what exactly?  The new standard where the Government is a big part of the economy?  Hey, I guess CNBC needs to attack someone to appear credible.




> CHK is mismanaged, is considered mysterious and enigmatic by observers for the creative bookkeeping, the seeming debt correction for a year or so (only to be reversed), pushing fracking to the point of oversupply and then having to sell off assets just to stay afloat? CHK is a flagrant outlier among U.S. corporations in its daily operations - and there's nothing "cool" about it.


A logical economic argument. Nothing about this economy is logical anymore, however. 




> and there's nothing "cool" about it.


I agree its not cool. 




As long as there's a government pumping hot money into the economy in order to ensure that the economy remains "saved" Chesapeake will find a way to survive. I'm sure it will take even more in hot money in the future to keep the economy going and I doubt it will all stay in oil. Speculators just need one reason to start moving it into natural gas. The irony is that this hurts more conservative businesses in other industries more than it does Chesapeake. 

With that said I go back to my original statement, "Chesapeake will somehow find a way to keep going unless there's a major economic depression." Not that I agree this is how it should work this is just how I feel the economy operates today. Time will tell however.

----------


## mugofbeer

> CHK is one of the most confusing stocks for analysts. It's hard to blame them. A couple of majors downgraded them to either "hold" or "sell" today.
> 
> *The Best Reason to Sell Chesapeake Shares*


Starmine analyst rankings show Chesapeake at a 7.6 which is a decidedly bullish rank.  This is a composite of stock analysts covering the stock based on historical accuracy of their ratings.  Chesapeake has dropped below 21 in recent weeks but has rebounded to above 25.  No one is very concerned about the viability of the company in upcoming months, just that it is in the middle of a conversion to liquids while cutting back on gas production due to the extremely low price of gas.  Sorry, Mike, I don't think CHK is the best managed company on the planet either but it's not going belly up anytime soon.

----------


## MikeOKC

> Starmine analyst rankings show Chesapeake at a 7.6 which is a decidedly bullish rank.  This is a composite of stock analysts covering the stock based on historical accuracy of their ratings.  Chesapeake has dropped below 21 in recent weeks but has rebounded to above 25.  No one is very concerned about the viability of the company in upcoming months, just that it is in the middle of a conversion to liquids while cutting back on gas production due to the extremely low price of gas.  Sorry, Mike, I don't think CHK is the best managed company on the planet either but it's not going belly up anytime soon.


I don't think anything horrible will happen soon and _I hope it never does_. I'll say it again - a healthy Chesapeake is CRUCIAL to the future of our city. 

I've heard it said more than once that stock analysts find Chesapeake one tough cake to bake. It's just not easy to figure out. This past week, we saw some yells to buy, yes; but there's a lot of serious analysis that says sell (or hold) and analysis of CHK, as you know, changes on a dime. Just like the company.

----------


## OKCTalker

> I've heard it said more than once that stock analysts find Chesapeake one tough cake to bake. It's just not easy to figure out. This past week, we saw some yells to buy, yes; but there's a lot of serious analysis that says sell (or hold) and analysis of CHK, as you know, changes on a dime. Just like the company.


Last fall's Forbes article mentioned that CHK intentionally OVER-discloses information, which has the ironic result of misleading analysts and providing cover for CHK to say, "Don't say we didn't tell you." The Forbes writer made a direct comparison with Enron in the disclosure of their complicated investment structures which almost no-one could figure out until later.

----------


## Pete

I have a very hard time understanding what CHK is doing and I imagine the average investor feels the same way.

They have a very complex web of entities, relationships and financial dealings.

----------


## MikeOKC

> Last fall's Forbes article mentioned that CHK intentionally OVER-discloses information, which has the ironic result of misleading analysts and providing cover for CHK to say, "Don't say we didn't tell you." The Forbes writer made a direct comparison with Enron in the disclosure of their complicated investment structures which almost no-one could figure out until later.


That's exactly right. When there's bad news or figures to report, like in politics, it's in Friday afternoon "news dumps" and reports that are several fine-print pages longer than the usual corporate reports. Then, when you ask about it, it's usually kicked to PR or legal who, with a big smile, says they "don't talk about that or provide analysis" and after all, all the information is - right there! Somewhere.

----------


## BorisYeltsin

The interesting thing is how much Fracing has actually caused the price of natural gas to fall, because it produces so much natural gas.

Also no company is taking over a company w/ $10 billion in debt

----------


## BillyOcean

^^^^^^^^^^^^^
XOM did when they acquired XTO.

----------


## BoulderSooner

> ^^^^^^^^^^^^^
> XOM did when they acquired XTO.


yep .. and as long a CHK and 68 Billion in assets .. the 12bil in dept is not that big of a deal

----------


## onthestrip

> yep .. and as long a CHK and 68 Billion in assets .. the 12bil in dept is not that big of a deal


The $68 bil in assets is probably highly debatable. And it cost tons of money to keep those assets as well as bring them to market.

----------


## OkieHornet

got my new rolling stone in the mail and noticed this article in it about chesapeake and aubrey mclendon:
http://www.rollingstone.com/politics...-boom-20120301

----------


## onthestrip

Chesapeake has already responded with a letter disputing some of the writers claims. I believe Chesapeake tweeted it so you might find it on their feed. Seems like they are constantly having to fight PR battles.

----------


## Pete

Thanks for sharing that article -- very interesting.

Rolling Stone is of course a very liberal publication and you could argue the author went into this piece with an agenda, and that notion is reinforced by the multiple comments about the conservative causes supported by McClendon.

Still, there is lots here to find scary, particularly this:




> Fracking, it turns out, is about producing cheap energy the same way the mortgage crisis was about helping realize the dreams of middle-class homeowners. For Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas. The company is now the largest leaseholder in the United States, owning the drilling rights to some 15 million acres – an area more than twice the size of Maryland. McClendon has financed this land grab with junk bonds and complex partnerships and future production deals, creating a highly leveraged, deeply indebted company that has more in common with Enron than ExxonMobil. As McClendon put it in a conference call with Wall Street analysts a few years ago, "I can assure you that buying leases for x and selling them for 5x or 10x is a lot more profitable than trying to produce gas at $5 or $6 per million cubic feet."
> 
> According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. "This is an industry that is caught in the grip of magical thinking," Berman says. "In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down."


And this:




> In recent years, the company has also sold off the future proceeds it expects to receive from thousands of wells – a complex financing deal that enables it to borrow cash now without counting the debt it will owe when it has to drill the wells later. The very first deal, made with Deutsche Bank and a Swiss investment firm, brought Chesapeake more than $1 billion in return for 15 years of future production from 4,000 wells. "It's not illegal, but most gas and oil companies don't do it," says Bob Brackett, an analyst with Sanford C. Bernstein & Co. "Chesapeake's poor credit rating pushes them to turn to unconventional financing."
> 
> To make its operations even riskier, leaseholders like Chesapeake are required by law to drill on the land within three to five years after acquiring the rights or wind up forfeiting the lease. "The more land they acquire, the more capital they have to spend upfront," says Deborah Rogers, a former investment banker who learned just how precarious Chesapeake's business model was when she looked into the firm's financial statements after the company sunk wells near her property in Texas. "Then they have to drill it or lose it, which further adds to capital costs. And the more they drill, the more gas they produce, which lowers the price of gas and further reduces their revenues. In the end, this drilling treadmill is difficult to sustain for long – especially if the wells under*perform, or the resource turns out to not be as valuable as they thought."

----------


## Easy180

Umm yeah very scary...Like I said before these guys remind me of good old CFS...Just about everything with this company does not pass the smell test

----------


## MikeOKC

The ponzi scheme reference has been made numerous times since the _New York Times_ investigation. If it's not...it's awfully close to it.

For me, it's just more head shaking. I agree with Pete about the agenda from the writer, it is _Rolling Stone_ as he pointed out. There's still a lot to chew on though. With Aubrey McClendon - you just never know.

*Other CHK news*...I don't think it was mentioned here...

The EPA handed off an expected investigation in West Virginia to the Department of Justice. CHK is facing environmental CWA penalties, but could now be looking at possible federal criminal charges. Just more outlaw behavior from CHK. 

CBS News: *Chesapeake Energy facing DOJ Investigation*

----------


## Pete

Chesapeake's rebuttal of the Rolling Stone article:

http://www.chk.com/rollingstone/index.html

----------


## pw405

I've been following this thread for quite a while.  As I mentioned a page or two back - I was interviewing at CHK.  I was offered the job, but I declined. 

As a random internet article suggested I should, when one declines a job offer, it is polite to offer a suggested replacement to fill the position instead of yourself.  I attached their resumes to the email and suggested them as qualified candidates.

Within 10 minutes both had already received a call and were asked very technical details about their experience.  They were told they were not qualified due to not enough relevant experience.

Ok fair enough, but the weird things is, I was in NO WAY qualified for this job.  I was even less qualified than one of the applicants was.  During the interview, the actual job duties were vaguely brought up.  Most of it was just mentioning how they LOVED LOVED LOVED EVERYTHING about working their.  Except parking.  I asked each round of interviewers what their LEAST favorite thing about working there was, and they all responded "parking".  

About 14 months prior to CHK contacting me, I had passed a resume to a friend of a friend who worked there.  I suppose I had an "in", but it is still quite bewildering to think they are just doling out jobs to people's "buddies".  Especially since these jobs pay on the higher end of the salary spectrum to comparable jobs in the metro area. 

After declining the offer, a person I knew there (working in no official capacity for the company) said that after hearing from my would-be boss, that "I would never have another chance with his team"

Furthermore, it seemed that by me suggesting other applicants, their chances of employment were voided as well.  

In conclusion, I could only tell that CHK pays unqualified people way too much money, and binds them to working there by offering some of the most competitive salaries in the metro.

Another tactic they use to bind employees is their retirement plan.  They will match 15% (!!!!1!!) of your 401k match.  BUT, they do it with their stock, not actual funds.  Further troubling, is that this match is only vested at 20-25% a year (I forget which).  So in essence, this "awesome" retirement plan they offer is a way of roping you in for a long time.  It would be idiotic to leave before you are fully vested, yet if the stock price is down once you are vested, one would act logically and work until the stock rebounded.  In my opinion, this is very "ponze-schemesque". 

CHK is smart, and I am sure they knew they needed more money before the most recent round of share offerings.  A good analyst can tell you this is going to occur months or years before it does.  So, why would they continue to expand their workforce when they know they aren't going to have enough cash on hand to even pay them?  My thought on this is that CHK employees buy TONS of CHK stock.  Think about it - every pay period, their 10,000 something employees buy stock with their retirement plan, and the plan matches that purchase.  

Seems like sooner or later, the only people buying into their "clean energy future" is going to be their own employees.

THAT said, I hope the company does OK.  It would be a huge loss to OKC for them to have lay-offs or (worst case) turns out to be an Enron.

----------


## okc_bel_air

"In conclusion, I could only tell that CHK pays unqualified people way too much money, and binds them to working there by offering some of the most competitive salaries in the metro."

More $$$$.......Sign Me Up!!! LOL

----------


## Snowman

> Another tactic they use to bind employees is their retirement plan. They will match 15% (!!!!1!!) of your 401k match. BUT, they do it with their stock, not actual funds.


While there are several things about how CHK operates that are concerning, matching programs using stock are fairly routine with large companies. My company, depending on earnings of the last quarter, will match between 50% and 100% of what you put into your 401k with stock.

----------


## mugofbeer

No doubt CHK produces an enormous amount of NG.  However, what could easily be said are smart business practices when a company has the cash resources to do it (the leasing of large amounts of promising production land before the competition does) is presented as some sort of demonic alien invasion of earth.  

Comments in this thread have previously mentioned the DOE's assertion that estimates of NG supplies in the country may be far lower than industry estimates and that reserves in the formations that are written about in the article, if true, should have resulted in a significant increase in the price of NG (simple supply and demand principles).  With certainty, I prefer to believe in the laws of supply and demand which shows a huge glut of NG.  CHK no more controls the NG industry than TCBY controls fro-go.  There are hundreds of producers - any one of which can drill and produce if they own the rights to the land.  The bogeyman is that CHK owns a huge amount of land rights.

Who knows where the truth lies but as we all know, CHK is very aggressive, very much a participant of the wildcatter mentality.  CHK has sold off a lot of lease acreage because they have debt to pay off.  They sold off a lot of acreage because Carl Icahn "suggested" they do to raise the price of the stock to pad his profits.  If they need to they can sell a lot more.  Devon is in the exact same business but goes about it in a quieter, more conservative way.  If NG went up 50% in price per unit, CHK would have a far easier time of it.  As with all companies, there are breakeven points in the balance of cost-of-production vs. profitability.  NG prices are so low, some higher cost producers are having more trouble than others.

Is CHK lilly clean?  Probably not.  But in the world of oil and gas, there are no promises, there are bets and faith and hope that hunches come true.

----------


## mugofbeer

> While there are several things about how CHK operates that are concerning, matching programs using stock are fairly routine with large companies. My company, depending on earnings of the last quarter, will match between 50% and 100% of what you put into your 401k with stock.


Totally agree - 15% is far more than most companies but they do it because they can and because the competition to retain quality employees is huge.  Not because they do it to be insidious.  If their financial position were so dire, they would cut this in a heartbeat.

----------


## MikeOKC

_Rolling Stone_ response to CHK "rebuttal"... http://www.rollingstone.com/politics...ubble-20120306

It's worth reading. Especially for the final paragraph. Take *that* Kehs!

----------


## Pete

This is the thing that I have always found most scary about CHK (from that Rolling Stone response):




> Chesapeakes convoluted off-book accounting practices.  This is hardly a controversial statement; virtually every financial analyst I talked to mentioned it. In addition, it is discussed at length in this recent Forbes story, and is a big reason why people like Phil Weiss, an analyst at Argus Research Group, said point-blank to me about Chesapeake: I dont trust them.


It's very hard to get a handle on their financial dealings and it's clear they like it that way.

----------


## OKCTalker

CHK & KKR entered a partnership valued at $250 million. Can somebody explain the money to me, and how this benefits either party? 

According to the DOK, CHK & KKR will commit $250 million to a partnership which will "identify investment opportunities." CHK will receive a "promoted ownership in the partnership, despite contributing only 10 percent of the initial cash committment." Reported elsewhere is that the partnership will have five board members, three from KKR, two from CHK. The inference is that KKR is contributing the other 90 percent - $225 million. 

So isn't this simply that KKR is paying CHK $225 million to find oil & gas? I still don't understand how this helps CHK's balance sheet.

----------


## Maynard

> CHK & KKR entered a partnership valued at $250 million. Can somebody explain the money to me, and how this benefits either party? 
> 
> According to the DOK, CHK & KKR will commit $250 million to a partnership which will "identify investment opportunities." CHK will receive a "promoted ownership in the partnership, despite contributing only 10 percent of the initial cash committment." Reported elsewhere is that the partnership will have five board members, three from KKR, two from CHK. The inference is that KKR is contributing the other 90 percent - $225 million. 
> 
> So isn't this simply that KKR is paying CHK $225 million to find oil & gas? I still don't understand how this helps CHK's balance sheet.


From yesterday --




> Chesapeake taps KKR to feed its addiction
> Commentary: Rounding up money to buy more gas acreage       03/06 03:05 PM
> 
> --------------------------------------------------------------------------------
> 
> SAN FRANCISCO (MarketWatch) -- Chesapeake Energy Corp. (CHK:$23.52,00$-0.04,00-0.17%) loves doing deals. It prides itself on being the nation's second-biggest natural gas producer. To get there, it spent over a decade binge-buying natural gas properties, leveraging itself to the hilt in the process.
> 
> There's nothing wrong with wanting to expand. Chesapeake's problem is knowing when to stop. It seems to be addicted to acquisitions and intent on buying more, even when a staggering debt load and prolonged slump in natural gas prices would argue against it.
> 
> ...

----------


## knightrider

> CHK & KKR entered a partnership valued at $250 million. Can somebody explain the money to me, and how this benefits either party? 
> 
> According to the DOK, CHK & KKR will commit $250 million to a partnership which will "identify investment opportunities." CHK will receive a "promoted ownership in the partnership, despite contributing only 10 percent of the initial cash committment." Reported elsewhere is that the partnership will have five board members, three from KKR, two from CHK. The inference is that KKR is contributing the other 90 percent - $225 million. 
> 
> So isn't this simply that KKR is paying CHK $225 million to find oil & gas? I still don't understand how this helps CHK's balance sheet.


Basically CHK gets the cash.  They will use the cash to service debt and pay for capital expenditures.  CHK in this instance is more of a "manager" in the sense they will be tasked with managing, finding and acuiring royalty interest.  CHK has the know-how KKR has the capital.  The only way it may help the CHK is the infusion of cash that can be used to pay down debt.  KKR just sits back and collects 90% of the revenue without having to worry about much risk.  I'm not saying this is good or bad. Because I'm not really sure.  Its just another way for CHK to find cash when it needs it.

----------


## OKCTalker

Thanks guys.

----------


## blangtang

An update on what the plan now is:

Chesapeake CEO Seeks Cash Infusion From Asian Gas Markets

http://www.bloomberg.com/news/2012-0...ce-energy.html

----------


## BoulderSooner

the XOM ceo comments are very interesting

----------


## Pete

Found this blurb about Chesapeake in today's Economic Development Trust meeting package.

GOLT stands for General Obligation Limited Tax bonds that were issued by the city to fund incentive programs for companies significantly adding to their OKC-based employment ranks.  It's used for relocations (like Continental) but also for companies that are already based in town.

It's significant to note that CHK's incentives were capped at 350 new hires a year.  They blew through that number and added almost a THOUSAND new hires in their last fiscal year, at an average salary of almost $92K.  Says they now have almost 5,000 OKC-based employees.  To put that in perspective, Devon only has about 2,600 and approx. 2,100 that work downtown.

And BTW, these numbers are legit because to qualify for these funds you have to submit payroll reports.  Considering we are already a 1/4 through their next fiscal year, they are probably well over that 5,000 mark and still adding people like crazy.

----------


## onthestrip

Why am I a bit skeptical of the average salary figure of $91k? Seems quite high if u ask me

----------


## Pete

In today's Oklahoman, Continental said they expect the average salary for it's new hires (part of this same GOLT program) to be $125K.

----------


## okcpulse

> Why am I a bit skeptical of the average salary figure of $91k? Seems quite high if u ask me


That figure is pretty typical for an E & P energy company.  This is coming from someone that has been in the oil & gas industry for almost five years.

----------


## Easy180

Hard to read too much into pictures but the folks shown in their weekly job hiring photos don't look like they have much energy experience...Love the job titles of "Land geographical analyst" for folks who look fresh off their general business associates degrees lol

----------


## blangtang

mere speculation on my part, but this might make sense and be a good fit after CHK went on a tour recently to asia and the middle east and was looking for joint ventures...plus it seems like its been a while in general regarding "news" on CHK
----
PetroChina Plans Large Scale Acquisitions to Expand Output

"We will buy assets on a large scale, Chairman Jiang Jiemin told reporters in Hong Kong yesterday.  PetroChina plans to invest at least $60 billion this decade in global oil and natural gas assets to increase the share of overseas output to half of its total

Shale Gas

Chinese companies are acquiring overseas shale-gas assets to gain expertise in developing the resource in China, holder of the worlds largest reserves of the fuel. PetroChina, which bought a 20 percent stake in Shells Groundbirch shale-gas project in British Columbia last month, said it will actively develop coal-seam gas and shale gas. 

http://www.bloomberg.com/news/2012-0...ng-losses.html

to be clear, i don't expect a Chinese takeover of Chesapeake is implied by this article, more like some news sometime soon of a joint venture, partnership, etc...

----------


## Maynard

Oil India eyes Chesapeake's Mississippi asset-source       04/03 09:11 AM

--------------------------------------------------------------------------------

* Oil India team to visit United States soon- source

* May partner other Indian cos to buy stake-source 

By Nidhi Verma

NEW DELHI, April 3 (Reuters) - Indian oil and gas producer Oil India Ltd is looking at buying a stake in Chesapeake Energy Corp.'s (CHK:$22.76,00$-0.55,00-2.36%) Mississippi Lime formation in Oklahoma, a source with knowledge of the matter said on Tuesday. 

"Oil India is examining this and will shortly send a team to the U.S.," the source said, adding it is too early to comment on the size of the stake that Oil India could buy. 

Oil India wants to invest between $1 billion and $1.2 billion for acquiring overseas oil and gas producing assets, its finance director said in October. 

Chesapeake last month said it expects to strike a joint venture in this quarter for its unconventional liquid-rich Mississippi Lime play covering 2 million acres. 

The source said Oil India may partner other state-run firms like Oil and Natural Gas Corp in buying a stake in the Mississippi Lime play. 

Oil India and Chesapeake could not be reached for comment. 

Oil India, whose assets in India's northeast account for its entire crude oil production and the bulk of gas production, has been aggressively scouting for overseas assets in discovered and producing areas. The U.S. No. 2 gas producer needs money to close a funding gap. 

The government allowed state-run Oil India to go global in December 2005 and since then it has acquired stakes in assets in countries including Venezuela, Libya, Gabon, Iran, Egypt, Yemen, Nigeria and Sudan. 

India, the world's fourth-largest oil importer, imports about 80 percent of its crude needs. It is scouting for oil and gas assets abroad to meet rising local demand and to feed its expanding refining capacity. 

In the United States, Indian gas utility GAIL India has agreed to buy a 20 percent stake in one of Carrizo Oil & Gas Inc's shale gas assets while top private firm Reliance Industries has sealed three shale gas joint ventures. 

(Reporting by Nidhi Verma; Editing by Jo Winterbottom)

----------


## Maynard

Chesapeake Energy Strikes Three Deals For $2.6 Billion       04/09 05:13 PM

--------------------------------------------------------------------------------

--Deals are Chesapeake's latest to raise capital while natural-gas prices are low

--Chesapeake agrees to sell shale acreage in Oklahoma to Exxon Mobil (XOM:$83.88,00$-0.94,00-1.11%) 

--Chesapeake says it will continue to sell properties including assets in East Texas

By Drew FitzGerald and Isabel Ordonez Of DOW JONES NEWSWIRES 

HOUSTON (Dow Jones)--Chesapeake Energy Corp. (CHK:$21.47,00$-0.68,00-3.07%) announced three agreements Monday that will raise $2.6 billion in cash, the latest in a series of deals it has struck in recent months to raise capital as low natural-gas prices hurt its top line.

The second-largest U.S. natural-gas producer behind Exxon Mobil Corp. (XOM:$83.88,00$-0.94,00-1.11%) has been under pressure from some shareholders and analysts to reduce spending and pare debt.

Monday, the company said it agreed to sell 58,400 acres in the oil-rich Woodford Shale in Oklahoma to a subsidiary of Exxon for about $590 million in cash. The Oklahoma City company also said it finished selling preferred shares in a new subsidiary called CHK Cleveland Tonkawa LLC to a group led by a Blackstone Group LP (BX:$15.06,00$-0.44,00-2.84%) affiliate, delivering about $1.25 billion of proceeds. Chesapeake maintains all the common equity interest in the CHK C-T.

Separately, Chesapeake closed its sale of 10-year volumetric-production payments to an affiliate of Morgan Stanley (MS:$17.98,00$-0.41,00-2.23%) for about $745 million for some producing assets in its Anadarko Basin Granite Wash play. Including this transaction, Chesapeake said it has closed 10 volumetric-production-payment deals since December 2007, generating about $6.4 billion of proceeds.

Oppenheimer & Co. analyst Fadel Gheit said Chesapeake's move is positive for the company as it gives investors confidence it can raise cash when it needs it. "Chesapeake has some of the best shale acreage in the U.S and when they need money they can easily find a buyer," Gheit said. "They are not running out of options."

The transactions also showed appetite for shale-oil-and-gas properties continues to be strong in the U.S., in sharp contrast to the refining sector, where several refineries are for sale and not many buyers are showing interest, Gheit said.

Chesapeake Chief Executive Aubrey K. McClendon said the assets the company sold to Exxon Mobil (XOM:$83.88,00$-0.94,00-1.11%) in Oklahoma weren't strategic.

An Exxon spokesman confirmed the agreement and said the acquisition was " strategic."

Exxon Mobil (XOM:$83.88,00$-0.94,00-1.11%) has highlighted the Woodford Shale as an emerging oil-rich area where the company has rapidly accumulated land and increased drilling. The company said at its March annual meeting with analysts it tripled its position in the Woodford Shale last year to more than 170,000 acres that have the potential to produce 70,000 barrels of oil equivalent per day. The company has 10 rigs running in the area, its spokesman said. The deal with Chesapeake is expected to close April 30.

Chesapeake also said it plans to monetize more holdings this year, including assets in its East Texas Woodbine play.

Chesapeake shares were recently up 1.4% at $21.77 after hours. Through Monday's close, the stock is off 37% over the past year.

----------


## BG918

> Hard to read too much into pictures but the folks shown in their weekly job hiring photos don't look like they have much energy experience...Love the job titles of "Land geographical analyst" for folks who look fresh off their general business associates degrees lol


I know people there with a business degree from OU and no experience outside of a couple energy internships starting at CHK with a salary of 70K.  Those same people after a few years are making over 100K before they're 30.  Is that sustainable with current NG prices?

----------


## Bellaboo

> I know people there with a business degree from OU and no experience outside of a couple energy internships starting at CHK with a salary of 70K.  Those same people after a few years are making over 100K before they're 30.  Is that sustainable with current NG prices?


I don't think so............ time will tell.

----------


## Maynard

Fresh 52-week low for CHK today.




> Chesapeake Energy Corp (CHK:$20.095,0$-0.595,0-2.88%) crossed below its 52-week low of $20.41 on 11:54 AM ET on April 11, 2012.

----------


## ou48A

Natural gas closed below $2 today

Its good that CHK has been moving to more liquids production.
But is it enough to save CHK and others like SD more serious pain?

----------


## mugofbeer

> Natural gas closed below $2 today
> 
> It’s good that CHK has been moving to more liquids production.
> But is it enough to save CHK and others like SD more serious pain?


CHK is fine.  They simply adjust, sell assets, reduce spending, slow growth until gas prices rise againor they become more of an "oil" company.

----------


## Maynard

Chesapeake Oilfield Services files for IPO of up to $862.5 mln       04/16 04:56 PM

--------------------------------------------------------------------------------

* Intends to list Class A common stock on NYSE under "COS"

* Names Goldman Sachs, BofA Merrill Lynch as underwriters 

April 16 - Chesapeake Oilfield Services, a unit of Chesapeake Energy Corp (CHK:$19.19,00$-0.76,00-3.81%) , filed with U.S. regulators to raise up to $862.5 million in an initial public offering of its Class A common stock. 

In a regulatory filing with the U.S. Securities and Exchange Commission, the company said Goldman Sachs and BofA Merrill Lynch would underwrite the offering. 

The filing did not reveal how many shares the company planned to sell or their expected price. 

Chesapeake Oilfield Services provides its parent, Chesapeake Energy (CHK:$19.19,00$-0.76,00-3.81%) , and other partners services in the Eagle Ford, Utica, Niobrara and Marcellus shale plays, some of the most heavily drilled areas in the United States. 

Last month, Chesapeake Chief Executive Aubrey McClendon said the company would likely announce a way to monetize its oil services business and its 30 percent stake in privately held oilfield service company Frac Tech International in the fourth quarter. 

Chesapeake Oilfield Services, which intends to list its Class A common stock on the New York Stock Exchange under the symbol "COS", said its parent Chesapeake will own all of the company's Class B shares. 

Chesapeake formed the oilfield services subsidiary last September and said it believes the business will be worth as much as $10 billion in 2012.

----------


## Maynard

Chesapeake shares fall in premarket trade to fresh 52-week low    04/18 07:55 AM

--------------------------------------------------------------------------------

NEW YORK, April 18 - Shares in Chesapeake Energy Corp (CHK:$19.12,00$-0.07,00-0.36%) fell Wednesday on news that its chief executive officer Aubrey McClendon had borrowed as much as $1.1 billion over the last three years against his stake in thousands of company wells. 

The stock dropped 2.5 percent to $18.65 per share in premarket trade, although volume was light at 115,000 shares. The stock has lost 14 percent so far this year. 

Companies involved in natural gas production have seen their shares hit recently as excess supply and warm weather undercut prices of the commodity. 

Both McClendon and Chesapeake said the loans did not pose any conflict of interest. They are private transactions that the company has no responsibility to disclose or to vet, Chesapeake said. 

"There are no covenants or obligations in my loan documents or mortgages that bind Chesapeake in any way," McClendon wrote in an email to Reuters. 

But traders appeared to be erring on the side of caution. 

"I think where there is smoke, there may be fire - and investors are still in a shoot first mentality - we will see real action when the market opens and we get some liquidity," said David Lutz, a trader a Stifel Nicolaus in Baltimore. 

The loans, which have not been previously detailed to shareholders, were used to fund McClendon's operating costs for an unusual corporate perk that offers him a chance to invest in a 2.5 percent interest in every well the company drills. McClendon in turn used the 2.5 percent stakes as collateral on those same loans, documents filed in five states showed. 

Analysts, academics and attorneys who reviewed the loan documents said the arrangement raised the potential for conflicts of interest.

----------


## onthestrip

Shocker, more news on the shady practices of Aubrey and chpk. I've made up my mind that it is best for chpk, it's employees, and the city of okc that Aubrey step down and someone else take over as CEO. The guy is wreckless and is basically using the company as a personal bank account.

----------


## BoulderSooner

> Shocker, more news on the shady practices of Aubrey and chpk. I've made up my mind that it is best for chpk, it's employees, and the city of okc that Aubrey step down and someone else take over as CEO. The guy is wreckless and is basically using the company as a personal bank account.


nothing in your post is close to the truth

----------


## dankrutka

> nothing in your post is close to the truth


So then tell us the truth...

----------


## OklahomaNick

> Shocker, more news on the shady practices of Aubrey and chpk. I've made up my mind that it is best for chpk, it's employees, and the city of okc that Aubrey step down and someone else take over as CEO. The guy is wreckless and is basically using the company as a personal bank account.


This must be the same guy that said that Russell Westbrook shoots too much.. and that Paul Thompson should have replaced Jason White in the 2003 National Championship, and that he was upset when Landry Jones decided to come back for his senior season.. 

Why would a guy that has been the BEST for the city, company, and overall community for the last 20 years all the sudden be better if he was gone? Absolutely asinine..

----------


## OklahomaNick

I agree that he has been VERY aggressive, and aggressive people are occasionally viewed as wreck-less.
But staying he should step down from a company he created is silly

----------


## Boomer3791

Here's the article about McClendon's $1.1B in personal loans. This looks very, very bad. http://www.reuters.com/article/2012/...83H0GA20120418

----------


## OKCTalker

Its "reckless."

----------


## OKCTalker

And CHK is down 10.04% so far today. The market seems to have concerns about Aubrey.

----------


## OklahomaNick

Yes, that article looks bad.. but it is definitely scathing

----------


## Boomer3791

And CHK stock has now dropped 10%.

----------


## jn1780

> This must be the same guy that said that Russell Westbrook shoots too much.. and that Paul Thompson should have replaced Jason White in the 2003 National Championship, and that he was upset when Landry Jones decided to come back for his senior season.. 
> 
> Why would a guy that has been the BEST for the city, company, and overall community for the last 20 years all the sudden be better if he was gone? Absolutely asinine..


Comparing Aubrey to Westbrook, Thompson, and White? Excuss me while I vomit. 
Hey lets compare Ken Lay to these sports stars. He was great for Houston and the country. I can only hope Cheaspeake isn't secretly doing something as bad as Enron.

----------


## Pete

CHK & McClendon's risky, complex and tangled financial dealings are scary to lots of people, including a bunch of analysts who look at this much more closely than anybody in the general public.

Even without delving into the fine print we know their stock is in the toilet and that McClendon recently lost almost his entire fortune (billions!) in one day.  There is also a pretty steady stream of scathing articles from reputable financial sites.

Ask yourself where you have heard comments like these before:




> McClendon's investor presentations are standing-room-only. But he often bristles when his business model is questioned by analysts, frequently arguing that Wall Street does not understand the company.



As I've said before, I sure hope this all works out for them but you also can't blame anyone who loves OKC for being a bit worried.

----------


## MikeOKC

> CHK & McClendon's risky, complex and tangled financial dealings are scary to lots of people, including a bunch of analysts who look at this much more closely than anybody in the general public.
> 
> Even without delving into the fine print we know their stock is in the toilet and that McClendon recently lost almost his entire fortune (billions!) in one day.  There is also a pretty steady stream of scathing articles from reputable financial sites.
> 
> Ask yourself where you have heard comments like these before:
> 
> 
> 
> 
> As I've said before, I sure hope this all works out for them but you also can't blame anyone who loves OKC for being a bit worried.


Thank you, Pete. You said it well. Anybody who loves this city should be concerned by the current management team at CHK.

----------


## MikeOKC

One other point, this latest report is a* picture perfect example* as to how Aubrey still runs CHK as if it's a private company. Look at what he did with the loans, the collateral used; if nothing else this shows again how he just can't seem to understand he's the CEO of a public company and has to be held accountable as such.

----------


## adaniel

CHK is a sound company, I certainly wouldn't call them an Enron. But it is obvious that they are in way over their head. I wouldn't bet against them in the long run, but they are a company that's about 5 year ahead of its time and used a lot of debt to get there as well.

I hat to play the telephone game, but I know two people who are very familiar with CHK inner workings. The company's highly touted "asset divestiture" they are doing to raise $10 billion at this point is a matter of survival, according to these two folks. Should they net all of that, then they will probably be okay since CHK has finally started getting a pretty good liquids position. But if not, then things get hairy. All options, including the "b-word" will be on the table at that point.

At least one of these people also indicated AM is dangerously close to being outed. I have a hard time believing that, but its likely a bigger possibility now than its ever been.

----------


## Pete

Until their board composition changes, McClendon is under no immediate threat.  If and when changes are made there, then that will be the first sign he is vulnerable.

Thus far, they have been successful selling assets to fund their operations.  But clearly that is not a sustainable way to run a business.

----------


## MikeOKC

Reuters full investigative report with graphics, charts and a lot more information than in the article linked above. 
http://graphics.thomsonreuters.com/1...eMcClendon.pdf

----------


## MikeOKC

_Forbe_s tells it like it is in an article on CHK's response. Aubrey is finding his typical double-speak is finding dead ears on this one. 
http://www.forbes.com/sites/francine...himself-first/

----------


## adaniel

> Until their board composition changes, McClendon is under no immediate threat.  If and when changes are made there, then that will be the first sign he is vulnerable.
> 
> Thus far, they have been successful selling assets to fund their operations.  But clearly that is not a sustainable way to run a business.


You would think that some on the board were getting tired of defending him from shareholder uprisings. I agree with your notion, however, and his board is full of what appears to be yes-men. So its going to take something pretty dramatic for someone to finally pull the trigger.

----------


## Pete

Part of the recent shareholder uprising was to rid the board of McClendon cronies, but they didn't have any success.

I imagine they'll keep trying and as I said, when those actions start to get traction, that's the first sign there may be bigger changes in store.

But as it stands, it's still Aubrey's company.

----------


## MikeOKC

Fox Business made a really good point. The really bad news for CHK is that the share price has dropped to $17.68 (as low as $17.17 after one large sell) and there's no great rush to buy at that highly discounted price. They say that's a reflection of the lack of faith in the CEO management team. 

It's very sad that the only positive thing I have been able to find is a back-handed one from Seeking Alpha, where they basically say investors are overreacting because we already know CHK is run for the benefit of the corporate insiders and not the investors - what's new? Pretty sad when that's the positive news out of this.

----------


## MikeOKC

There's that Enron mention again. "I can't remember a public company of this size with the number of shell companies used for legal protection, constant questions over management leadership and lack of board oversight, accounting practices that are questionable at best, since, I hate to say it, but Enron of 2000/2001" Probably not the exact quote but as close as I remember it within 60 seconds.

----------


## BoulderSooner

> CHK & McClendon's risky, complex and tangled financial dealings are scary to lots of people, including a bunch of analysts who look at this much more closely than anybody in the general public.
> 
> Even without delving into the fine print we know their stock is in the toilet and that McClendon recently lost almost his entire fortune (billions!) in one day.  There is also a pretty steady stream of scathing articles from reputable financial sites.
> 
> Ask yourself where you have heard comments like these before:
> 
> 
> 
> 
> As I've said before, I sure hope this all works out for them but you also can't blame anyone who loves OKC for being a bit worried.


i agree with all of this except the "recently lost almost his entire fortune"   part ... AM is still a Billionaire  and didn't come close to losing all his fortune

----------


## dankrutka

> \Why would a guy that has been the BEST for the city, company, and overall community for the last 20 years all the sudden be better if he was gone? Absolutely asinine..


Uh... Because he may run the company into the ground thus doing tremendous harm to OKC.

----------


## MikeOKC

This is the kind of thing that frightens investors.....already talking class action:
http://finance.yahoo.com/news/invest...183900623.html

----------


## Pete

> i agree with all of this except the "recently lost almost his entire fortune"   part ... AM is still a Billionaire  and didn't come close to losing all his fortune


He DID lose it; he just built it back after CHK gave him a massive bonus, which was the primary reason a lawsuit was filed by some major shareholders.

He had to sell 90% of his holdings due to a margin call.

----------


## ou48A

At what price would any of you buy CHK stock?
Natural gas will bottom out probably this summer or early fall.  
CHK is drilling mostly for oil / liquids. They are still relatively land acreage rich.
But dilution would very much concern me.

----------


## blangtang

Its not a hedge fund.. its a bank.. Giving out loans now lol. $CHK

I guess if natgas never recovers, $CHK can always pawn whatever McClendon is buying. So there's that...

If investors are pissed about $CHK loaning money to Aubrey I wonder how they would feel knowing it basically underwrites his OKC Thunder?

i don't know what everyone is so worked up about. it's totally normal for a CEO to borrow a billion bucks from his own company #sarcasm

http://stocktwits.com/symbol/CHK

i would say a good price is about 13 bucks, it would be around the 2008 low during the big selloff and it would be about 25% lower which would correspond to the $1.50 price target for nat gas which is about 25% lower than the current $2 bucks or so.  

those employees in Oklahoma get some compensation in stock don't they?  U would think they aren't might be concerned when stuff like this keeps happening

----------


## MikeOKC

David Dreman of Dreman Value Investments  - He only owns a million shares(!) - wants Aubrey Kerr McClendon and the current Board of Directors OUT.
http://www.reuters.com/article/2012/...EN420520120418

----------


## MikeOKC

Yahoo Finance "Breakout" looks at the CHK deal with AKM. They are feeling the way most observers are - _outraged_. This is a video program and should be watched. They make some very excellent points. They are shocked at the CHK response as well. Wondering how the management team can possibly survive this.
http://finance.yahoo.com/blogs/break...165736649.html

By the way, Jeff Macke is extremely well-respected and *listened to* in the financial community. Watch the video. It's a rough road ahead for Aubrey.

FROM BREAKOUT (just a small part of what they discuss in the video):

Shares of Chesapeake Energy (CHK) dropped as much as 10% today on a Reuters report that CEO Aubrey McClendon may have taken as much as $1.1 billion in previously undisclosed loans secured using his stake of company oil and gas wells as collateral.

Reuters says the loans are being used to finance McClendon's re-investment in the same assets he's using as collateral. It's a leverage scheme only a derivatives trader could love.

It's not simply the fancy accounting driving CHK lower today. In the attached video my Yahoo! Finance colleague Aaron Task and I discuss McClendon's prior double-dealings, including his panicked selling of CHK stock in order to meet a margin call. The 2008 sale of 31 million CHK shares helped drive the stock 40% lower in one week.

If Reuters is to believed, this time could be different for CHK and McClendon; it could be much worse.

CHK's lawyers claim the loans, totaling more than 1 billion, are immaterial to shareholders, comically offering that "if there were any conflicts of interest they would have surfaced by now," as Task notes with a sneer. The lawyers are being "oily," to be polite.

Obviously McClendon had the incentive and ability to minimize the price paid for the the wells. He could indirectly drive it lower by managing the wells in a manner designed to make them appear less valuable than they are. More directly, McClendon could set the price himself and simply underpay. Regardless, the sole reason to make an investment is the belief that an asset is underpriced. By definition, McClendon paid less than he thought the interest in the wells was worth.

The way to maximize CHK shareholder value would have been to auction off the assets to the highest bidder or, should a reasonable bid fail to materialize, do nothing. Instead, a portion of assets belonging to CHK shareholders were sold to the company CEO at an undisclosed price.

You do the math.

Going forward McClendon now has the interest on a $1.1 billion loan to service. He needs cash every month—and lots of it. With natural gas trading at historic lows, it's not in CHK's best interest to be maximizing output into weak demand. A CEO with the vig running on $1.1 billion has entirely different concerns than your average "Buy and Hold" investor.

If Reuters is to be believed, Aubrey McClendon has nakedly taken advantage of his position as CEO of Chesapeake to profit at shareholder expense. Were his actions legal? Spun correctly and under the letter of the law, there's a good chance they were.

Was McClendon abusing his role and victimizing shareholders to his own personal benefit? Yes; yes he was. That's why so many shareholders are voting with their feet today.

----------


## MikeOKC

I hate to keep posting here, but there's a lot happening...and this should frighten us all....

I just got off the phone with someone who said this is good news for one company: TOTAL. The French MegaCompany (one of the Supermajor energy companies) could take advantage of this investor crisis and takeover CHK in a heartbeat. They are flush with cash, could "buy it and shelve it" until things look up for natural gas. Hyperbole? Maybe a little, but he said the purchase would allow Total a foothold that they've wanted for a long time (as shown by their partnerships with CHK). He said, "Don't count it out. This is when companies get blindsided."

CHK needs new top management and a new board to shore up the share price and offer confidence. Oklahoma City can't afford to lose CHK due to Aubrey Kerr McClendon's recklessness and shady dealings. Despite what many have said about me and CHK, I *do not* want Chesapeake to fail or be bought and moved. That would hurt Oklahoma City in the worst of ways. I honestly don't want to say, "I told you so," I love Oklahoma City too much and am excited about its future. But BIG changes are needed over on Western. Sooner rather than later. Like - tomorrow.

----------


## MikeOKC

-

*McClendon just lost one of his best friends: Mad Money's Jim Cramer.* 

He just said he was "shocked" to learn about this. He said if he was on the Board of Directors, he couldn't support him. He pointed to a chair and said, "Aubrey McClendon sat right here in this chair (_pointing_), right here, and said he was sorry for the lack of transparency and all that went on with the compensation debacle of a few years ago." He's done it again. Cramer's clearly disappointed as he thinks Aubrey is a "visionary" in NatGas, but is bewildered by this - clearly a sense of betrayal.

----------


## OKCTalker

Board: Aubrey McClendon, Richard Davidson, Kathleen Eisbrenner, Burns Hargis, Frank Keating, Chares Maxwell, Merrill Miller, Don Nickles & Lou Simpson. 

Who's going to object? Their board compensation exceeds that of any publicly-traded company that I know of, in fact, exceeds even the CEO's pay at almost all publicly-traded companies. 

Whoever has the most to lose by a corporate collapse will be the first to call for a change, and perhaps one or more already have.

----------


## onthestrip

> nothing in your post is close to the truth


Did you even read the article? How is he not using chpk as his personal bank account? Borrowing over a billion dollars because he cant fund his FWPP costs himself? Definitely sounds a little shady. And if youve read any more of this thread you will see quotes and links to other people saying the same. I mean, chpk is the only company known to allow the ceo to own a personal share of each well (the FWPP program).




> This must be the same guy that said that Russell Westbrook shoots too much.. and that Paul Thompson should have replaced Jason White in the 2003 National Championship, and that he was upset when Landry Jones decided to come back for his senior season.. 
> 
> Why would a guy that has been the BEST for the city, company, and overall community for the last 20 years all the sudden be better if he was gone? Absolutely asinine..


Ive always been a fan of Russell, so no. And Im an OSU guy so I could care less about Paul and Landry. But you know what? If Russell were traded, Paul was inserted in that game, and Landry went pro, many of my friends would still have a job. Not so much when Aubrey bankrupts chpk.

No doubt he has been good to the city, he has done great things for okc and employed many people. I just dont want it to go away because of his irresponsible actions.

----------


## soonerguru

I don't know where to put this thread (and I'm sure it will be moved), so I started in the most-read forum on okctalk.com, the Urban Core forum, because I believe this story is extremely important for everyone on this forum to read and comment on.

At the basic level, it seems as if McClendon is rather cavalier with stockholders' investments. It also seems as if CHK's board is the ultimate rubber-stamp to his personal whims. Why does this guy need to borrow so much money? Can he not get by on a $100 million a year or whatever his "highest paid CEO" salary provides?

Does anyone who is educated on corporate law care to comment on the ramifications of this story?

http://newsok.com/chesapeake-stock-d...rticle/3667568

And here's a teaser:

*
Chesapeake stock dips on news of CEO's loans*

Chesapeake Energy Corp.'s stock price lost nearly $640 million Wednesday after it was revealed that CEO Aubrey McClendon has used his personal stake in Chesapeake wells as collateral for loans.

Chesapeake Energy Corp. shares tumbled 5.5 percent Wednesday After a published report showed that CEO Aubrey McClendon has borrowed up to $1.1 billion against his stake in Chesapeake wells.

Shares of Chesapeake Energy Corp. fell to a new 52-week low Wednesday before recovering at the end of the trading day following a report about $1.1 billion...
Reuters reported Wednesday that the loans were to fund McClendon's investment in Chesapeake's Founder Well Participation Program, under which McClendon can take a 2.5 percent stake in every well drilled by the company.

----------


## Snowman

> I don't know where to put this thread (and I'm sure it will be moved)


This is already being discuses on the Chesapeake Business Practices tread in the Local Business forum.

----------


## dankrutka

THere's a long thread on CHK's business model in the local businesses thread. It's on the main page right now. Not hard to find.

----------


## soonerguru

This is one of my favorite bits from the Reuters story:

"McClendon continues to treat his employees well. In recent years, he built a 50-acre red-brick campus in Oklahoma City as Chesapeake headquarters. It boasts a 72,000 square-foot state-of-the art gym, visiting doctors who provide lunchtime Botox treatments for employees, and dentists to whiten teeth."

What a bizarre fantasy world he's building. He's like the oil and gas version of Willy Wonca. Seriously, though, the article makes clear the company is $10 billion in debt, and scrambling to sell assets. Can some accounting whiz please explain to us simpletons how this is really nothing to worry about?

----------


## soonerguru

This should not be in the "local businesses thread," in my opinion. This isn't an article about a local bakery, this is a damning piece about one of the top three employers in Oklahoma City. Don't be parochial about this.

----------


## dankrutka

> This should not be in the "local businesses thread," in my opinion. This isn't an article about a local bakery, this is a damning piece about one of the top three employers in Oklahoma City. Don't be parochial about this.


Which is also a local business. Local business does not equal small business. And, yes, Aubrey McClendon seems completely detached from reality at this point. He should change things, if nothing else, to present the appearance of sanity.

----------


## ljbab728

> This should not be in the "local businesses thread," in my opinion. This isn't an article about a local bakery, this is a damning piece about one of the top three employers in Oklahoma City. Don't be parochial about this.


SG, no one is being parochial.   You said yourself that you weren't sure what thread to put this story in.  It really has nothing to do with urban OKC discussions and it is a  local business.  The only other possible areas would be general civic issues or current events.

----------


## soonerguru

Aubrey McClendon is clearly an adrenaline junkie. That's fine. Maybe he should walk a high wire for a living, but he's playing with other people's money now. Something tells me this company is toast. Perhaps it's the in-house botox treatments. Maybe it's the kool-aid-drinking mantras of the employees who work there. I don't know. But I've had REALLY BAD VIBES about this shady company and its sycophantic Republican board of directors for some time. 

I agree that McClendon has done many outstanding things for OKC, but if he runs this company into the ground, the final written chapter will be terrible for our dear city. Even worse than if he had never started the company. A buyout or bankruptcy of CHK would be devastating to OKC in orders of magnitude similar to the Penn Square Bank failure.

Would you trust your life's savings with Aubrey McClendon? I wouldn't even trust him around my daughter. The guy clearly can't manage his own abundant personal resources, so why would we think he can effectively manage the resources of a multibillion dollar public company?

----------


## betts

> I hate to keep posting here....


The lady[sic] doth protest too much, methinks.

----------


## soonerguru

> SG, no one is being parochial.   You said yourself that you weren't sure what thread to put this story in.  It really has nothing to do with urban OKC discussions and it is a  local business.  The only other possible areas would be general civic issues or current events.


I understand what you're saying, and technically you're correct, but the possible failure of one of OKC's three biggest employers has everything to do with our city and its urban renaissance. If CHK goes tits up, OKC is screwed.

----------


## ljbab728

> I understand what you're saying, and technically you're correct, but the possible failure of one of OKC's three biggest employers has everything to do with our city and its urban renaissance. If CHK goes tits up, OKC is screwed.


If you think the failure of one business in OKC means we're screwed you are sadly mistaken.  It wouldn't be wonderful but we would survive quite nicely.

----------


## soonerguru

> If you think the failure of one business in OKC means we're screwed you are sadly mistaken.  It wouldn't be wonderful but we would survive quite nicely.


I hope you're right, but I doubt it. CHK is a huge employer and they pump an assload of money into local nonprofits. Also, they own a massive amount of real estate in town. I actually think that if they failed it would be worse for OKC than the Penn Square Bank fiasco.

----------


## ljbab728

OKC, is just too diversified now for the loss of one business to be a disaster.  It would certainly cause problems but there are now enough other similar companies that would be willing to take up much of the slack.  Although not as significant, we got through the closing of the GM plant with hardly a notice in the overall economy.  

With that said, I don't think we are going to be in that situation so I'm not particularly concerned about it.

As for Penn Square, there were numerous other businesses that were directly affected by that.  There is no comparison at all.

----------


## PhiAlpha

Mike, shut up and take a breath. Jesus. You've shown too much bias to warrant credibility.

----------


## blangtang

I wonder if the DOK will help us all gain insight into this situation

----------


## soonerguru

> OKC, is just too diversified now for the loss of one business to be a disaster.  It would certainly cause problems but there are now enough other similar companies that would be willing to take up much of the slack.  Although not as significant, we got through the closing of the GM plant with hardly a notice in the overall economy.  
> 
> With that said, I don't think we are going to be in that situation so I'm not particularly concerned about it.
> 
> As for Penn Square, there were numerous other businesses that were directly affected by that.  There is no comparison at all.


Too diversified? We've focused more on oil and gas now than at any time. We're an oil and gas town, and besides Devon, Chesapeake is the biggest player. How many employees do they have now, and how much do they earn? What is the value of their real estate holdings? 

This isn't an abstract discussion. What are their real assets right now in OKC? Do you think their faux-Georgian Mental Hospital University campus would just fill up with new tenants if they were bought or went under? I'm not trying to be an asshat about this, but you seem to be seriously minimizing the impact they have on OKC's economy. 

We will always have the Whole Foods, though, so that is good.

----------


## ljbab728

> Too diversified? We've focused more on oil and gas now than at any time. We're an oil and gas town, and besides Devon, Chesapeake is the biggest player. How many employees do they have now, and how much do they earn? What is the value of their real estate holdings? 
> 
> This isn't an abstract discussion. What are their real assets right now in OKC? Do you think their faux-Georgian Mental Hospital University campus would just fill up with new tenants if they were bought or went under? I'm not trying to be an asshat about this, but you seem to be seriously minimizing the impact they have on OKC's economy. 
> 
> We will always have the Whole Foods, though, so that is good.



I'm not going to get into a long detailed conversation with you about this and I'm not minimzing anything.  When I said diversified I was referring more to multiple other oil and and gas related businesses that would help take up any slack.  And yes, I think their buildings would fill up within a year if they went under.  

As for being an abstract discussion, unless it happens it is abstract and I firmly believe it won't happen.  

It would be a blow but it would be one that would in no way devastate OKC.  We are hardly a one company town.

----------


## soonerguru

> I'm not going to get into a long detailed conversation with you about this and I'm not minimzing anything.  When I said diversified I was referring more to multiple other oil and and gas related businesses that would help take up any slack.  And yes, I think their buildings would fill up within a year if they went under.  
> 
> As for being an abstract discussion, unless it happens it is abstract and I firmly believe it won't happen.  
> 
> It would be a blow but it would be one that would in no way devastate OKC.  We are hardly a one company town.


I hope you're right about this, and mostly that you're right that CHK won't be bought or go under. That said, the most estimable postulation you make is that CHK's real estate holdings would magically be taken over by other interests. I ask, who? This isn't garden-variety corporate real estate, this is a bizarre campus setting that includes a failing retail development. Have you actually tallied the amount of real estate holdings they have and what impact this would have on the commercial real estate community? It would be an unmitigated disaster.

----------


## progressiveboy

> OKC, is just too diversified now for the loss of one business to be a disaster.  It would certainly cause problems but there are now enough other similar companies that would be willing to take up much of the slack.  Although not as significant, we got through the closing of the GM plant with hardly a notice in the overall economy.  
> 
> With that said, I don't think we are going to be in that situation so I'm not particularly concerned about it.
> 
> As for Penn Square, there were numerous other businesses that were directly affected by that.  There is no comparison at all.


 Can you give us examples of how OKC is so diversified? I have to disagree with this statement. Besides CHK, Devon, SR and CR, which are all oil and gas companies and "some " of the top employers in OKC it appears that the city still has the appearance of relying on one industry. I believe that if CHK did fail, it would have much more ramifications on the community than what you think. Diversification is the key to a economy and i feel that OKC has not learned from the oil bust of the early 80"s. Many people have a false sense of security that OKC will become the next Houston, however I feel "denial" can be a very dangerous, complacent attitude. OKC is a one trick pony town and still has the same mentality it had in the 80's. Has OKC truly evolved like a big league city?

----------


## BoulderSooner

> This is one of my favorite bits from the Reuters story:
> 
> "McClendon continues to treat his employees well. In recent years, he built a 50-acre red-brick campus in Oklahoma City as Chesapeake headquarters. It boasts a 72,000 square-foot state-of-the art gym, visiting doctors who provide lunchtime Botox treatments for employees, and dentists to whiten teeth."
> 
> What a bizarre fantasy world he's building. He's like the oil and gas version of Willy Wonca. Seriously, though, the article makes clear the company is $10 billion in debt, and scrambling to sell assets. Can some accounting whiz please explain to us simpletons how this is really nothing to worry about?


i would not say "scrambling" ...    they have 65+ bil in assets ... and they have already raised 3 bil of that 10 in the first Q

----------


## metro

For the record, CHK Is TWICE the workforce of Devon locally. The only bigger employer would be The state government and perhaps Tinker. Let's not forget CHK is mostly high paid, white collar jobs too. Sandridge and Continental are a fraction the size of CHK or DVN.

----------


## okcpulse

I really cringe when people compare Chesapeake to Enron.  Enron was an energy TRADING company.  Chesapeake is an Exploration and Production company.  The fact that Enron had no assets is exactly what lead to the company's demise.  

With Chesapeake, they are over-extended with assets.  What will likely happen is they will continue downsizing by selling off assets to raise company cash to pay down debt and/or use the cash raised to go after more valuable liquids.  Make no mistake, the Rueters report is damning news, and Aubrey has a lot of damage control to do.  I don't doubt at all that Chesapeake's ultimate goal was to become the olive branch that would switch America's gasoline-dependent infrastructure to natural gas, from power plants down to every day automobiles.  Only no one expected natural gas prices to tumble this low.  CHK was hoping prices would recover, but they have not.

Like I said, this is not good news, but this is no Enron.  Enron's assets were as good as toilet paper.  At least Chesapeake holds valuable assets.  But now the company has to come up with a new game plan.

----------


## Just the facts

What is the absolute worst that can happen at CHK - bankruptcy?  So what.  They go bankrupt, reset their books, and keep on trucking.  They produce enough revenue they could live on cash-flow if they got rid of the debt.  Maybe going bankrupt would be the best option for the company.

----------


## BoulderSooner

> Its not a hedge fund.. its a bank.. Giving out loans now lol. $CHK
> 
> I guess if natgas never recovers, $CHK can always pawn whatever McClendon is buying. So there's that...
> 
> If investors are pissed about $CHK loaning money to Aubrey I wonder how they would feel knowing it basically underwrites his OKC Thunder?
> 
> i don't know what everyone is so worked up about. it's totally normal for a CEO to borrow a billion bucks from his own company #sarcasm
> 
> http://stocktwits.com/symbol/CHK
> ...


you know that CHK did NOT loan him the money right??

----------


## MikeOKC

> The lady[sic] doth protest too much, methinks.


Whatever that means. I follow this stuff. I've known that CHK's corporate governance practices would cause one crisis after another. I've been warning here when not a single other person was discussing this in the Oklahoma City media and certainly on this forum. You follow, post and run a forum about basketball. I post about how this rogue CEO is a threat to our city. I don't see what makes mine protesting too much. Nothing I've written about hasn't shown to be true - unfortunately. 




> Mike, shut up and take a breath. Jesus. You've shown too much bias to warrant credibility.


So, passion about something I see right in front of my face when nobody else was willing to talk about this shows I lack "credibility?" If anything, when my warnings were falling on deaf ears, I think I have been vindicated. You can't say I wasn't warning people. What you call "bias" I see as passion and sounding a bugle cry. There's too much to lose.

----------


## betts

The problem is, Mike, that you come across as one of those breathless hyperexcited reporters for a 24 hours news channel, all the while proclaiming that you wish you didn't have to do it. It is clear you have more of an agenda than reporting the news that's fit to print. Nothing said here is going to change the business practices of Chesapeake. We're a message board. I rarely read this thread for the same reason I don't watch 24 hour news channels.

----------


## MikeOKC

> The problem is, Mike, that you come across as one of those breathless hyperexcited reporters for a 24 hours news channel, all the while proclaiming that you wish you didn't have to do it. It is clear you have more of an agenda than reporting the news that's fit to print. Nothing said here is going to change the business practices of Chesapeake. We're a message board. I rarely read this thread for the same reason I don't watch 24 hour news channels.


A little personal, yes? I expected it.

Tell me what my agenda could possibly be. You would be surprised at the power of a message board. Sometimes it's the only place people can find certain information, especially when there's a local media blackout of news concerning anything bad regarding CHK (NewsOK even held off on reporting _this_ story until late yesterday afternoon and into the evening). Yes, the posts came fast and furious yesterday as I was posting as certain things were happening. Do I always do that? Of course not. But, I'm all of a sudden a breathless, hyperexcited reporter for a 24 hour news channel? This is a clear case of KILL THE MESSENGER. If anyone has an agenda regarding this issue, wouldn't it be you? Aubrey is an owner of the basketball team for which you run a fan forum!  But, *I* have the agenda?


OKCPulse, I think you don't understand why there are comparisions to Enron. It's not because of the business CHK is in and their similarity (or lack thereof). Here are the things that make them similar to Enron:

1. Corporate governance is a joke as the board is packed with yes men.
2. Accounting practices are constantly called into question.
3. The use of shell companies to provide legal protection and God only knows what else.
4. Flamboyant leadership that is arrogant in the face of adversity. No humility, never wrong.
5. Creation of a work culture that is akin to a "business cult" by going overboard on pay & benefits to keep an army of people who do not question.
And, frankly, there's a lot more. But it doesn't matter if Enron was an energy trading company or if CHK sold frosted mudpies. It's the malgovernance and in-your-face blatant self-interest for the management. All of that makes people think "Enron."

I knew the "Kill The Messenger" posts would begin, but that's okay. I know where I stand and why. I feel confident to speak to the issues which, don't kid yourself, are serious.

Oh....it should be said that 90% of what I post is information from other sources. Like this from Forbes this morning:
*Why Chesapeake Shareholders Should Worry About McClendon's Big Borrowing*
That's a good "in-a-nutshell" piece.

----------


## Larry OKC

> I really cringe when people compare Chesapeake to Enron.  Enron was an energy TRADING company.  Chesapeake is an Exploration and Production company.  *The fact that Enron had no assets is exactly what lead to the company's demise.* 
> 
> With Chesapeake, they are over-extended with assets.  What will likely happen is they will continue downsizing by selling off assets to raise company cash to pay down debt and/or use the cash raised to go after more valuable liquids.  Make no mistake, the Rueters report is damning news, and Aubrey has a lot of damage control to do.  I don't doubt at all that Chesapeake's ultimate goal was to become the olive branch that would switch America's gasoline-dependent infrastructure to natural gas, from power plants down to every day automobiles.  Only no one expected natural gas prices to tumble this low.  CHK was hoping prices would recover, but they have not.
> 
> Like I said, this is not good news, but this is no Enron.  Enron's assets were as good as toilet paper.  At least Chesapeake holds valuable assets.  But now the company has to come up with a new game plan.


I can't speak to what Enron's primary business role was, but one of my former employers routinely sold Enron properties at auction (as we did for all of the major oil & gas companies). They also bought properties at auction. So to say they had "no assets" might be misleading.

----------


## Larry OKC

> *What is the absolute worst that can happen at CHK* - bankruptcy?  So what.  They go bankrupt, reset their books, and keep on trucking.  They produce enough revenue they could live on cash-flow if they got rid of the debt.  Maybe going bankrupt would be the best option for the company.


What would the ramifications be for the newly named Chesapeake Energy Arena? When others have gone bankrupt, naming rights to various venues vanished as well. Enron Field and the Kodak Theater come to mind.

----------


## Larry OKC

> For the record, CHK Is TWICE the workforce of Devon locally. The only bigger employer would be The state government and perhaps Tinker. Let's not forget CHK is mostly high paid, white collar jobs too. Sandridge and Continental are a fraction the size of CHK or DVN.


http://www.greateroklahomacity.com/i...view=employers
According to the Chamber (3/2012), CHK is almost twice the size of Devon, with SandRidge & Continental not even making the list (that may change with Continental's expansion plans). There are several entities ahead of CHK. Not sure if I would include Norman but that is just me. As pointed out the State & Tinker are at the top of the list...

1. 42.1K  State of Oklahoma 
2. 27.0K  Tinker      
3. 11.7K  OU Norman Campus   
4.  7.5K   FAA     
5.  6.0K   Integris
6.  5.0K   City of OKC
7.  4.2K   OU Health Sciences
*8.  4.0K   Chesapeake
*13. 2.6K  Devon

----------


## BoulderSooner

CHK is closer to 6k than 4k

----------


## Snowman

> What would the ramifications be for the newly named Chesapeake Energy Arena? When others have gone bankrupt, naming rights to various venues vanished as well. Enron Field and the Kodak Theater come to mind.


It depends on if the company is bought out or exists after bankruptcy, profitability coming out of bankruptcy and if it sees value in continuing to pay the city. Enron did not exist after it's bankruptcy and Kodak without some major change will only survive a couple more years.

----------


## MikeOKC

I suppose if anybody should know about Enron, it's the business reporters at the _Houston Chronicle_. Loren Steffy sees an eerie resemblance:
*Chesapeake Energy: Are the 'e's' tilting?*

----------


## Pete

In a report to the city, CHK had almost 5,000 employees in OKC as of 1/31/12.

They are also adding about 1,000 jobs per year.

----------


## Larry OKC

> A little personal, yes? I expected it.
> 
> Tell me what my agenda could possibly be. You would be surprised at the power of a message board. Sometimes it's the only place people can find certain information, especially when there's a local media blackout of news concerning anything bad regarding CHK (NewsOK even held off on reporting _this_ story until late yesterday afternoon and into the evening). ...


I'm not saying you are incorrect on anything else in your post and the Oklahoman has killed at least one story in the past when it came to CHK a while back, but this statement isn't entirely true. I noticed a NewsOK story on it right after lunch time. it was the 2nd highest "feature" story on the main page (the ones on the left hand side with a pic attached), just under the story. Just as right now they have another story about this in 2nd place on that page. They seem to have a few stories today on it... breaking news sort of thing.

----------


## OKCTalker

Two troubling points: 

1) Insolvency. Today's Wall Street Journal on CHK's debt, which makes a case for the company being technically insolvent: "The company continues to outspend its cash flow at a rapid pace. It is filling the gap with asset sales and financing that has, to date, built up off-balance sheet obligations of $6 billion, according to estimates from Credit Suisse analyst Arun Jayaram. This on top of existing net debt of $10.3 billion. Chesapeake's market capitalization is $12.7 billion." With a market cap of $12.7 billion and debt of $16.3 billion, the company is under water by $3.6 billion. 

2) Refusal to answer questions. In this morning's paper edition of the Daily Oklahoman were two questions posed by Reuters, and CHK's responses. The first question raised the potential for conflict of interest, to which CHK responded by deeming the question to be "improper on a number of levels." The second question asked about lien rights on the loans, to which CHK responded that an explanation "is too complicated to fully explain here." People are seeking answers to their questions, and CHK is responding that the questions are improper and the answers are too complicated for them to understand.

----------


## Larry OKC

> CHK is closer to 6k than 4k





> In a report to the city, CHK had almost 5,000 employees in OKC as of 1/31/12.
> 
> They are also adding about 1,000 jobs per year.


I realize numbers are in a constant state of flux, but someone needs to let the Chamber know...LOL

----------


## Pete

The Oklahoman is definitely doing a more thorough job reporting this issue than they have with CHK stories in the past.

Remember, they have a new out-of-state owner and they've also hired back a couple of energy reporters.


If OKC is truly an energy leader, than the local paper should cover that industry like the LA or NY Times covers entertainment.  Hopefully these recent changes represent a move in that direction.

----------


## Pete

I don't think OKC has ever been so at the mercy of a single employer.

If CHK came crashing down not only would there be the loss of 5,000+ (!) very high-paid jobs, the real estate market would take a massive hit in many different ways.


When you combine these realities with the risky nature in which Chesapeake conducts business, you are going to have a lot of concerned parties.

----------


## BoulderSooner

> I realize numbers are in a constant state of flux, but someone needs to let the Chamber know...LOL


according to the OKC economic development  trust chk had 4950 OKC employees in JAN and they have continued to hire  ... no doubt they have over 5k in OKC right now

----------


## OKCTalker

Pete posted some OKC employment figures not long ago, but I can't find them. Pete...oh, PETE. Are you out there?

----------


## ou48A

The biggest problem is the rapid decline of natural gas prices. 
Per CNBC its $ 1.91 down .04

This decline is going to continue and be tough on the local economy.
I have heard one report of NG already selling for as low as $1.36 in the field.

----------


## okcpulse

So...

-Natural gas prices continue to fall
-Oil prices continue to climb gradually
-Chesapeake Energy continues to hire and expand
-Aubrey McClendon takes out over $1.1 billion in personal loans using his stake in marginal wells as backing

Sooner or later, people will get tired of paying $4 a gallon for gasoline, when the gallon equivalent of natural gas at around $1.13.  Eventually, the public will be driven to natural gas fueled vehicles.

Is Chesapeake and Aubrey McClendon preparing for something that is not public knowledge?  Not trying to live in denial, just trying to look at this from outside the box.

----------


## soonerguru

> So...
> 
> -Natural gas prices continue to fall
> -Oil prices continue to climb gradually
> -Chesapeake Energy continues to hire and expand
> -Aubrey McClendon takes out over $1.1 billion in personal loans using his stake in marginal wells as backing
> 
> Sooner or later, people will get tired of paying $4 a gallon for gasoline, when the gallon equivalent of natural gas at around $1.13.  Eventually, the public will be driven to natural gas fueled vehicles.
> 
> Is Chesapeake and Aubrey McClendon preparing for something that is not public knowledge?  Not trying to live in denial, just trying to look at this from outside the box.


Interesting question. I would hope so. But we've seen this movie before, and we know McClendon: he's a reckless gambler with other people's money and he cannot seem to manage his own financial affairs. Additionally, he's totally arrogant and thinks he knows more than everyone else. He's been saying for years that nat gas prices are going to go up, and they have gone down (largely because so much of the stuff is sitting in reserve due to so much drilling).

The public can't magically start driving nat-gas fueled vehicles. This would be a seismic shift in the entire auto industry. 

Chesapeake is in ridiculous debt, and we're being told "not to worry," we really just don't understand their fancy accounting. THAT is what reminds me of Enron. 

I would also like to see what their "assets" really are and how CHK places values on them. What are these "assets": Overpriced real estate in OKC? Overpriced leases for natural gas (which is plunging in value)? Aubrey's wine collection? Who knows?

----------


## jn1780

> So...
> 
> -Natural gas prices continue to fall
> -Oil prices continue to climb gradually
> -Chesapeake Energy continues to hire and expand
> -Aubrey McClendon takes out over $1.1 billion in personal loans using his stake in marginal wells as backing
> 
> Sooner or later, people will get tired of paying $4 a gallon for gasoline, when the gallon equivalent of natural gas at around $1.13.  Eventually, the public will be driven to natural gas fueled vehicles.
> 
> Is Chesapeake and Aubrey McClendon preparing for something that is not public knowledge?  Not trying to live in denial, just trying to look at this from outside the box.


I know what they think will happen. Problem is their way to early in timing. The global economy will be weighed down by debt for several years to come and I haven't discounted the possibility of a double dip recession. Just this week Europe was having troubles again. 

One thing is for sure, I don't see how Cheaspeake can keep expanding as rapidly as they are. They need to chill out and let energy prices catch up.

----------


## OU Adonis

Does that 4k for CHK include contractors?

----------


## onthestrip

> The problem is, Mike, that you come across as one of those breathless hyperexcited reporters for a 24 hours news channel, all the while proclaiming that you wish you didn't have to do it. It is clear you have more of an agenda than reporting the news that's fit to print. Nothing said here is going to change the business practices of Chesapeake. We're a message board. I rarely read this thread for the same reason I don't watch 24 hour news channels.



Pretty sure that 99% of the time Mike posts something about chpk, it is a link to a story about them that you wouldnt find written by an Oklahoma publication. All he is doing is providing new information. I guess you could remain uninformed or just choose to ignore it and imagine everything is just dandy.  But in reality, its not. 

It is quite amazing how a company can rack up so much goodwill with charitable donations and good jobs with good benefites that people will get disgusted at someone who is just pointing out the reality of the situation (Betts, Bouldersooner, oklahomanick..)

----------


## Bailey80

> Pretty sure that 99% of the time Mike posts something about chpk, it is a link to a story about them that you wouldnt find written by an Oklahoma publication. All he is doing is providing new information. I guess you could remain uninformed or just choose to ignore it and imagine everything is just dandy.  But in reality, its not. 
> 
> It is quite amazing how a company can rack up so much goodwill with charitable donations and good jobs with good benefites that people will get disgusted at someone who is just pointing out the reality of the situation (Betts, Bouldersooner, oklahomanick..)


I don't like to self promote, but one Oklahoma publication, the Journal Record, has been covering all of these issues related to Chesapeake. We've covered McClendon's clashes with shareholders over the past two years and broke the story last November about McClendon repaying the company $12.1 million for his map collection as part of a legal settlement. You all should subscribe.     
It should also be noted that the Oklahoman is also doing a much better job of covering these issues these days than they have in the past.

----------


## Pete

> Does that 4k for CHK include contractors?


The number was 4,950 as of 1/31/12 (as reported by CHK to the City for an incentive grant) and they are hiring about 1,000 workers a year.

These numbers represent employees, not contractors.  I'm sure they pay a ton of those as well.

----------


## proud2Bsooner

Of course we all must hope for the best in regards to NG prices. But from what I hear, this summer will be the bottom. Analysts say that this latest story is immaterial to the actual state of the company. It's the thought that things may be worse than we really know that has everyone scared. Although McLendon is not well-loved by many, I suspect he pretty much knows what he is doing. To expect that this is an Enron situation is stupid given his (and CHK's) history. Even the nayest of naysayers here has to admit that this is more of a question of business ethics and respect for your shareholders than anything else. I do think it's a shame how disliked he is given all that he has personally done for this city. As bad as he is, it's countered with a lot of good.

----------


## PhiAlpha

What is there that OKC hasn't "learned"? Energy company's come here because they started here, to be around other companies, or to be close to or in centralized around their assets. Energy companies want to come here so they come, what does that have to do with the city? Should the city not recruit oil companies that will most likely relocate here just because it wants to be diversified?  They got 1,000 + Boeing jobs so city leadership is obviously working on diversification. How is it the city's fault if companies from other industries just haven't wanted to relocate here yet? The city is built around one primary industry because it has been for a century, it will take time to change that and it appears that city leaders are working on pushing it that direction.

----------


## PhiAlpha

> Can you give us examples of how OKC is so diversified? I have to disagree with this statement. Besides CHK, Devon, SR and CR, which are all oil and gas companies and "some " of the top employers in OKC it appears that the city still has the appearance of relying on one industry. I believe that if CHK did fail, it would have much more ramifications on the community than what you think. Diversification is the key to a economy and i feel that OKC has not learned from the oil bust of the early 80"s. Many people have a false sense of security that OKC will become the next Houston, however I feel "denial" can be a very dangerous, complacent attitude. OKC is a one trick pony town and still has the same mentality it had in the 80's. Has OKC truly evolved like a big league city?


The above is in reply to this...

----------


## PhiAlpha

> Whatever that means. I follow this stuff. I've known that CHK's corporate governance practices would cause one crisis after another. I've been warning here when not a single other person was discussing this in the Oklahoma City media and certainly on this forum. You follow, post and run a forum about basketball. I post about how this rogue CEO is a threat to our city. I don't see what makes mine protesting too much. Nothing I've written about hasn't shown to be true - unfortunately. 
> 
> 
> 
> So, passion about something I see right in front of my face when nobody else was willing to talk about this shows I lack "credibility?" If anything, when my warnings were falling on deaf ears, I think I have been vindicated. You can't say I wasn't warning people. What you call "bias" I see as passion and sounding a bugle cry. There's too much to lose.


Vindicated for what? nothing has happened, the news ran with a story about AM legally taking out loans to finance his personal, legal working interest investments which many people have and will continue to do. The company is in crappy shape due to the nat gas price. You still sound like an over obsessive idiot.

----------


## Easy180

> Vindicated for what? nothing has happened, the news ran with a story about AM legally taking out loans to finance his personal, legal working interest investments which many people have and will continue to do. The company is in crappy shape due to the nat gas price. You still sound like an over obsessive idiot.


So after the millionth story written about how interesting this company is you aren't the least bit concerned?

----------


## Spartan

I am starting to lean more and more on the side that is predicting this will end badly. I hope I'm wrong.

This could have even worse consequences for OKC than the 80s bust.

----------


## PhiAlpha

> I can't speak to what Enron's primary business role was, but one of my former employers routinely sold Enron properties at auction (as we did for all of the major oil & gas companies). They also bought properties at auction. So to say they had "no assets" might be misleading.


Enron oil and gas was spun off in 1997, it is now known as EOG Resources. Those were likely the properties they were refering to. EOG has done very well, Enron wen bankrupt in 2001

----------


## Drake

> Vindicated for what? nothing has happened, the news ran with a story about AM legally taking out loans to finance his personal, legal working interest investments which many people have and will continue to do. The company is in crappy shape due to the nat gas price. You still sound like an over obsessive idiot.


I wouldn't say an idiot. A tad over obsessive. It is funny how the Journal Record guy points that they have been covering this all along. I also don't think that most of this breaking news about AM, but Mike sees himself as some sort of savior for the masses. Saving from what exactly I am not sure. Until the board decides something needs to be done, you can post all the tidbits you want but in the end it doesn't mean much.

AM is a reckless CEO. Natural gas prices have tanked. That combo could spell trouble for CHK as we know it. Pretty much it and not much most of us can do about it.

----------


## Pete

The bad publicity is going to encourage shareholders to rise up and I bet we see a board shake-up soon; like within a year.

Then, things will get interesting.

----------


## Drake

> The bad publicity is going to encourage shareholders to rise up and I bet we see a board shake-up soon; like within a year.
> 
> Then, things will get interesting.


Your gut feeling? Good or bad?

----------


## Pete

I don't think anything dramatic will happen any time soon...  Just growing dissatisfaction and concern among stockholders that will drive some board changes.

But Chesapeake needs McClendon.  Can anyone even name another executive there?  He's the face and mind behind it all and is a great deal-maker.  Not sure if he could continue to work his magic on a tight leash, though.

----------


## MikeOKC

delete - posts got messed up. Sorry. See below

----------


## MikeOKC

> I don't think anything dramatic will happen any time soon...  Just growing dissatisfaction and concern among stockholders that will drive some board changes.
> 
> But Chesapeake needs McClendon.  Can anyone even name another executive there?  He's the face and mind behind it all and is a great deal-maker.  Not sure if he could continue to work his magic on a tight leash, though.


Chesapeake needs McClendon? The last thing CHK needs going forward is a rogue CEO. McClendon has to go. The top management has to go. The board needs to go. This company is corrupt - to the core. All this news dribbles out a little at a time because they're a cult-like corporate entity that runs a secretive operation. His Kerr bloodline can't save him anymore. He has proven nobody can trust him. Even his buddy Jim Cramer feels betrayed. Same song second (third? Fourth?) verse.





> I wouldn't say an idiot. A tad over obsessive. It is funny how the Journal Record guy points that they have been covering this all along. I also don't think that most of this breaking news about AM, *but Mike sees himself as some sort of savior for the masses.* *Saving from what exactly I am not sure.* Until the board decides something needs to be done, you can post all the tidbits you want but in the end it doesn't mean much.
> 
> AM is a reckless CEO. Natural gas prices have tanked. That combo could spell trouble for CHK as we know it. Pretty much it and not much most of us can do about it.





> Vindicated for what? nothing has happened, the news ran with a story about AM legally taking out loans to finance his personal, legal working interest investments which many people have and will continue to do. The company is in crappy shape due to the nat gas price. You still sound like an over obsessive idiot.


There's a lot we can do. Raise your voice. Be heard. It's a public company running with a charter issued by the people of the state of Oklahoma - that's all of us. If we can't point out a rogue CEO and his shenanigans that put the company at risk, and therefore our city, - something is wrong. I'm not obsessive and I'm not trying to be a "savior for the masses." I post information about CHK and Aubrey Kerr McClendon and look what happens! Kill the messenger. I can only guess you work for CHK, PhiAlpha?




> You still sound like an over obsessive idiot.


That's an over-the-top personal attack. I'm neither obsessive about this nor an idiot. I'm surprised that remark is still on the board considering Pete has been posting here.

People can post all kinds of topics and go over things endlessly about things, but my "watchdog" posts re Chesapeake seem to really get to you.

----------


## okcpulse

GM fails, we bail them out.  A green car company fails in California, it isn't a blip on the radar.  When an ENERGY company makes a mistake, it is skewered, dragged before congress and lectured like a five year old child when oil prices are high or a CEO'S private business affairs are made public.  Sorry, I call BS.

There will be a shake up on the board, but at this point it is wait and see.

----------


## okcpulse

I honestly believe that Chesapeake has what it takes to move America to natural gas. It is very easy for a media outlet to angle a story to drive down the company's stock prices to make sure that doesn't happen.  It is just as easy for the media to manipulate the market as it is for speculators.

However, it is now up to CHK to make things right with its shareholders, or else things will go south.

----------


## MikeOKC

> GM fails, we bail them out.  A green car company fails in California, it isn't a blip on the radar.  When an ENERGY company makes a mistake, it is skewered, dragged before congress and lectured like a five year old child when oil prices are high or a *CEO'S private business affairs are made public.  Sorry, I call BS*.
> 
> There will be a shake up on the board, but at this point it is wait and see.


Why will there be a shake-up of the board if you don't think AKM did anything wrong? What he did is egregious!

There's too many here not reading anything but CHK's response. So much denial. So much killing the messenger.




> I honestly believe that Chesapeake has what it takes to move America to natural gas.* It is very easy for a media outlet to angle a story to drive down the company's stock prices to make sure that doesn't happen.  It is just as easy for the media to manipulate the market as it is for speculators.*
> 
> However, it is now up to CHK to make things right with its shareholders, or else things will go south.


So, this is a* media* conspiracy? This is just too much.

----------


## okcpulse

> Why will there be a shake-up of the board if you don't think AKM did anything wrong? What he did is egregious!
> 
> There's too many here not reading anything but CHK's response. So much denial. So much killing the messenger.
> 
> 
> 
> So, this is a* media* conspiracy? This is just too much.


There will be a shake up regardless of what think about McClendon. 

However, some outlets are good sources.  Wall Street Journal does their job, and I do agree with their assessment on CHK's debt, market cap and expenditures.  Not denying they are over-extended and believing all is rosy.  But why the massive media coverage on this and not other companies?

----------


## PhiAlpha

> So after the millionth story written about how interesting this company is you aren't the least bit concerned?


Concerned because of the natural gas market situation, yes. Concerned about an article that doesn't have anything to do with the company itself, no.  

AM is a risky CEO and the market is in bad shape for sure but he has been there before and it would be hard to believe they have not planned for poor market situations, especially after 2009. I work in the industry and have seen CHK acquiring large acreage positions in several emerging horizontal oil plays that we are chasing. The leases are much cheaper than those in the shale gas plays and CHK has the ability to drill them quicker and cheaper than many competitors due to owning their own large drilling fleet. In addition chk and most other companies have prepared for low gas price by hedging their gas. While their stock is taking a hit due to sub $2.00 mmbtu natural gas prices, they've locked it in and are marketing it at likely above $5 per mmbtu. Journalists can say what they want about chk but they will likely be fine in the long run. 

And no mike, I don't work for CHK. Your self proclaimed industry watch dog title and obsessiveness just annoy me.

----------


## PhiAlpha

> That's an over-the-top personal attack. I'm neither obsessive about this nor an idiot. I'm surprised that remark is still on the board considering Pete has been posting.


Wow did I hurt your feelings?

----------


## Maynard

> ---
> ---
> ---
> In addition chk and most other companies have prepared for low gas price by hedging their gas. While their stock is taking a hit due to sub $2.00 mmbtu natural gas prices, they've locked it in and are marketing it at likely above $5 per mmbtu. Journalists can say what they want about chk but they will likely be fine in the long run.


Unlike many others in the space, CHK is 'naked' for 2012 &2013 volumes -- no derivatives hedging; they get spot for oil & gas.

----------


## MikeOKC

> Wow did I hurt your feelings?


No, frankly, it just shows you are probably young and certainly rude and immature. Most of us here can debate in a civilized manner without calling people obsessive idiots and lowering ourselves to lash out against fellow posters. A lot of people might annoy many of us, but we don't start calling members of the forum names. This isn't high school. 

"Self-proclaimed industry watchdog?" That's BS. I consider myself a citizen watchdog of CHK - along with many others. Sorry it "annoys" you.

----------


## PhiAlpha

> No, frankly, it just shows you are probably young and certainly rude and immature. Most of us here can debate in a civilized manner without calling people obsessive idiots and lowering ourselves to lash out against fellow posters. A lot of people might annoy many of us, but we don't start calling members of the forum names. This isn't high school.


You can think what you want.




> "Self-proclaimed industry watchdog?" That's BS. I consider myself a citizen watchdog of CHK - along with many others. Sorry it "annoys" you.


Citizen watch dog of CHK, eh? Well go get 'em tiger!

----------


## soonerguru

> There will be a shake up regardless of what think about McClendon. 
> 
> However, some outlets are good sources.  Wall Street Journal does their job, and I do agree with their assessment on CHK's debt, market cap and expenditures.  Not denying they are over-extended and believing all is rosy.  But why the massive media coverage on this and not other companies?


Maybe it has something to do with the on-site Botox treatments.

----------


## dankrutka

I appreciate MikeOKC's contributions. He's being personally attacked for posting stories from multiple major media outlets. This dialogue is important. If you don't want to partake in it civilly then don't post. geez.

----------


## okcpulse

PhiAlpha and I are in the same industry, so it is easy for us to see things from a different perspective.  We see things that the media DOESN'T report.  Again, this is why I get irked when CHK is compared to Enron.  Thanks to Enron, we have Sarbanes-Oxley regulations to stick to.  If those are violated, we are talking millions of dollars in federal fines.

----------


## Doug Loudenback

> I don't like to self promote, but one Oklahoma publication, the Journal Record, has been covering all of these issues related to Chesapeake. We've covered McClendon's clashes with shareholders over the past two years and broke the story last November about McClendon repaying the company $12.1 million for his map collection as part of a legal settlement. You all should subscribe.     
> It should also be noted that the Oklahoman is also doing a much better job of covering these issues these days than they have in the past.


As well, perhaps the _Journal Record_ might rethink whether it requires people to pay to read. Sure, its your right, so whatever you do will be OK, but please don't think that just because something is covered  the _Journal Record_ that very many people know about it.

At the least, as a public service, how about providing some dates combined with bullet points which describe the Journal Record's coverage right here ... is that too much to ask?

----------


## David

> I appreciate MikeOKC's contributions. He's being personally attacked for posting stories from multiple major media outlets. This dialogue is important. If you don't want to partake in it civilly then don't post. geez.


I have to agree with KT on this.  Mike, don't ever change.

----------


## Doug Loudenback

The only thing I can say for sure after reading through the last 4 pages in this thread is that the outcome is hugely important to Oklahoma City. 

I've appreciated reading everything that Mike & OkcPulse and others have to say. But what I've not seen, but would like to, is for someone to intelligently and dispassionately put together a pro/con single piece so that numb-nut like me can gain a better grip on what's going/gone on.  I'm pretty much a blank slate and would value someone objectively placing the facts and issues side-by-side, if anyone is up to doing that. Something like ...

McClendon did this (whatever "this" is). "This" fact is undisputed.Some say that is wrong because .... some say it is not wrong because ...McClendon did that (whatever "that" is). "That" fact is disputed.Some say that is wrong because .... some say it is not wrong because ... 
... in other words, not as a debate but as a discussion. That would be most helpful.

----------


## OKCTalker

> But what I've not seen, but would like to, is for someone to intelligently and dispassionately put together a pro/con single piece so that numb-nut like me can gain a better grip on what's going/gone on.  I'm pretty much a blank slate and would value someone objectively placing the facts and issues side-by-side, if anyone is up to doing that. Something like ...
> 
> McClendon did this (whatever "this" is). "This" fact is undisputed.Some say that is wrong because .... some say it is not wrong because ...McClendon did that (whatever "that" is). "That" fact is disputed.Some say that is wrong because .... some say it is not wrong because ... 
> ... in other words, not as a debate but as a discussion. That would be most helpful.


Doug - This would be terrific, but CHK hasn't been forthcoming with information. Or more accurately, they have been so voluminous in their disclosures that no one can sort it all out. In the absence of information that people can understand, they're naturally left to speculate and make broad allegations such as "Where there's smoke there's fire." Analysts and journalists are smart people who are paid to process and articuate complicated industry information for the rest of us - and they're baffled. 

It is in CHK's DNA to withhold information, and in some cases - frankly - to lie. One case in point was when CHK Land initially sought to rezone and redevelop the Nichols Hills Plaza. The city asked for plans typically required in a PUD, but company reps - including their head of land & legal Henry Hood - denied that any plans had been prepared. Then Aubrey gave a newspaper interview stating that they had been working with national consultants on a development plan for years. 

CHK can make things clear when they want to, but that's rare, and their stock price suffers for it. When that happened in 2008, Aubrey's holdings were all but wiped out by a margin call, and its clear that he didn't learn from that painful lesson.

----------


## BoulderSooner

> So after the millionth story written about how interesting this company is you aren't the least bit concerned?


my concern is the same now as it was a month ago .. if nat gas prices stay below 2 for the next 5 years CHK is in real trouble ...   if they go back to 4 they are in good shape ... if they go back to 7 .. CHK will be one of the most profitable company's in america

----------


## Pete

I don't see prices moving much unless there is a change to our export laws, and that doesn't seem likely.

----------


## ereid

And it begins. First to sue... http://www.reuters.com/article/2012/...83J0QJ20120420

----------


## OKCTalker

> As well, perhaps the _Journal Record_ might rethink whether it requires people to pay to read. Sure, its your right, so whatever you do will be OK, but please don't think that just because something is covered  the _Journal Record_ that very many people know about it.


Doug - Not to hijack this thread, but I believe that the JR's pay wall and terms had unintentionally made them all but invisible. I sent an email to Ted several months ago but never received a reply. I advertise a bit in the JR so I have an interest in increasing their readership.

----------


## ou48A

> I don't see prices moving much unless there is a change to our export laws, and that doesn't seem likely.


Actually FERC just gave Cheniere Energy (LNG) regulatory approval to build the first Natural Gas export terminal.

 This project will have the capacity to export 3% of the nation’s NG supply. It will probably take 2 to 3 year before it comes on line. 

NG has been selling for 12 to 16 in China. XOM is building a large NG export terminal in   Papua New Guinea. XOM is participating in another NG export facility in Australia. There are other NG export facilities that will be coming on line in the world. There are large supplys of shale gas expected to be developed in a few years in China and Poland and in other areas of Europe where they had been importing part of their NG via LNG. 

In a few short years the world LNG market price is likely to be much lower.

Exports would help some but using more NG for electrical generation and transportation along with drastically lower dry NG drilling rates IMO offer the best opportunities to see sustained higher NG prices. A much better economy would also help.

----------


## adaniel

> my concern is the same now as it was a month ago .. if nat gas prices stay below 2 for the next 5 years CHK is in real trouble ...   if they go back to 4 they are in good shape ... if they go back to 7 .. CHK will be one of the most profitable company's in america


Expansions in Liquefied Natural Gas, particularly with developments like this probably means NG has bottomed out for the long term.  

As much as I think CHK has really put itself in bad positions, its way too early to stick a fork in them. Should they get through what will probably be a very rough patch the next few months, then they will be okay. They have got to make a plan to pay down their debt, though. Its unsustainable.

EDIT: ou48A beat me to it.

----------


## justinm

I'm a producer, so it would certainly help my bottom line if we could export nat gas and lower the domestic supply.  However, our gov't is crazy to allow us to export domestic energy resources.

----------


## ou48A

> However, our gov't is crazy to allow us to export domestic energy resources.


I would much rather see the NG kept at home....... but we have got to get so many other things right before 
companies are going to take big risk.

Think of the economic competitive advantage we would have in the world with our cheap abundant and secure supply of NG.
 We could create value added products cheaper and employ hundreds of thousands with good jobs.

If much of our delivery system used CNG/LNG for their fuel it would create even more prosperity with cheaper prices.
 It would almost be like a tax cut.

----------


## Bellaboo

> I don't see prices moving much unless there is a change to our export laws, and that doesn't seem likely.


Let there be another major hurricane in the Gulf,  such as Katrina, and prices will shoot to 13 bucks again, like they did in 2005.

God forbid.

----------


## ou48A

> Let there be another major hurricane in the Gulf,  such as Katrina, and prices will shoot to 13 bucks again, like they did in 2005.
> 
> God forbid.


That will not happen.
The supply situation is now drastically different for NG.

A bad hurricane season could send crude oil prices much higher though.

----------


## Doug Loudenback

While I still do not think that I have a good grip of the issues and/or facts involved, the national press is certainly bearing down today. See this link at Business/Bloomberg, the Wall Street Journal,  CNN Money, and locally even this Oklahoman link today, as examples.

I also add that I congratulate the _Oklahoman_, in this case its reporter J. F. Marks, for apparently being proactive in its reporting. Good reporting journalists and their employers, should have their names mentioned (as should those less worthy).

----------


## Bailey80

> As well, perhaps the _Journal Record_ might rethink whether it requires people to pay to read. Sure, its your right, so whatever you do will be OK, but please don't think that just because something is covered  the _Journal Record_ that very many people know about it.
> 
> At the least, as a public service, how about providing some dates combined with bullet points which describe the Journal Record's coverage right here ... is that too much to ask?



Well, I don't pretend that the JR has a very large subscriber base, but enough people are buying it to keep me employed anyway. My point was that we are reporting about the company's troubles. It irks me a little when people say that media outlets in the state aren't reporting on what is going on at Chesapeake, because we are. Here's some of our coverage over the past year. I challenge anybody to go through the Oklahoman archives and compare our coverage.  This is just a sampling. 

4-20-2012:*Chesapeake shareholder files lawsuit over McClendon loans*  (we posted multiple updates on our website through the day on this) 
http://journalrecord.com/2012/04/20/...-loans-energy/

4-18-2012: *Chesapeake defends McClendon loans* 
http://journalrecord.com/2012/04/18/...-loans-energy/

12-06-2012: *Shareholders: Chesapeake settlement ignores McClendons $75M bonus* http://journalrecord.com/2011/12/06/...ion-bonus-law/

November 2, 2011:* McClendon would repay Chesapeake $12.1 million as part of settlement* 
http://journalrecord.com/2011/11/02/...lement-energy/

October 19, 2011: *Chesapeake to settle shareholder lawsuit*
http://journalrecord.com/2011/10/19/...r-lawsuit-law/

September 9, 2011: I*nvestors sue McClendon over 2008 pay* http://journalrecord.com/2011/09/09/...ackage-energy/

June 10, 2011: *McClendon re-elected as Chesapeake chairman* http://journalrecord.com/2011/06/10/...y-firm-energy/

June 27, 2011: *McClendon fires back at news report of overstated reserves*
http://journalrecord.com/2011/06/27/...serves-energy/

June 3, 2011: *ISS: Dont reappoint McClendon to Chesapeake board of directors* 
http://journalrecord.com/2011/06/03/...ectors-energy/

April 29, 2011: *Chesapeake CEO draws $21M in 2010* http://journalrecord.com/2011/04/29/...n-2010-energy/

February 9, 2011: *Continental Resources sues Chesapeake over land deal* http://journalrecord.com/2011/02/09/...ne-bad-energy/

December 20, 2010: *Icahn builds stake in Chesapeake*
http://journalrecord.com/2010/12/20/...ompany-energy/

----------


## Easy180

Just your standard shareholders suing the CEO...Happens every day lol

----------


## ljbab728

It's interesting that the board of directors that some are saying should resign is heavy with former Republican political figures.

http://newsok.com/chesapeake-board-o...rticle/3668262

----------


## ou48A

> It's interesting that the board of directors that some are saying should resign is heavy with former Republican political figures.
> 
> http://newsok.com/chesapeake-board-o...rticle/3668262



It’s interesting that Aubrey was an Obama supporter in 2008

----------


## onthestrip

More negative news from Reuters today.
http://www.reuters.com/article/2012/...83M16Y20120423

----------


## Drake

> More negative news from Reuters today.
> http://www.reuters.com/article/2012/...83M16Y20120423


More? 

Isn't that the exact same article from last week?

----------


## Pete

No, this is a new article with new concerns being raised:




> CEO Aubrey K. McClendon has employed another way to cash in on a perk unique to the company he runs: He sold his share of two large energy plays at the same time the company divested its interest.
> 
> Analysts say the deals, which generated $6.5 billion in proceeds, pose a potential conflict because of the possibility that they could have been timed and structured to suit McClendon's personal interests, rather than those of the company he runs.

----------


## Drake

> No, this is a new article with new concerns being raised:


Ahh. My bad. Teach me to skim.

Well, it probably won't. : )

----------


## king183

> It's interesting that the board of directors that some are saying should resign is heavy with former Republican political figures.
> 
> http://newsok.com/chesapeake-board-o...rticle/3668262



By "heavy with" do you mean 2 of 9??? Or am I missing someone?

----------


## king183

> More negative news from Reuters today.
> http://www.reuters.com/article/2012/...83M16Y20120423


This story is more worrisome than the first one.  I know two people who are close to him and both say he's a megalomaniac.  I've never met the guy, so I have no idea if they're saying something everyone believes or if it's just them.  But Aubrey seems to have a consistent pattern of causing financial controversy with himself and his company. Pressure is building rapidly for him to step down.  If he truly is a megalomaniac, he won't do it.  Or if he's completely normal and he believes he's doing nothing out of the ordinary, he won't do it.  It'll be interesting to see what happens in the future. Hopefully, it's good for Chesapeake and OKC.

----------


## kevinpate

> By "heavy with" do you mean 2 of 9??? Or am I missing someone?


I count minimum of three former OK politicos ... Nickles, Keating, Hargis.  Don't know if any of the others were politicos here or elsewhere.

----------


## ljbab728

> By "heavy with" do you mean 2 of 9??? Or am I missing someone?


Note that I didn't say majority.  And, yes, I would call one third of the board heavy coming from one segment.

----------


## Maynard

Chesapeake to halt CEO's well ownership plan       04/26 07:49 AM

--------------------------------------------------------------------------------

NEW YORK, April 26 - Natural gas producer Chesapeake Energy Corp (CHK:$18.13,00$0.36,002.03%) said on Thursday it would halt a controversial program that gave company founder and chief executive Aubrey McClendon an ownership stake in its wells. 

The company, the nation's second-largest natural gas producer behind Exxon Mobil Corp, said it would not extend the "Founder Well Participation Program" beyond 2015. 

The move comes days after Reuters reported McClendon had borrowed as much as $1.1 billion against his 2.5 percent interest in wells received under that program. 

The loans, taken out over the past three years, were previously undisclosed to shareholders, analysts and academics said, raising concerns that McClendon's personal financial deals could compromise his fiduciary duty to Chesapeake.  The company's board is also reviewing financing arrangements between McClendon and third parties. "The board did not review, approve or have knowledge of the specific transactions engaged in by Mr. McClendon or the terms of those transactions," the company said.

Shares in the company fell 2.4 percent to $17.70 per share in premarket trading after the announcement.

----------


## Maynard

Fitch revises Chesapeake outlook -- Rating Outlook is revised to Stable from Positive, Affirms rtgs       04/26 08:55 AM

--------------------------------------------------------------------------------

    (The following statement was released by the rating agency)	
    April 26 - Fitch Ratings has revised the Rating Outlook for Chesapeake
Energy Corporation's (CHK:$18.26,00$0.13,000.72%)  long-term Issuer Default Rating (IDR)
to Stable from Positive and affirmed all of the company's ratings. A full list
of rating actions follows at the end of this release. Chesapeake has 	
approximately $13 billion of rated securities.	

The Outlook revision results primarily from the near and intermediate term weak 	
outlook for natural gas prices in the U.S. coupled with Chesapeake's still 	
aggressive spending plans in 2012. The current weakness in natural gas prices 	
has accelerated since just a couple of months ago with the 12 month NYMEX strip 	
decreasing by nearly 20% to $2.63/Mcf over that timeframe. These price 	
expectations will reduce earnings and cash flow significantly from last year's 	
level. Current capex and leasehold spending are expected to total approximately 	
$8.5-$9 billion with spending in the company's other segments expected to be 	
$2.5-$3.5 billion. Current spending plans are expected to result in a funding 	
gap of $7-8.5 billion, which is to be funded with asset sales and monetizations 	
potentially totaling $10 billion. The asset sale/monetizations figure was 	
approximately 30% of total enterprise value as recently as a few weeks ago.	

Liquidity is provided by the company's $4 billion senior secured revolver due 	
2015. Additionally, Chesapeake Midstream Operating, LLC has a $600 million 	
senior secured revolver due 2016 that it can utilize, and Chesapeake Oilfield 	
Operating, LLC has a $500 million senior secured facility that it can utilize. 	
However, these latter two borrowing capacities are limited by certain 	
restrictive provisions. Nearer-term maturities for Chesapeake are $464 million 	
in 2013 and $1.6 billion in 2015. Key covenants are primarily associated with 	
the senior secured credit facility and include maximum debt-to-book 	
capitalization (70% covenant threshold) and maximum total debt-to-EBITDA (4.0x 	
covenant level). 	

Balance sheet debt totaled approximately $10.6 billion at the yearend 2011. In 	
addition, the company has in the past sold approximately $6 billion of reserves 	
into Volumetric Production Payments (VPPs) that Fitch considers to have 	
debt-like characteristics and factors into its analysis for adjusted leverage. 	
In addition, Chesapeake also has convertible preferreds and non-controlling 	
interests in its capital structure totaling approximately $4 billion as of 	
yearend 2011. 	

The recent news regarding the personal borrowings by the company's CEO from the 	
same group that has invested in preferred interests in two of Chesapeake's 	
non-guarantor subsidiaries has raised issues regarding the potential for a 	
conflict of interest and lack of transparency among some stakeholders. The 	
borrowings and the lack of prior disclosure has focused a spotlight on the 	
company's Board of Directors and its oversight of the company. Given this recent	
news, Fitch believes stakeholders will have a higher level of expectations for 	
disclosure and transparency going forward.	

Given the reduction in near-term price expectations for natural gas, there 	
exists a potential shortfall or delay in some of the expected proceeds from the 	
remaining planned asset sales and monetizations this year. As such, a 	
significant reduction in capital spending may be warranted for the Outlook to 	
remain Stable. That said, Chesapeake has already completed or will complete soon	
approximately 25% of this year's $10 billion in planned assets 	
sales/monetizations and has a proven track record of successfully monetizing 	
assets in the past.	

Fitch has affirmed the ratings for Chesapeake as follows:	

--IDR at 'BB'; 	
--Senior unsecured debt at 'BB'; 	
--Senior secured revolving credit facility at 'BBB-';	
--Convertible preferred stock at 'B+'. 	

The Rating Outlook is revised to Stable from Positive.

----------


## onthestrip

Ouch. The hits keep on coming. Formal SEC investigation.
http://t.co/CzVUwm8M

----------


## OKCTalker

The Founder Well Participation Program is being ended, but not for another 3-1/2 years? 

Is it assumed that the $1.1 billion in personal borrowings went to pay for Aubrey's cost to participate in this program? If so, then isn't this a program that he can't afford to continue?

----------


## Maynard

> Ouch. The hits keep on coming. Formal SEC investigation.
> http://t.co/CzVUwm8M


*In*formal SEC investigation (which means CHK cannot be forced to produce documents).

----------


## Maynard

> Fitch revises Chesapeake outlook -- Rating Outlook is revised to Stable from Positive, Affirms rtgs       04/26 08:55 AM
> 
> ---
> ---
> ---
> ---



The following statement was released by the S&P rating agency -  04/26 01:43 PM

 Overview	
     -- U.S. natural gas producer Chesapeake Energy Corp. (CHK:$17.5801,$-0.5499,-3.03%)  has announced
that it is negotiating an early termination of the Founder Well Participation 	
Program (FWPP) after revelations about the CEO's personal transactions 	
revealed shortcomings in the company's existing corporate governance 	
practices. The board is currently reviewing financing agreements between the 	
CEO and third parties.	
     -- Turmoil resulting from these developments could hamper Chesapeake's 	
ability to meet the massive external funding requirements stemming from its 	
currently weak operating cash flow and continuing aggressive capital spending.	
     -- We are lowering our corporate credit and senior unsecured debt issue 	
ratings on Chesapeake to 'BB' from 'BB+', and lowering the ratings on two 	
affiliates--Chesapeake Oilfield Operating LLC and Chesapeake Midstream 	
Partners L.P. 	
     -- We are placing all these ratings on CreditWatch with negative 	
implications.	


Rating Action	
On April 26, 2012, Standard & Poor's Ratings Services lowered its ratings on 	
Oklahoma City-based Chesapeake Energy Corp. (CHK:$17.5801,$-0.5499,-3.03%) , including the corporate credit 	
rating to 'BB' from 'BB+', and lowered ratings on two related 	
entities--Chesapeake Oilfield Operating LLC and Chesapeake Midstream Partners 	
L.P. At the same time, we placed all these ratings on CreditWatch with 	
negative implications.	

Rationale	
The downgrade and CreditWatch placement reflect our view that recent 	
revelations about personal transactions undertaken by Chesapeake's CEO 	
relating to the company's unusual FWPP underscore shortcomings in Chesapeake 	
Energy Corp.'s (CHK:$17.5801,$-0.5499,-3.03%)  corporate governance practices. Under the FWPP, Chesapeake's 	
CEO, Aubrey McClendon can, before the beginning of each year, elect to take a 	
small (up to 2.5%, subject to certain restrictions) working interest in all of 	
the wells Chesapeake drills during that year. Recent press reports have 	
revealed that Mr. McClendon has obtained loans to fund his investments under 	
the FWPP from third parties (such as EIG Global Energy Partners LLC) who, at 	
the same time, were also significant participants in financing transactions 	
with Chesapeake. Mr. McClendon has also at times sold his interests in certain 	
fields, in conjunction with asset sales by Chesapeake. We believe these 	
transactions heighten the potential for unmanaged and unmonitored conflicts of 	
interest, or the perception thereof. Under the terms of the FWPP, there has 	
been no effective mechanism to protect against conflicts of interest, in our 	
view. Indeed, Chesapeake has previously stated that the company does not 	
review or approve financings of Mr. McClendon's personal assets, including his 	
FWPP interests. It is our understanding that Mr. McClendon has also been under 	
no obligation to disclose his dealings with third parties which also have 	
lending, investment, or advisory relationships with the company.  	

Chesapeake today has announced that its board and Mr. McClendon have committed 	
to negotiate the early termination of the FWPP, which otherwise would have 	
expired at the end of 2015. The company also announced that the Board is 	
reviewing financing arrangements between Mr. McClendon (and the entities 	
through which he participates in the FWPP) and any third party that has had a 	
relationship with the company in any capacity. The board has also confirmed 	
that it did not previously review, approve, or have knowledge of the specific 	
transactions engaged in by Mr. McClendon or the terms of those transactions. 	
In our view this represents a significant governance deficiency.	

Turmoil resulting from these developments--and from potential revelations 	
resulting from the board investigation--could hamper Chesapeake's ability to 	
meet the massive external funding requirements stemming from its currently 	
weak operating cash flow and aggressive capital spending. Chesapeake's 	
production is heavily skewed toward natural gas, and natural gas prices are 	
severely depressed at this time. Although hedge-related gains had been an 	
important support to Chesapeake's earnings and cash flow in recent years, the 	
company terminated its natural-gas related hedge positions in late 2011. 	
Chesapeake is in the midst of an extensive repositioning of its business mix, 	
placing more emphasis on production of crude oil and natural gas liquids 	
(collectively, liquids). The company's excellent drilling record and  large 	
acreage positions in the most promising North American liquids-rich basins 	
afford confidence about its ability to make this transition. 	

However, Chesapeake faces very large external funding requirements to sustain 	
the aggressive planned investment needed to effect its strategic shift. In its 	
investor presentation dated April 17, 2012, Chesapeake gave guidance of total 	
investment of $10.9 billion to $12.4 billion in 2012, and $10.5 billion to 	
$12.3 billion in 2013. This guidance encompasses well costs on proved and 	
unproved properties, acquisition of unproved properties, and investment in 	
oilfield services and midstream assets. Based on our estimates and price deck 	
assumptions (including natural gas price of $2.00/btu in 2012, $2.75 in 2013, 	
and $3.50 thereafter), we expect Chesapeake's funds from operations to total 	
only $3.4 billion to $3.8 billion in 2012 and $5.4 billion to $5.8 billion in 	
2013, implying massive internal funding shortfalls.  	

To help fund its planned investment, Chesapeake has stated that it is 	
targeting sales of proved and unproved properties, and monetization of 	
oilfield services, midstream, and other assets, totaling $10 billion to $12 	
billion in 2012, and $4.0 billion to $6.5 billion in 2013. Chesapeake is asset 	
rich, and it has been adept at structuring varied and innovative transactions 	
to generate funds, including outright asset sales, formation of joint ventures 	
(JVs), issuance of securities by a royalty trust and by newly formed 	
subsidiaries, and issuances of volumetric production payment (VPP) 	
obligations. However, Chesapeake's ability to continue executing such 	
transactions on favorable terms depends largely on capital market receptivity. 	
From our analytical perspective, some of the company's actions to raise funds 	
dilute the benefit of debt reduction, which it is also pursuing. Based on our 	
price deck, we anticipate that coverage metrics over the next two years will 	
be weak  even for the revised rating--with debt to EBITDA higher than 5x and 	
EBITDA of less than $4 billion in 2012 and less than $5 billion in 	
2013--before Chesapeake's liquids production increases sufficiently to offset 	
the effect of persisting depressed natural gas prices.	

CreditWatch	
As part of our CreditWatch review, Standard & Poor's will take account of the 	
conclusions of the board's investigation; the terms under which the FWPP is 	
terminated; Chesapeake's ongoing capital-raising initiatives; and potential 	
changes to its growth strategy, financial policies, and governance structure. 	
At this time, we cannot rule out further ratings downgrades of more than one 	
notch; for example, if we believe that asset monetization actions will fall 	
short of plans and that offsetting actions won't be taken to preserve 	
liquidity and  limit the increase in financial leverage.	

The ratings on Chesapeake Oilfield Operating LLC and Chesapeake Midstream 	
Partners L.P. are constrained by our ratings on Chesapeake, given the extent 	
of Chesapeake's ownership control over these entities, and the close business 	
ties between Chesapeake and these entities.	

Over time, we could elevate Chesapeake Midstream Partners L.P. ratings above 	
those of Chesapeake Energy (CHK:$17.5801,$-0.5499,-3.03%)  if it achieves greater customer diversity and 	
remains committed to conservative financial policies. However, given the large 	
list of future drop-down candidates from Chesapeake, we do not anticipate any 	
ratings separation.

----------


## Boomer3791

I was introduced to an attorney at an event last weekend who is part of the team representing a group of over 500 individual CHK shareholders who are in the midst of filing a lawsuit against AKM and the CHK Board. He told me flatly that Aubrey would be gone "in less than two weeks." At the time I thought he was crazy, but I'm beginning to think he may have been right. 

Have a look at this video from CNBC and listed to their investment analyist saying that Chesapeake is now in a "death spiral" and predicting that their stock will go below $10/share. http://www.cnbc.com/id/47192199

Scary stuff indeed.

----------


## Maynard

> I was introduced to an attorney at an event last weekend who is part of the team representing a group of over 500 individual CHK shareholders who are in the midst of filing a lawsuit against AKM and the CHK Board. He told me flatly that Aubrey would be gone "in less than two weeks." At the time I thought he was crazy, but I'm beginning to think he may have been right. 
> 
> Have a look at this video from CNBC and listed to their investment analyist saying that Chesapeake is now in a "death spiral" and predicting that their stock will go below $10/share. http://www.cnbc.com/id/47192199
> 
> Scary stuff indeed.


Their tradable convertible preferred stock, CHKPRD, is down -8.55% today setting a new 52-week low @ 73.25.  Par value is $100.

----------


## soonerguru

I'm doubting Aubrey will survive this. It's funny to me that those spineless jellyfish on the board of directors first stated they "approved" the loan guarantees, and are now saying they didn't. How credible is this? They must know the **** is hitting the fan and they don't want to be in front of the blades. What else is Chesapeake hiding?

What's worse is that AKM seems to think his investors' money is his money -- very reckless attitude (and altogether much too common among the 1% atop corporate America).

----------


## soonerguru

Can anyone who is more sophisticated in the world of corporate finance comment on whether this makes CHK more vulnerable to a takeover attempt? Obviously, the ramifications for OKC would be huge.

----------


## WilliamTell

burn baby burn....o wait, i mean drill baby drill...i get confused sometimes.

----------


## Maynard

> burn baby burn....o wait, i mean drill baby drill...i get confused sometimes.



From this past January in Sweetwater, Oklahoma.  Just sayin'.

----------


## Pete

CHK and it's Board are in a tough spot because they are getting heat over these CEO perks, which is hurting their stock, but by discontinuing the well participation program it's almost an admission that it was in fact inappropriate.


I can tell you that if McClendon is ousted or demoted, that will radically change how their campus and surrounding area will be developed.  All this real estate stuff has been his baby and let's face it, a very big chunk of their activity has had very little to do with their core business.  So, if he is no longer the decision maker, what happens to Nichols Hills Plaza and the hundreds of other properties they own all over town?  My guess is that over time they would all go back on the market.

But of course, the most important thing to OKC is that CHK survives without major reductions in staff or worse.  And they may be to the point where they need to move McClendon aside to aide their overall prospects.

----------


## Maynard

At the very least, there should be a separation of the CEO/Chairman role for Aubrey.

----------


## Boomer3791

> CHK and it's Board are in a tough spot because they are getting heat over these CEO perks, which is hurting their stock, but by discontinuing the well participation program it's almost an admission that it was in fact inappropriate.
> 
> 
> I can tell you that if McClendon is ousted or demoted, that will radically change how their campus and surround area will be developed.  All this real estate stuff has been his baby and let's face it, a very big chunk of their activity has had very little to do with their core business.  So, if he is no longer the decision maker, what happens to Nichols Hills Plaza and the hundreds of other properties they own all over town?  My guess is that over time they would all go back on the market.
> 
> But of course, the most important thing to OKC is that CHK survives without major reductions in staff or worse.  And they may be to the point where they need to move McClendon aside to aide their overall prospects.


If I worked for CHK, I can tell you'd I'd much rather have a job at the end of the day than a redeveloped NHP to enjoy on my lunch break, or a bunch of fancy buildings scattered all over town with my company's logo on them. If CHK is going to survive at all, they've got to turn the stock price around in a hurry and generate as much cash through asset sales as they can. Focus on the "saving the mothership" and forget about all the Nichols Hills real estate development, Rt. 66 convenience stores, boathouses, pet projects for Rand Elliott, and all the other silly sidelines to their core business. When you're riding high you can be the hero and play city planner all you want. But all of those "community enhancements" will only become monuments to failure if CHK goes belly-up. Ask anyone who lived in Houston when ENRON imploded. 

It may mean that a few hundred non-essential employees go looking for work in the short term, but it may save thousands of jobs in the years ahead. And I can tell you from personal experience, when it comes down to brass tacks, AKM will kill dozens of projects and jobs in a heartbeat if thats what it takes to keep the company afloat.

----------


## Boomer3791

http://www.marketwatch.com/story/cra...ank-2012-04-26

----------


## Pete

My biggest fear -- besides the company completely going away -- was that they would never get to the point of putting back anything in place of much of which they had bought and demolished.

But at least now Classen Curve is up, The Triangle properties are largely complete and they haven't messed up NH Plaza in any serious way, unless you want to count running out Crescent and the soda fountain (and you certainly could).

I wish they hadn't rushed to pull down Glenbrook Centre East, the Kensington Apartments and Kings Court Condos.  But if they never did any more development in OKC it wouldn't be the end of the world.


What's most important is that they don't implode and strand 5,000 well-paid employees in OKC alone.

----------


## soonerguru

The Oklahoman still has nothing about the SEC inquiry. Didn't they just bring on two energy reporters? How hard is it to relay to the public what has already been reported?

Of course, they run Chesapeake's press release verbatim. Quality work there.

----------


## betts

Chesapeake Energy Corp. CEO Aubrey McClendon has agreed to give up his right to invest in every well the company drills, the company announced Thursday.


Read more: http://newsok.com/chesapeake-to-end-...#ixzz1tBqUYNVZ

----------


## soonerguru

Betts,

We saw that piece. The commentary about the Oklahoman was about the fact they haven't mentioned the pending SEC inquiry, which was reported elsewhere. Here's a link to a piece in the International Business Times:

*SEC Starts Probe of Chesapeake CEO's Well Stakes*

http://www.ibtimes.com/articles/3337...ell-stakes.htm

----------


## ou48A

If CHK failed……

Many if not most corporate employees…… many of which have skills that are in very high demand……. would be able to find other good jobs… particularly if they were willing to move.

I suppose that some of CHK’s building could be converted to Apartments, condos, retail and office space. 

Somebody will be there to pick up the pieces and they would likely maintain at least some corporate presents.
Let’s hope for higher NG prices.

----------


## soonerguru

I think at this point what we should be hoping for is McClendon's ouster -- and a complete realignment of CHK's overpaid board. Investor confidence must be restored ASAP and the best way to do it is to cut the head off the snake. If confidence isn't restored CHK's stock is going to tank.

----------


## Questor

Chesapeake now in discussions to end founders well program early:

http://www.smartmoney.com/news/on/?s...=TheMotleyFool

----------


## ljbab728

> Betts,
> 
> We saw that piece. The commentary about the Oklahoman was about the fact they haven't mentioned the pending SEC inquiry, which was reported elsewhere. Here's a link to a piece in the International Business Times:
> 
> *SEC Starts Probe of Chesapeake CEO's Well Stakes*
> 
> http://www.ibtimes.com/articles/3337...ell-stakes.htm




It looks like it's covered a little more in depth here.




> Reuters also reported the U.S. Securities and Exchange Commission has opened an informal inquiry into the Chesapeake's well program, citing an unidentified source in the SEC's regional Fort Worth, Texas, office.
> 
> The SEC doesn't confirm or deny the existence of informal inquiries or investigations.
> 
> Danne Johnson, a law professor at Oklahoma City University, said investors shouldn't read too much into the SEC news. Johnson is a former staff attorney and branch chief for the SEC's Enforcement Division in New York City.
> 
> Johnson said informal inquiries are used to gather information by staff attorneys and aren't an indication that wrongdoing has occurred. The next step, a formal investigation, involves issuing subpoenas and compelling witnesses to testify.
> 
> “As a staff attorney, if the things you're able to collect look like you might need to spend a little more time, then you have to get permission from someone higher up in the enforcement division to open up a formal inquiry,” Johnson said.
> ...


And there is this.  It doesn't look like the Oklahoman is exactly avoiding any issues.

http://newsok.com/chesapeake-energy-...rticle/3670103

http://newsok.com/third-lawsuit-is-f...rticle/3670102

http://newsok.com/founder-difference...rticle/3670097

It looks like your concern about a lack of stories from two new energy reporters is being answered.

----------


## blangtang

*Boomer 3791 wrote:*

"If I worked for CHK, I can tell you'd I'd much rather have a job at the end of the day than a redeveloped NHP to enjoy on my lunch break, or a bunch of fancy buildings scattered all over town with my company's logo on them. If CHK is going to survive at all, they've got to turn the stock price around in a hurry and generate as much cash through asset sales as they can. Focus on the "saving the mothership" and forget about all the Nichols Hills real estate development, Rt. 66 convenience stores, boathouses, pet projects for Rand Elliott, and all the other silly sidelines to their core business. When you're riding high you can be the hero and play city planner all you want. But all of those "community enhancements" will only become monuments to failure if CHK goes belly-up. Ask anyone who lived in Houston when ENRON imploded."

*Blangtang writes:*  

Aubrey believes the assets are worth $100 Billion.  So the $10B debt load is insignificant in his mind.  I believe thats why he went to asia and the middle east to shop the assets, since he can't get a good deal on short term financing in the US.  He just has to get from here to there. this new insider dealing scandal just makes the getting from here to there all that more of a challenge.  

 I wonder if Icahn has made any statements on this whole ordeal.  Guys like that are usually an early indicator that something might be amiss, but alas, he flipped in and out and got his profit...

We need to come up with a list, something like, if everything goes to sh*t...at least...

I'll add, If everything goes to sh*t, at least we got a Whole Foods.

Here's another, If everything goes to sh*t, at least another Hobby Lobby sponsored "college" has a campus ready and waiting

----------


## betts

> Betts,
> 
> We saw that piece. The commentary about the Oklahoman was about the fact they haven't mentioned the pending SEC inquiry, which was reported elsewhere. Here's a link to a piece in the International Business Times:
> 
> *SEC Starts Probe of Chesapeake CEO's Well Stakes*
> 
> http://www.ibtimes.com/articles/3337...ell-stakes.htm


I wasn't trying to indicate the DOK had covered everything well.  I was just posting a new story that I hadn't noticed in this thread.  It looked like it was news, that's all.  But, I rarely read this forum so I might have missed it.

----------


## OKCTalker

Wall Street Journal reporting that the board disagrees with CHK attorney Henry Hood's statement that they knew everything. From 4/27/2012 WSJ: 

Just last week, Chesapeake Energy Corp.'s CHK -1.87%general counsel, Henry Hood, said the company's board of directors was "fully aware of the existence" of Chief Executive Aubrey McClendon's financing transactions. 

Thursday, the company backtracked, saying that it wished "to clarify" that statement.

While the board was "generally aware" that Mr. McClendon used his personal stakes in Chesapeake oil and gas wells as collateral for loans, the company said in a statement, it didn't know about specific transactions.

The shift signals that the board is trying to back away from Mr. McClendon's financial activities, corporate-governance experts said. Some of them also said it was unusual for a board to take issue with the company's lawyer in such a public fashion.

The board is "seeking to distance itself from the sweeping endorsement suggested by the general counsel's earlier statement," said Harvard Law School professor Lucian Bebchuk, adding that the board now seems to appreciate "the necessity of a more careful and detailed review of the transactions than has been undertaken in the past."

Neither the board nor Mr. Hood responded to requests for comment.

----------


## Boomer3791

For those of you who haven't seen it, OKC made the front page of the NY Times today, thanks to AKM: http://www.nytimes.com/2012/04/27/bu...1&ref=business

Also, here's another article worth reading: http://seekingalpha.com/article/5359...sapeake-energy

----------


## wsucougz

This can't be legal:

http://finance.yahoo.com/news/exclus...195836453.html

Spotlight is on, now.  Gotta figure the real estate dealings are going to come to light.  $50 million on Classen Curve alone, I bet.

----------


## Easy180

Think it is safe to say that the writing is on the wall for ole Aubrey to downsize to a position within the company that doesn't have 1000 spotlights shining on it

----------


## Pete

> Spotlight is on, now.  Gotta figure the real estate dealings are going to come to light.  $50 million on Classen Curve alone, I bet.


Nobody has tracked this better than yours truly.  I have a comprehensive database of all their purchases and how they contrast with the last sale and/or market value.  I also track all their building permits.

It's only a matter of time before these issues get the focus of a media increasingly anxious to add more fuel to the fire.

Frankly, it's amazing to me that a $12 million map collection becomes part of a shareholder lawsuit and no one has bothered to notice they've spent about a billion dollars on real estate, a good portion of which being completely outside the scope of their core business.  And what about things like the sponsorship of the OKC Arena?  For a company that doesn't sell to end consumers, I can't imagine how they can make a business case for spending $3 million for each of the next 12 years (it actually escalates 3% each year, meaning by the end of the contract they will be paying $4.2 mil).


I'm sure the reason no one has made an issue of the real estate is because 1) it involves thousands of separate pieces of information; and 2) the company itself never talks about it.

----------


## ljbab728

An attempt at damage control?

http://newsok.com/aubrey-mcclendon-i...rticle/3670438

I wonder if this would have happened without the current controversies.

----------


## OUGrad05

> I think at this point what we should be hoping for is McClendon's ouster -- and a complete realignment of CHK's overpaid board. Investor confidence must be restored ASAP and the best way to do it is to cut the head off the snake. If confidence isn't restored CHK's stock is going to tank.


McClendon definitely needs to go, I agree you've gotta restore investor confidence and put the company on a path of sustainability that doesn't require billions from investors outside the country...



> *Boomer 3791 wrote:*
> 
> "If I worked for CHK, I can tell you'd I'd much rather have a job at the end of the day than a redeveloped NHP to enjoy on my lunch break, or a bunch of fancy buildings scattered all over town with my company's logo on them. If CHK is going to survive at all, they've got to turn the stock price around in a hurry and generate as much cash through asset sales as they can. Focus on the "saving the mothership" and forget about all the Nichols Hills real estate development, Rt. 66 convenience stores, boathouses, pet projects for Rand Elliott, and all the other silly sidelines to their core business. When you're riding high you can be the hero and play city planner all you want. But all of those "community enhancements" will only become monuments to failure if CHK goes belly-up. Ask anyone who lived in Houston when ENRON imploded."
> 
> *Blangtang writes:*  
> 
> Aubrey believes the assets are worth $100 Billion.  So the $10B debt load is insignificant in his mind.  I believe thats why he went to asia and the middle east to shop the assets, since he can't get a good deal on short term financing in the US.  He just has to get from here to there. this new insider dealing scandal just makes the getting from here to there all that more of a challenge.  
> 
>  I wonder if Icahn has made any statements on this whole ordeal.  Guys like that are usually an early indicator that something might be amiss, but alas, he flipped in and out and got his profit...
> ...


In Aubrey's mind it may be insignificant...but reports from just a few weeks ago was the company was going to be 3.5B short on cashflow this year.  That's a big hole to plug.  His assets may ultimately be worth 100B but given current pricing and medium term industry dynamics with a glut of gas and hundreds of rigs just waiting to jump in if prices rebound...seeing long term $10, $12 or $15/mcf is not realistic.  $5 to 7 is far more realistic once the current glut is worked off....



> Nobody has tracked this better than yours truly.  I have a comprehensive database of all their purchases and how they contrast with the last sale and/or market value.  I also track all their building permits.
> 
> It's only a matter of time before these issues get the focus of a media increasingly anxious to add more fuel to the fire.
> 
> Frankly, it's amazing to me that a $12 million map collection becomes part of a shareholder lawsuit and no one has bothered to notice they've spent about a billion dollars on real estate, a good portion of which being completely outside the scope of their core business.  And what about things like the sponsorship of the OKC Arena?  For a company that doesn't sell to end consumers, I can't imagine how they can make a business case for spending $3 million for each of the next 12 years (it actually escalates 3% each year, meaning by the end of the contract they will be paying $4.2 mil).
> 
> 
> I'm sure the reason no one has made an issue of the real estate is because 1) it involves thousands of separate pieces of information; and 2) the company itself never talks about it.


They've long had operations outside their core business.  This isn't necessarily bad if it's done responsibly.  CHK going belly up and laying off 4,500 workers in OKC would be devastating to the city.  I do not think CHK will go bankrupt...they may be forced to firesale some assets but BK seems unlikely at this point unless there's something big we haven't seen yet.  

I'm more surprised the city has let them continue development over such a large and spread out area.  The city council should have stopped this long ago...IF CHK were to go belly up and pack it up it would leave a LARGE blighted area in a very nice area of the metro.

----------


## BoulderSooner

large yes blighted  no ...

----------


## jn1780

> I'm more surprised the city has let them continue development over such a large and spread out area.  .


Yeah, I don't want the city trying to determine who is doing "good business" and who is not because frankly they would suck at it. If the city is to deny a company to expand it should only be because it doesn't help the city in becoming more urban. 

Even if Cheaspeake failed they still are indirectly the cause for a lot of other businesses and development coming into town. 

Which it is doubtful they would fail. Takeover on the other hand......

----------


## Maynard

> At the very least, there should be a separation of the CEO/Chairman role for Aubrey.




Chesapeake's McClendon To Relinquish Chairman Role       05/01 

--------------------------------------------------------------------------------

--Chesapeake board moves to separate chairman, CEO roles amid investor criticism

--McClendon agreed with the move, board says

--Chesapeake shares soar

(Updates with new details, analyst and shareholder comment and fresh share price) 

By Angel Gonzalez and Ben Lefebvre

Of DOW JONES NEWSWIRES 

Relenting to investor pressure, Chesapeake Energy Corp.'s (CHK:$19.79,00$1.35,007.32%) board and Chief Executive Aubrey McClendon agreed to separate the roles of CEO and chairman, and announced an early termination of a controversial participation program that gave McClendon stakes in thousands of oil and gas wells.

McClendon will remain as CEO, but he will relinquish his role as chairman to a yet-unnamed non-executive chairman.

The board intends to consider candidates "with no previous substantive relationship with Chesapeake," adding it will be soliciting input from major shareholders.

Shares soared more than 10% after the announcement and were trading up 6.51% at $19.64 in mid-morning trading.

The move comes after news reports revealed that McClendon used stakes acquired in the well participation program to borrow up to $1.4 billion, some of that amount from financial institutions that had done business with Chesapeake.

The news cost Chesapeake billions in market capitalization and gave fresh fuel to long-standing criticism that the board was giving McClendon too much power. Some analysts for a long time have warned that the company's financial structure and liquidity concerns could present a risk for shareholders; after the information about the loans came out, they heightened their calls for a reform of the board or even McClendon's ouster.

"Without the chairmanship, my guess is (McClendon's) influence over that board would be diminished," said Morningstar analyst Mark Hanson in a recent interview.

The well participation program had provided McCLendon with the right to participate and invest as a working interest owner of up to 2.5% in new wells. Chesapeake said Tuesday that McClendon will receive no compensation of any kind in connection with the contract's early termination.

"The board appreciates Aubrey's cooperation in these measures and has confidence in Chesapeake's future," said Merrill A. Miller Jr., Chesapeake's lead independent director.

The nine-member board includes a former Oklahoma senator, a former Oklahoma governor and the current president of Oklahoma State University. The only board members below the age of 60 are McClendon, the scion of a prestigious Oklahoma family, and Kathleen Eisbrenner, the board's first and only woman. All but two of the directors receive more than $550,000 a year from Chesapeake.

O. Mason Hawkins, head of Southeastern Asset Management, the largest holder of Chesapeake shares, said in the Chesapeake release that his firm is "pleased that the Board has listened to our input."

"Aubrey was right to recognize that these actions are in the best interests of the Company and its shareholders," Hawkins said.

Chesapeake's aggressive push to develop gas and oil from shale rocks has helped create a U.S. energy boom. It and other companies have been so successful at finding natural gas that the price of the fuel recently hit a 10-year low. But low natural-gas prices have pushed Chesapeake's share price down 45% over the past year, as have concerns about corporate governance, debt and financial complexity.

----------


## knightrider

Looks like AKM is out as Chairman.  This is good news from shareholder standpoint. He'll still be "very involved" with the board I'm sure. 

http://dealbook.nytimes.com/2012/05/...r=yahoofinance

----------


## Urban Pioneer

Per KOSU Aubrey is out.

----------


## Pete

Out only as chairman of the board; he's still the CEO.

This is a move in the right direction.  It will be interesting to see if he can hang onto the CEO role, especially with a new chairman who is likely to be hired from the outside.

----------


## Easy180

> Out only as chairman of the board; he's still the CEO.
> 
> This is a move in the right direction.  It will be interesting to see if he can hang onto the CEO role, especially with a new chairman who is likely to be hired from the outside.



Yep. If their dealings continue to get hammered he will be out as CEO as well...Little bit of hoping for the best with this move but we all know that rarely turns out well

----------


## BoulderSooner

he 100% had his choice of which roll to take ... he could have stayed as chairmen ... and given the CEO job to someone else ..

----------


## HewenttoJared

http://www.reuters.com/article/2012/...8400RI20120501

----------


## OUGrad05

> large yes blighted  no ...


I'll be in Denver tonight (noticing your name  :Smile:  )
If the buildings were abandoned that would qualify as blighted in my book...but that's not likely to happen...



> Yeah, I don't want the city trying to determine who is doing "good business" and who is not because frankly they would suck at it. If the city is to deny a company to expand it should only be because it doesn't help the city in becoming more urban. 
> 
> Even if Cheaspeake failed they still are indirectly the cause for a lot of other businesses and development coming into town. 
> 
> Which it is doubtful they would fail. Takeover on the other hand......


CHK has plenty of operating margins to service debt if they'd just scale back their absurd capex budgets to a more normal and sustainable level.  I don't see CHK going anywhere and there's no reason for them to go belly up or get taken over unless there's some skeleton in a closet we don't know about it.  That seems unlikely...

----------


## Maynard

Chesapeake Energy Corporation Reports Financial and Operational Results for the 2012 First Quarter -- Q1 loss 11c a share vs 32c a share loss 

Company Reports 2012 First Quarter Net Loss to Common Stockholders of $71 Million, or $0.11 per Fully Diluted Common Share, on Revenue of $2.4 Billion; Company Reports Adjusted Net Income Available to Common Stockholders of $94 Million, or $0.18 per Fully Diluted Common Share, Adjusted Ebitda of $838 Million and Operating Cash Flow of $910 Million       

05/01 03:07 PM


*2012 First Quarter Average Daily Total Production of 3.658 Bcfe per Day -- Increases 18% Year over Year and 2% sequentially, despite voluntary net natural gas curtailments of 30 Bcf (54 Bcf Gross) during February and March; 2012 First Quarter Daily Liquids Production Increases 69% YOY and 7% sequentially to 113,600 Bbls per Day; liquids production reaches 19% of total production and 61% of unhedged natural gas and liquids revenue.

Company adds new net proved reserves of approximately 1.8 Tcfe, or 300 Mmboe, through the drillbit in the 2012 first quarter at a drilling and completion cost of only $1.19 per Mcfe, or $7.14 per Boe.

Company has completed $2.6 billion of asset monetizations YTD and is on track to complete an expected $11.5-14.0 billion of total asset monetizations in 2012; proceeds expected to fully fund 2012 capital expenditure budget and reduce long-term debt to the 25/25 plan goal of $9.5 billion by year-end 2012.

Company plans to significantly reduce capital expenditures for drilling, completion and leasehold from 1Q 2012 levels during remainder of 2012 and in 2013.

--------------------------------------------------------------------------------

OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation (CHK:$19.60,00$1.16,006.29%) today announced financial and operational results for the 2012 first quarter. For the 2012 first quarter, Chesapeake reported a net loss to common stockholders of $71 million ($0.11 per fully diluted common share), ebitda of $597 million (defined as net income (loss) before income taxes, interest expense, and depreciation, depletion and amortization) and operating cash flow of $910 million (defined as cash flow from operating activities before changes in assets and liabilities) on revenue of $2.419 billion and production of 333 billion cubic feet of natural gas equivalent (bcfe). 

The company’s 2012 first quarter results include various items that are typically not included in published estimates of the company’s financial results by certain securities analysts. Excluding such items for the 2012 first quarter, Chesapeake reported adjusted net income to common stockholders of $94 million ($0.18 per fully diluted common share) and adjusted ebitda of $838 million. The primary excluded item from the 2012 first quarter reported results is a net unrealized noncash after-tax mark-to-market loss of $167 million resulting from the company’s natural gas, liquids and interest rate hedging programs.

Management Comments

Aubrey K. McClendon, Chesapeake’s Chairman and Chief Executive Officer, said, “We are focused on executing our transformation to a more balanced asset base between liquids and natural gas and believe our business has strong momentum despite a challenging environment with natural gas prices at 10-year lows. This quarter continued to see strong liquids production growth as we accelerate our ongoing shift to liquids, continuing success in keeping finding costs low, and the addition of a substantial amount of new proved reserves. This year’s capital expenditures will be front-end loaded, and for the remainder of the year we expect a significant decrease from the first quarter’s peak capital expenditure levels as we further reduce drilling activity in dry natural gas plays and reduce spending on new leasehold. We will continue to implement our 25/25 Plan, including reducing overall debt to $9.5 billion by year-end 2012, monetizing the portions of our asset base where we are not a #1 or #2 producer, and continuing to increase our exposure to liquids. We believe Chesapeake has built the nation’s best collection of resource-rich E&P assets, and we remain focused on realizing their growth and value for our shareholders.” 

2012 First Quarter Average Daily Total Production of 3.658 Bcfe per Day Increases 18% Year over Year and 2% Sequentially, Despite Voluntary Net Natural Gas Curtailments of 30 Bcf (54 Bcf Gross) during February and March; 2012 First Quarter Daily Liquids Production Increases 69% Year over Year and Reaches 19% of Total Production and 61% of Unhedged Natural Gas and Liquids Revenue

Chesapeake’s daily production for the 2012 first quarter averaged 3.658 bcfe, an increase of 2% from the average 3.596 bcfe produced per day in the 2011 fourth quarter and an increase of 18% from the average 3.107 bcfe produced per day in the 2011 first quarter. Chesapeake’s average daily production of 3.658 bcfe for the 2012 first quarter consisted of approximately 2.976 billion cubic feet of natural gas (bcf) (81% on a natural gas equivalent basis) and approximately 113,600 barrels (bbls) of oil and natural gas liquids (collectively “liquids”) (19% on a natural gas equivalent basis). During February and March, the company voluntarily curtailed 54 bcf of gross natural gas production, or an average of approximately 900 million cubic feet (mmcf) per day, resulting in net curtailments to Chesapeake of 30 bcf, or approximately 330 mmcf per day of natural gas production spread across the entire quarter. For the 2012 first quarter, the company’s year-over-year growth rate of natural gas production was 10%, or approximately 272 mmcf per day, and its year-over-year growth rate of liquids production was 69%, or approximately 46,400 bbls per day. The company’s percentage of revenue from liquids in the 2012 first quarter was 61% of total unhedged natural gas and liquids revenue, compared to 47% in the 2011 fourth quarter and 34% in the 2011 first quarter. 

As a result of reduced drilling activity in 2012 and 2013 on its dry natural gas plays, Chesapeake is projecting a decline in its natural gas productive capacity in 2013 of approximately 12% after adjusting for estimated net voluntary production curtailments of approximately 80 bcf in 2012. 

Average Realized Prices and Hedging Results Detailed

Average prices realized during the 2012 first quarter (including realized gains or losses from natural gas and oil derivatives, but excluding unrealized gains or losses on such derivatives) were $2.35 per thousand cubic feet of natural gas (mcf) and $67.92 per bbl, for a realized natural gas equivalent price of $4.02 per thousand cubic feet of natural gas equivalent (mcfe). Realized gains from natural gas and liquids hedging activities during the 2012 first quarter generated a $0.58 gain per mcf and a $3.99 loss per bbl, respectively, for a 2012 first quarter realized hedging gain of $117 million, or $0.35 per mcfe. 

By comparison, average prices realized during the 2011 first quarter (including realized gains or losses from natural gas and oil derivatives, but excluding unrealized gains or losses on such derivatives) were $5.31 per mcf and $63.20 per bbl, for a realized natural gas equivalent price of $5.99 per mcfe. Realized gains from natural gas and liquids hedging activities during the 2011 first quarter generated a $2.07 gain per mcf and a $2.88 loss per bbl, respectively, for a 2011 first quarter realized hedging gain of $488 million, or $1.74 per mcfe. 

The company’s realized cash hedging gains since January 1, 2006 have been $8.5 billion, or $1.52 per mcfe. 

Chesapeake’s Leasehold and 3-D Seismic Inventories Total 15.6 Million Net Acres and 31.8 Million Acres, Respectively; Risked Unproved Resources in the Company’s Inventory Total 112 Tcfe; Unrisked Unproved Resources Total 348 Tcfe

Since 2000, Chesapeake has built the largest combined inventories of onshore leasehold (15.6 million net acres) and 3-D seismic (31.8 million acres) in the U.S. The company has also accumulated the largest inventory of U.S. natural gas shale play leasehold (2.2 million net acres) and owns a leading position in 11 of what Chesapeake believes are the Top 15 unconventional liquids-rich plays in the U.S. – the Eagle Ford Shale in South Texas; the Utica Shale in the Appalachian Basin; the Granite Wash, Cleveland, Tonkawa and Mississippi Lime plays in the Anadarko Basin; the Avalon, Bone Spring, Wolfcamp and Wolfberry plays in the Permian Basin; and the Niobrara Shale in the Powder River Basin. In addition, Chesapeake also owns a #1 position in three of the best unconventional natural gas plays in the U.S. – the Marcellus, Haynesville and Bossier shales – and a #2 position in the Barnett Shale. 

On its leasehold inventory, Chesapeake has identified an estimated 20.9 trillion cubic feet of natural gas equivalent (tcfe) of proved reserves (using volume estimates based on the 10-year average NYMEX strip prices as of March 31, 2012 as compared to 19.8 tcfe using SEC pricing), 112 tcfe of risked unproved resources and 348 tcfe of unrisked unproved resources. The company is currently using 154 operated drilling rigs to further develop its inventory of approximately 39,400 net risked drillsites. Of Chesapeake’s 154 operated rigs, 131 are drilling wells primarily focused on developing unconventional liquids-rich plays and 23 are drilling wells primarily focused on unconventional natural gas plays. To reduce capital expenditures during the remainder of 2012 and in 2013 by a combined $750 million at the midpoint, the company is reducing its drilling activity from a peak in the 2011 fourth quarter of 172 operated rigs to less than 125 operated rigs by the third quarter of 2012 and plans to average approximately 130 operated rigs in 2013 assuming natural gas prices remain at depressed levels. 


In recognition of the value gap between liquids and natural gas prices, Chesapeake has directed a significant portion of its technological and leasehold acquisition expertise during the past three years to identify, secure and commercialize new unconventional liquids-rich plays. To date, Chesapeake has built leasehold positions and established production in multiple unconventional liquids-rich plays on approximately 6.8 million net leasehold acres with 1.0 billion bbls of oil equivalent (bboe) (or 6 tcfe) of proved reserves, 8.1 bboe (or 49 tcfe) of risked unproved resources and 30.8 bboe (or 185 tcfe) of unrisked unproved resources based on the company’s internal estimates. 

Company Has Completed $2.6 Billion of Asset Monetizations Year to Date and is on Track to Complete an Expected $11.5-14.0 Billion of Total Asset Monetizations in 2012; Proceeds Expected to Fully Fund 2012 Capital Expenditure Budget and Reduce Long-Term Debt to the 25/25 Plan Goal of $9.5 Billion by Year-End 2012

Chesapeake has completed $2.6 billion of asset monetizations in the first four months of 2012. In March 2012, the company completed the sale of preferred shares of a newly formed unrestricted, non-guarantor consolidated subsidiary, CHK Cleveland Tonkawa, L.L.C. (CHK C-T), and a 3.75% overriding royalty interest in the first 1,000 new net wells to be drilled on CHK C-T leasehold and certain wells contributed at closing, for gross proceeds of $1.25 billion. Also in March 2012, Chesapeake completed the sale of a 10-year volumetric production payment (VPP) for proceeds of approximately $745 million, or approximately $4.68 per mcfe, for certain producing assets in its Anadarko Basin Granite Wash play. The transaction included approximately 160 bcfe of proved reserves and current net production of an estimated 125 million cubic feet of natural gas equivalent (mmcfe) per day. Including this transaction, the company has completed 10 VPP transactions since December 2007 and, in doing so, has sold approximately 1.37 tcfe of proved reserves for combined proceeds of approximately $6.4 billion, or approximately $4.65 per mcfe, which is nearly 300% more than the company’s current drilling and completion cost per mcfe. In addition, in April 2012, Chesapeake closed the sale of approximately 58,400 net acres of leasehold and current daily production of approximately 25 mmcfe per day in the Texoma Woodford play to XTO Energy Inc., a subsidiary of Exxon Mobil Corporation (XOM:$87.04,00$0.70,000.81%) , for approximately $572 million after certain deductions and closing costs. 

The company remains on track to complete additional asset monetizations of $9-11.5 billion during 2012. The planned asset monetizations include the sale of the company’s Permian Basin assets, a joint venture in the Mississippi Lime, a VPP in the Eagle Ford Shale and the sale of various non-core oil and gas assets, as well as partial monetizations of the company’s oilfield services, midstream and/or other assets. The company’s monetization program is designed to fully fund the company’s 2012 capital expenditure program and reduce the company’s long-term debt to the 25/25 Plan goal of $9.5 billion by year-end 2012. 

Operational Update

In response to stronger U.S. oil prices than natural gas prices, during the past four years Chesapeake has substantially shifted its drilling and completion activity to liquids-rich plays. During 2012 and 2013, the company projects that only approximately 16% and 8%, respectively, of its total drilling and completion capital expenditures will be invested in dry natural gas plays. The company continues to achieve strong operational results in its liquids-rich plays, particularly in the key plays highlighted below. 

Eagle Ford Shale (South Texas):Chesapeake’s activities in the Eagle Ford Shale continue to generate strong results as the company further delineates its 475,000 net acre leasehold position. Approximately 30% and 40% of the company’s 2012 and 2013 drilling budgets, respectively, have been allocated to the Eagle Ford Shale. The company’s production from the play is growing steadily and substantially. Production for the 2012 first quarter averaged approximately 23,000 barrels of oil equivalent (boe) per day, up 35% sequentially compared to the 2011 fourth quarter. Approximately 55% of total Eagle Ford production during the 2012 first quarter was oil, 20% was natural gas liquids (NGL) and 25% was natural gas. Year to date, Chesapeake’s gross operated oil production in the Eagle Ford Shale has more than doubled from 25,000 bbls per day at the beginning of 2012 to approximately 55,000 bbls per day at the end of April 2012. The growth has been achieved as a result of increased infrastructure and takeaway capacity as well as improved lateral steering, enhanced stimulation optimization and increased operational efficiencies. During the 2012 first quarter, the company brought on line more than 60 wells, including eight wells with peak rates of more than 1,000 bbls per day of oil. The company has secured pipeline transportation capacity for all of its projected Eagle Ford shale oil production with pipeline projects scheduled to become operational between May 2012 and January 2013 which will enable significant transportation cost savings relative to truck transportation alternatives. During the 2012 first quarter, approximately $150 million of Chesapeake’s drilling costs in the Eagle Ford were paid for by its JV partner, CNOOC. Chesapeake is currently operating 35 rigs in the play and plans to average 30 rigs in 2012. 

Three notable recent wells completed by Chesapeake in the Eagle Ford during the quarter are as follows: 

The McKenzie D 3H in McMullen County, TX achieved a peak rate of 1,390 bbls of oil, 60 bbls of NGL and 0.6 mmcf of natural gas per day, or approximately 1,540 boe per day; 
Blakeway Unit B Dim 1H in Dimmit County, TX achieved a peak rate of 1,200 bbls of oil, 90 bbls of NGL and 0.8 mmcf of natural gas per day, or approximately 1,420 boe per day; and 
The Lazy A Cotulla M 3H in Dimmit County, TX achieved a peak rate of 1,020 bbls of oil, 35 bbls of NGL and 0.3 mmcf of natural gas per day, or approximately 1,115 boe per day. 
Mississippi Lime (northern Oklahoma, southern Kansas):Chesapeake’s approximate 2.0 million net acres of leasehold is the largest position in the Mississippi Lime play. Production for the 2012 first quarter averaged 12,800 boe per day, up 22% sequentially compared to the 2011 fourth quarter. Approximately 40% of total Mississippi Lime production during the 2012 first quarter was oil, 15% was NGL and 45% was natural gas. The company has drilled 130 horizontal producing wells since 2009 with results that have been attractive and consistent. Well costs in the Mississippi Lime play are more than 50% less than typical wells in the Bakken play, resulting in very strong rates of return for the Mississippi Lime Play. The company is currently operating 22 rigs in the play and will maintain that level throughout the remainder of 2012. Chesapeake is currently pursuing a joint venture transaction on its leasehold and expects to announce a transaction in the next few months. 

Three notable recent wells completed by Chesapeake in the Mississippi Lime during the quarter are as follows: 

The Rudy 20-26-13 1H in Woods County, OK achieved a peak rate of 325 bbls of oil, 150 bbls of NGL and 2.8 mmcf of natural gas per day, or approximately 950 boe per day; 
The Leeper Trust9-25-12 1H in Alfalfa County, OK achieved a peak rate of 525 bbls of oil, 70 bbls of NGL and 2.0 mmcf of natural gas per day, or approximately 930 boe per day; and 
H J Davis 24-29-10 1H in Alfalfa County, OK achieved a peak rate of 640 bbls of oil, 40 bbls of NGL and 1.2 mmcf of natural gas per day, or approximately 880 boe per day. 
Utica Shale (eastern Ohio, western Pennsylvania and northwestern West Virginia):Chesapeake’s activity level is expected to continue rising as the company develops its most recent large-scale liquids-rich play discovery. The company has approximately 1.3 million acres of leasehold in the play, is currently operating 10 rigs and plans to average 13 rigs in 2012 and 22 rigs in 2013. The company’s initial development focus in the play has been in the wet gas window. Chesapeake has drilled a total of 59 wells in the play, of which nine are currently producing, 15 are currently being completed, 15 are waiting on completion and 20 are waiting on pipeline infrastructure. Of the nine producing wells, eight are in the wet gas window of the play. On a post-processing basis, peak rates from the wet gas window of the play have averaged approximately 415 bbls of oil, 260 bbls of NGL and 3.9 mmcf of natural gas per day, or approximately 1,325 boe per day. The company’s best Utica well, the Buell 8H in Harrison County, OH had an initial peak rate of more than 3,000 boe per day in September 2011, with roughly half the production from liquids. The Buell well is currently producing at a rate of 1,040 boe per day, and the company believes the well will have an estimated ultimate recovery (EUR) of at least 575,000 bbls of liquids and 13 bcf of natural gas. 

Three notable recent wells completed by Chesapeake in the Utica are as follows: 

The Shaw 5H in Carroll County, OH achieved a peak rate of 770 bbls of oil, 180 bbls of NGL and 2.9 mmcf of natural gas per day, or approximately 1,440 boe per day; 
The Burgett 8H in Carroll County, OH achieved a peak rate of 720 bbls of oil, 140 bbls of NGL and 2.1 mmcf of natural gas per day, or approximately 1,210 boe per day; and 
The Coniglio 6H in Carroll County, OH in a limited flow test before being shut-in to wait on a pipeline connection achieved a peak rate of 290 bbls of oil and 5.0 mmcf of wet natural gas per day, or approximately 1,125 boe per day at the end of the test. 
The company has a significant number of wells planned for the Utica oil window during the remainder of 2012 and is confident that it will have strong results based on its successful results in the oilier portion of the wet gas window, preliminary results from oil window testing and the results of certain of its competitors in the oil window. 

Cleveland and Tonkawa Tight Sand (western Oklahoma, Texas Panhandle):Chesapeake owns approximately 520,000 net acres of leasehold in the Cleveland play and 285,000 net acres in the Tonkawa play. Production for the 2012 first quarter averaged 18,500 boe per day, up 17% sequentially compared to 2011 fourth quarter. Approximately 50% of total Cleveland and Tonkawa production during the quarter was oil, 15% was NGL and 35% was natural gas. The company is currently operating 15 rigs in the area and plans to reduce its activity to 13 rigs in the second half of 2012. 

Three notable recent wells completed by Chesapeake in the Cleveland Sand during the quarter are as follows: 

The Lohr 701H in Hemphill County, TX achieved a peak rate of 580 bbls of oil, 850 bbls of NGL and 8.3 mmcf of natural gas per day, or approximately 2,811 boe per day; 
The Letha 10-19-25 1H in Ellis County, OK achieved a peak rate of 1,460 bbls of oil, 145 bbls of NGL and 1.6 mmcf of natural gas per day, or approximately 1,870 boe per day; and 
The Shill 3-18-25 1H in Ellis County, OK achieved a peak rate of 1,070 bbls of oil, 130 bbls of NGL and 1.3 mmcf of natural gas per day, or approximately 1,415 boe per day. 
Three notable recent wells completed by Chesapeake in the Tonkawa Sand during the quarter are as follows: 

The Roberts 32-16-22 1H in Roger Mills County, OK achieved a peak rate of 1,070 bbls of oil, 130 bbls of NGL and 1.3 mmcf of natural gas per day, or approximately 1,415 boe per day; 
The Thomas 20-16-23 1H in Ellis County, TX achieved a peak rate of 655 bbls of oil, 80 bbls of NGL and 0.9 mmcf of natural gas per day, or approximately 880 boe per day; and 
The Wa****a River USA 15-15-26 1H in Roger Mills County, OK achieved a peak rate of 600 bbls of oil, 21 bbls of NGL and 0.2 mmcf of natural gas per day, or approximately 650 boe per day. 
Drilling, Completion and Leasehold Capital Expenditures Peak in the 2012 First Quarter, Will Significantly Decline in Remaining Three Quarters of 2012

Chesapeake’s 2012 first quarter capital expenditures on proved and unproved drilling and completion activities for operated and non-operated wells totaled $2.5 billion, an increase of approximately $350 million from the 2011 fourth quarter. The 2012 first quarter’s capital expenditures were front-end loaded and were primarily attributable to increased and more expensive liquids-rich drilling, the timing lag of oilfield service cost reductions, higher than expected expenditures on non-operated wells and costs associated with ramping down in dry gas plays. 

The company believes that its drilling and completion expenditures have peaked and projects substantially lower quarterly capital expenditures for the remainder of 2012 and 2013, primarily as a result of the following factors: 

Substantial reduction of its drilling activity in dry natural gas plays from 50 operated rigs at the beginning of 2012 to an average of 38 rigs in the 2012 first quarter to an average 12 dry natural gas rigs in the second half of 2012, including approximately only two rigs each in the Barnett and Haynesville Shale plays. 
More aggressively electing out of (nonconsenting) non-operated wells in dry gas plays; 
Modest reduction of its drilling activity in liquids-rich plays from an average of 123 operated rigs in the 2012 first quarter to an average of approximately 115 rigs in the second half of 2012; 
Further optimizing drilling programs to achieve more efficient use of drilling capital and fewer wells waiting on completion and pipelines; 
Completing a joint venture in the Mississippi Lime play in the 2012 third quarter, which will reduce the company’s net capital expenditures as a result of an anticipated drilling carry; 
Selling the company’s Permian Basin assets in the 2012 third quarter, which will result in future capital expenditure savings; and 
Working more aggressively to lower oilfield service costs. 
As a result of the changes above, the company has revised its capital expenditure budget for drilling and completion costs from $7.0-7.5 billion to $7.5-8.0 billion in 2012 and from $7.5-8.5 billion to $6.5-7.0 billion in 2013, for two-year total drilling capital expenditure savings of $750 million at the midpoint. Of these 2012-2013 capital expenditures, approximately 90% will be directed to liquids-rich plays. 

During the 2012 first quarter, the company invested approximately $900 million in net leasehold and unproved properties, primarily in the Utica Shale and Mississippi Lime plays. The company has now largely completed its leasing objectives in those two areas and anticipates substantially reduced leasehold investment going forward. The company projects investing approximately $700 million in net leasehold and unproved properties for the balance of 2012 and approximately $500 million in 2013, for two-year total leasehold capital expenditure savings of approximately $425 million at the midpoint. Combined drilling and leasehold capital expenditure savings for 2012-2013 should therefore be approximately $1.175 billion relative to the company’s previous Outlook dated February 21, 2012. 

2012 First Quarter Financial and Operational Results Conference Call Information

A conference call to discuss this release has been scheduled for Wednesday, May 2, 2012 at 9:00 am EDT. The telephone number to access the conference call is 913-312-0640 or toll-free 888-278-8476. The passcode for the call is 4138928. We encourage those who would like to participate in the call to place calls between 8:50 and 9:00 am EDT. For those unable to participate in the conference call, a replay will be available for audio playback at 1:00 pm EDT on Wednesday, May 2, 2012 and will run through midnight Wednesday, May 16, 2012. The number to access the conference call replay is 719-457-0820 or toll-free 888-203-1112. The passcode for the replay is 4138928. The conference call will also be webcast live on Chesapeake’s website at www.chk.com in the “Events” subsection of the “Investors” section of the website. The webcast of the conference call will be available on Chesapeake’s website for one year.

----------


## blangtang

> Nobody has tracked this better than yours truly.  I have a comprehensive database of all their purchases and how they contrast with the last sale and/or market value.  I also track all their building permits.
> 
> It's only a matter of time before these issues get the focus of a media increasingly anxious to add more fuel to the fire.
> 
> Frankly, it's amazing to me that a $12 million map collection becomes part of a shareholder lawsuit and no one has bothered to notice they've spent about a billion dollars on real estate, a good portion of which being completely outside the scope of their core business.  And what about things like the sponsorship of the OKC Arena?  For a company that doesn't sell to end consumers, I can't imagine how they can make a business case for spending $3 million for each of the next 12 years (it actually escalates 3% each year, meaning by the end of the contract they will be paying $4.2 mil).
> 
> 
> I'm sure the reason no one has made an issue of the real estate is because 1) it involves thousands of separate pieces of information; and 2) the company itself never talks about it.


Hey Pete,I have a question about your stash of info...

Let's say that when the new Chair comes in, they look into the non-core assets and decide to sell some of the real estate acquisitions, do you have any idea how much cash could be raised if they sold some real estate? like $100 Million, or  $1Billion?  and do you think they would get back half or what they paid or close to or more than they paid?  

Just curious how much they may have overpaid, or not...and how much cash they could raise...thanks!

----------


## Pete

On average, CHK has paid 3 to 4 times market value for all their properties.  This is based on hard data I have been collecting for years.

In terms of what they could get for buildings/land not used to house employees, I bet they could only raise about $100 million for things like NH Plaza, Classen Curve and others.

They have about a billion invested thus far with about another $300 million of more proposed buildings for their campus.

----------


## jn1780

> I'll be in Denver tonight (noticing your name  )
> If the buildings were abandoned that would qualify as blighted in my book...but that's not likely to happen...
> 
> 
> CHK has plenty of operating margins to service debt if they'd just scale back their absurd capex budgets to a more normal and sustainable level.  I don't see CHK going anywhere and there's no reason for them to go belly up or get taken over unless there's some skeleton in a closet we don't know about it.  That seems unlikely...


There's all sorts of reasons for *other* companies to take over Cheaspeake. They often look for companies that are not to unhealthy financially, but also not too financially sound

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## Snowman

> There's all sorts of reasons for *other* companies to take over Cheaspeake. They often look for companies that are not to unhealthy financially, but also not too financially sound


The thing is with Chesapeake books not being the most transparent and the dept they have, it may make companies wary of a takeover.

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## Pete

Yet another McClendon controversy...  He ran a $200 million hedge fund with Tom Ward from 2004 to 2008:

http://www.reuters.com/article/2012/...8410GG20120502

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## Maynard

> I knew I should have bought in last week! =)




Chesapeake Energy shares tumble       05/02 08:00 AM

--------------------------------------------------------------------------------
Chesapeake Energy Corp shares fell nearly 11 percent in trading before the bell on Wednesday after the company reported earnings that disappointed investors.

Wall Street analysts pointed to the company's higher-than-expected natural gas output, which increased quarter on quarter, even as the company sought to cut production. Chesapeake reported its results on Tuesday after the market had closed.

Reuters also reported that Chesapeake Chief Executive Officer Aubrey McClendon ran a $200 million hedged fund that traded the same commodities that the company produces.

Shares of Chesapeake were trading at $17.45, down sharply from Tuesday's New York Stock Exchange close of $19.60.

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## onthestrip

Man, when it rains it pours. Every morning it seems like there is another article about some dodgy business practices by Aubrey.

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## Pete

BTW, I am aware of at least one and possibly two articles delving into Chesapeake real estate practices.

We all know they've been wildly spending in this area and I believe the article(s) are going to delve into that further, and I expect more backlash as a result.

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## onthestrip

Hey Pete, since Chesapeake Land Co is a subsidiary of the public company that is Chesapeake, would leases that theyve entered into be public info? Leases such as Whole Foods, Anthro, and Classen Curve tenants?

----------


## Pete

No.  They are publicly-held but a private enterprise.

All publicly traded companies are required to disclosure material financial information, but at their scale retail leases would not be in that ballpark.

However, the sum total of their real estate dealings may fit that category and if and when details come out in the press, it may spark requests for further investigation by shareholders.  In that case, specific details may be disclosed.

----------


## dankrutka

Is it not time for Aubrey to step away from CHK completely? How many more disparaging articles have to come out before, regardless of his impact on the company, the bad press just hurts CHK too much?

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## OKCTalker

If the hedge fund operated from 2004-2008 and wasn't known until 2012, can you imagine what else could be going on and not disclosed? 

And I don't want to hear Henry Hood saying that the board was fully-informed about this.

----------


## Maynard

Chesapeake Bonds Tumble, CDS [credit-default swaps] Protection Costs Spike       05/02 

--------------------------------------------------------------------------------

NEW YORK (Dow Jones)--Chesapeake Energy Corp. (CHK:$16.95,00$-2.65,00-13.52%) bonds are taking a hit Wednesday after co-founder and chief executive Aubrey McClendon was stripped of his chairman title late Tuesday.

The Oklahoma City natural-gas producer announced McClendon would step down following recent scrutiny from regulators and shareholder outcries over some personal financial dealings perceived as being in conflict of interest with his role as chairman.

The company also posted disappointing first-quarter earnings and revealed heavy exposure to weakening natural-gas prices.

Chesapeake bonds maturing between 2015 and 2021 are the four most actively traded "junk"-rated bonds in Wednesday's market, according to MarketAxess. The price of its 9.5% coupon bonds due 2015 dropped $2.94 per $100 of face-value to $106.375. Before the story of McClendon's financial dealings broke on April 18, the bonds traded at $113.500.

The extra yield the 2015 bonds offer over Treasurys widened 1.12 percentage points Wednesday to 6.59 points, MarketAxess shows. The debt is rated Ba3 by Moody's Investors Service and BB by Standard & Poor's and Fitch Ratings.

According to Markit, the upfront cost of credit-default-swap protection on Chesapeake spiked to 7 points Wednesday, from 4.13 late Tuesday. The jump indicates that CDS sellers are demanding $700,000 upfront, plus a running annual payment of $500,000, to protect a $10 million notional trade.

CDS is traded in points upfront when protection-sellers are concerned about a jump in default risk.

Chesapeake CDS prices actually fell half a point after Chesapeake's disappointing earnings release late Tuesday, as traders responded favorably to the idea that corporate governance was improving, according to Otis Casey, director of credit research at Markit.

But with shares of the company falling 13% and bond spreads widening early Wednesday, CDS prices are now playing catch-up.

Short-selling of Chesapeake shares is at a record high with 8.4% of total shares on loan, versus 7% a month ago, as of Tuesday, according to Data Explorers, a Markit company.

----------


## soonerguru

Drip, drip, drip. McClendon should be gone. This is a mess and I'm guessing there's a lot more damaging stuff we don't know yet.

----------


## BoulderSooner

and nothing illegal ..

----------


## Swake2

Aubrey looks to be going to jail. This is really shocking. And much worse than the shocking $1.1 billion in personal loans from board members.

http://www.reuters.com/article/2012/...8410GG20120502

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## SoonerBoy18

Off topic but does this mean he and his wife wont be sitting next to Clay Bennet at the Thunder games?

----------


## Stinger

> Off topic but does this mean he and his wife wont be sitting next to Clay Bennet at the Thunder games?


Wasn't there for Game 1.  Not sure about Monday night.

----------


## BoulderSooner

> Aubrey looks to be going to jail. This is really shocking. And much worse than the shocking $1.1 billion in personal loans from board members.
> 
> http://www.reuters.com/article/2012/...8410GG20120502


did you even read what you linked?? ... he didn't break the law ..

----------


## soonerguru

> and nothing illegal ..


...that we know of yet. And that is hardly material anyway. There are a lot of "technically legal" thongs companies can do that drive them into bankruptcy.

----------


## Swake2

Yes, I read it, did you?




> experts on energy trading, corporate governance and commodity-market regulation said they were stunned by the latest revelation.
> "An executive's first responsibility is to shareholders and the betterment of their investment," said Carl Holland, who ran the trading-compliance department at former U.S. oil major Texaco. "Personal trading in the commodity around which the CEO's business is based would be a clear no. We would never have tolerated that, ever."
> Thomas Mulholland, a risk-management consultant to oil and gas producers for Golden Energy Services in St Louis, said such matters are "taken very seriously by energy companies, and there are strict codes against it. Even if there is just a whiff of impropriety," he said, "it can be enough to lead to a termination."


That's bad, but here is where it get's really bad:




> A securities law professor said the very existence of the hedge fund could prompt a securities investigation.
> "I would argue, and I think the SEC would argue, that the failure to disclose that you are engaging in this kind of conduct can constitute a securities fraud problem," said Elizabeth Nowicki, a professor at Tulane University. She said a failure by McClendon and Ward to disclose their fund to Chesapeake's shareholders may constitute a "material omission" that could draw SEC scrutiny.
> "A reasonable investor would want to know that the CEO could be in a situation where he's betting against the interests of the company personally," Nowicki said. "That, it seems to me, is a slam dunk."
> An SEC spokesman declined to comment.


That means that this




> A search of Chesapeake's public filings turned up no disclosure of McClendon's hedge fund, Heritage.


And this



> Cirino and Ward's recollections differ on at least one point. Ward said he didn't interact with the fund's outside investors. Cirino recalled that "every investor I was involved with either met with McClendon and Ward or at least spoke with them by phone before investing." The hedge fund's healthy gains were a lure, but "the cachet of those two individuals certainly also helped," Cirino said.
> In addition to weekly Monday conference calls and regular emails, the two owners met frequently with traders in New York and occasionally in Oklahoma, Cirino said.


 Likely equal jail time.

Having lived through two companies that melted down Enron style, Chesapeake is screaming “LOOK AT ME” to the SEC.

----------


## blangtang

Wow-Sandridge shares getting spanked down ~9% today in "sympathy" to the Chesapeake association, and the mentions in the reuters story.  Wonder if they will start digging into Sandridge more...

McClendon won't get any jail time

----------


## Maynard

Top Chesapeake holder says will be more active       05/02 01:50 PM

--------------------------------------------------------------------------------

Southeastern Asset Management, the largest shareholder in Chesapeake Energy Corp, said on Wednesday it is converting its passive ownership in Chesapeake to an active stake and intends to have discussions with Chesapeake's management, board and third parties. 

Southeastern made the disclosure in a U.S. Securities and Exchange Commission filing (13D) in which it reported that it has a 13.6 percent stake (89,854,868 shares) in Chesapeake.

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## blangtang

O. Mason Hawkins

Maybe this guy just threw his hat in the ring to be on the board?

----------


## blangtang

> BTW, I am aware of at least one and possibly two articles delving into Chesapeake real estate practices.
> 
> We all know they've been wildly spending in this area and I believe the article(s) are going to delve into that further, and I expect more backlash as a result.


Hey Pete

are these local media or national?  Have you been contacted about the real estate info?  BTW, I'd understand if you want to stay mum...

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## Pete

Yes, I have been contacted but that's all I'm going to say at this point.

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## Pete

Sandridge should not be punished for Tom Ward's involvement in this hedge fund, as he didn't even buy controlling interest in what became SR until 2006 and even then it was a much, much smaller operation than CHK.

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## Maynard

> Sandridge should not be punished for Tom Ward's involvement in this hedge fund, as he didn't even buy controlling interest in what became SR until 2006 and even then it was a much, much smaller operation than CHK.


SandRidge Energy puts active on wide price movement into Q1       05/02 02:26 PM

--------------------------------------------------------------------------------

SandRidge Energy (SD:$7.24,00$-0.78,00-9.73%) May 7 and 8 puts are active on total put volume of 30K contracts (12K calls). May put option implied volatility is at 74, June and September put option implied volatility of 64 compared to its 26-week average of 70 according to Track Data. Large put volume suggests traders positioning for price movement into the expected release of Q1 results on May 4.

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## OKCTalker

> Sandridge should not be punished for Tom Ward's involvement in this hedge fund, as he didn't even buy controlling interest in what became SR until 2006 and even then it was a much, much smaller operation than CHK.


CHK is Aubrey and SD is Tom. If this is a corporate governance problem brought about by the character defects of Aubrey & Tom, then Tom took that with him to SD. I've heard good things about Tom as a person, so there's a disconnect somewhere - he either got taken for a ride on this hedge fund by Aubrey, or he was a co-conspirator who might do similar sleazy things at SD. He'll have to prove his innocence in the court of public opinion, and perhaps defend himself in a court of law or a securities inquiry.

----------


## SharkSandwich

http://www.businessweek.com/news/201...imates-are-cut

Chesapeake Bonds Drop After Cash-Flow Estimates Are Cut
By Sridhar Natarajan and Shannon D. Harrington on May 02, 2012  

The cost to protect against losses on the debt of Chesapeake Energy Corp. (CHK) (CHK) jumped to the highest since September 2009 as the driller, which reported an unexpected first-quarter loss, said it may run out of money next year. 

Credit-default swaps (CHK) on the company jumped 3.3 percentage points to 7.4 percent upfront as of about 12:30 p.m. in New York, according to CMA, which is owned by CME Group Inc. The driller’s $1.3 billion of 6.775 percent bonds due in March 2019 dropped by 4.1 cents to 94.9 cents on the dollar at 12:20 p.m., the lowest level on record, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. 

The second-largest U.S. natural-gas producer reported a first-quarter loss of $71 million as it cut its cash flow estimates by as much as 48 percent with falling natural gas prices hurting company profits, it said in a statement yesterday. The driller also announced plans to strip CEO Aubrey McClendon of the role of chairman as investors criticized him for using company interests to secure personal loans, raising concerns over corporate governance. 

“The company was headed into 2012 without any hedges on natural gas production and the market is rightfully concerned as gas prices have gone lower,” Mark Hanson, an equity analyst at Morningstar Inc. said in a telephone interview. 

Company Spokesman Jim Gipson couldn’t be reached for a comment. 

Make or Break 
“In 2011, they thought natural gas prices had hit a rock bottom and it didn’t and now they are paying a price for it,” Hanson said. “2013 is a make or break year for the company.” 

McClendon said the company had planned for an increase in debt levels in the first quarter because of low gas prices and capital expenditure, in an earnings call with investors today. Chesapeake has about $1.7 billion of bonds maturing by 2015, according to data compiled by Bloomberg. The company has a $9.5 billion year-end net long term debt target. 

Natural gas prices touched a more than 10-year intraday low of $1.902 per million British Thermal Units last month on the New York Mercantile Exchange. 

The cost of the Chesapeake swaps contracts means buyers of protection would pay $740,000 initially and $500,000 annually to protect $10 million of debt from default for five years.

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## Maynard

CHK hits fresh 52-week low, breaching $16.78 (set last Tuesday), which was support.

Volume has been extrememly heavy -- over 135,000,000 shares exchanged

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## Pete

> CHK is Aubrey and SD is Tom. If this is a corporate governance problem brought about by the character defects of Aubrey & Tom, then Tom took that with him to SD. I've heard good things about Tom as a person, so there's a disconnect somewhere - he either got taken for a ride on this hedge fund by Aubrey, or he was a co-conspirator who might do similar sleazy things at SD. He'll have to prove his innocence in the court of public opinion, and perhaps defend himself in a court of law or a securities inquiry.


I've heard from more than one person Ward left CHK because he has a very different way of doing things, and he and Aubrey didn't see eye-to-eye.

That hedge fund was already in operation when Ward bought into SandRidge and it ended not long after he took over control.  Very, very different situation than with McClendon and CHK.

----------


## jn1780

I don't see how Aubrey can survive this and still be CEO. He is starting to become a liability to CHK.

----------


## adaniel

> I don't see how Aubrey can survive this and still be CEO. He is starting to become a liability to CHK.


At the very least, investors will be on him like a hawk.

That means no more ridiculous real estate deals (wonder how this will effect the so called "mystery tower"), 1,000+ hirings a year, and maybe a significant cutback of corporate sponsorships.

I'll be a glass half full person and say it is probably good for CHK that this is all coming out now, rather than this time next year when they have no money and are teetering on bankruptcy. From this point on shareholders will be much more hands on then they have been in the past, which will probably keep the company from plunging into the abyss (although OKC may not fully escape any negative repercussions).

----------


## Maynard

Sen Nelson seeks US probe into Chesapeake Energy       

--------------------------------------------------------------------------------

WASHINGTON, May 2 (Reuters) - U.S. Senator Bill Nelson plans to ask the Justice Department to investigate Chesapeake Energy Corp (CHK:$16.74,00$-2.86,00-14.59%) for potential fraud and price manipulation, an aide to the lawmaker said. 

Nelson's request comes after Reuters reported on Wednesday that Chesapeake CEO Aubrey McClendon ran a $200 million hedge fund that traded in the same commodities Chesapeake produces. A search of Chesapeake's filings turned up no disclosure of his activities. 

"In response to the reporting by Reuters, Senator Bill Nelson has asked his staff to formally request that the Justice Department'sFinancial Fraud Enforcement Task Force investigate the Chesapeake Energy Corp. (CHK:$16.74,00$-2.86,00-14.59%) matter to determine whether there is evidence of fraud, price manipulation, conflicts-of-interest, or other illegal activities," said Ryan McCormick, a staff director for the Senate Finance subcommittee on fiscal responsibility.

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## SoonerBoy18

> Wasn't there for Game 1.  Not sure about Monday night.


They was there for game 2, I was sitting about 5 rows behind him. I love seeing him and his wife cheering on my tv screen

----------


## Pete

> At the very least, investors will be on him like a hawk.
> 
> That means no more ridiculous real estate deals (wonder how this will effect the so called "mystery tower"), 1,000+ hirings a year, and maybe a significant cutback of corporate sponsorships.
> 
> I'll be a glass half full person and say it is probably good for CHK that this is all coming out now, rather than this time next year when they have no money and are teetering on bankruptcy. From this point on shareholders will be much more hands on then they have been in the past, which will probably keep the company from plunging into the abyss (although OKC may not fully escape any negative repercussions).


I agree with all of this and believe Aubrey will hang tough and continue to shift the company towards oil and away from natural gas.

They still own tons of mineral rights so they can easily sell some off to raise capital then focus on drilling for liquids.

I suspect they'll be fine in the longer term and agree it's probably a good thing all this came out sooner rather than later.  AKM needs oversight and it sounds like he is going to get much more than at any time since CHK was founded.

But the sharks are circling and I bet there will be a few more revelations that put McClendon and CHK in a bad light before this gets significantly better.  But I do believe it will.

----------


## mugofbeer

I have a feeling that if CHK survives this little episode intact, you may see some serious reigning in of a lot of the extracurricular activities they were involved in.  McClendon got some serious 'splainin to do.  Did you note their largest shareowner has filed to change from a passive to an active shareowner?  THis means they may push for a takeover.  Hold on for the ride!

----------


## Questor

> I have a feeling that if CHK survives this little episode intact, you may see some serious reigning in of a lot of the extracurricular activities they were involved in.  McClendon got some serious 'splainin to do.  Did you note their largest shareowner has filed to change from a passive to an active shareowner?  THis means they may push for a takeover.  Hold on for the ride!


I noticed that and wondered if that might be where this is headed.  You know I got a real kick out of The Oklahoman's take on a possible takeover a few articles back... they talked about loyal investors and then how Oklahoma law requires that only portions of the board can be elected at any one time to guard against it and so the possibility was very low... I actually LOL'd reading it.  They need to stop the sugar-coating and just report.

----------


## ljbab728

Chesapeake is at least trying to sound like it's going to do the right thing.

http://newsok.com/chesapeake-to-move...rticle/3671815

----------


## Spartan

And their stock price continues to plummet, erasing $1.8 billion.

----------


## BoulderSooner

> And their stock price continues to plummet, erasing $1.8 billion.


except that it is up 2.2% today

----------


## Maynard

> except that it is up 2.2% today

----------


## Midtowner

> except that it is up 2.2% today


You buying?

----------


## BoulderSooner

> You buying?


no .. not for a little while any way  ... just disputing the "continues to plummet"

----------


## OKCTalker

Dead cat bounce.

----------


## Stinger

Say he loses the CEO title next....what kind of power does he retain as majority shareholder?

----------


## BoulderSooner

> Say he loses the CEO title next....what kind of power does he retain as majority shareholder?


any idea what % he actually owns??

----------


## Maynard

> any idea what % he actually owns??



3,257,614 shares (a small percentage -- CHK has 662.50 million outstanding shares) as of March 30, 2012 filing.

----------


## Pete

> any idea what % he actually owns??


A very small percentage, particularly after he lost almost all his shares in the now famous margin call.

He is nowhere near a majority shareholder.

----------


## Lafferty Daniel

I'm not really sure why people think they're going to go under. Worst situation is they hire a new CEO and I'll bet you everything rebounds after that.

----------


## Maynard

> I'm not really sure why people think they're going to go under. Worst situation is they hire a new CEO and I'll bet you everything rebounds after that.

----------


## jn1780

Its interesting because you have people saying that there is NO chance of Cheaspeake being taken over because of all their debt, but you also have people saying their A-OK because they have tons of assets and can service their debt.  

If the latter is true than someone would be very interested in buying Cheaspeake, take the good assets, clean house,  and close "McClendon World".

----------


## Spartan

> I'm not really sure why people think they're going to go under. Worst situation is they hire a new CEO and I'll bet you everything rebounds after that.


Yeah, nothing going on here, nothing to see...Aubrey's not like a big deal locally or anything like that.

And that's good if today they're seeing an awkward rebound in the stock.

----------


## Lafferty Daniel

> *Yeah, nothing going on here, nothing to see...Aubrey's not like a big deal locally or anything like that*.
> 
> And that's good if today they're seeing an awkward rebound in the stock.


How does this have anything to do with them going under? So, since Aubrey is a big deal in OKC, the entire company that has shareholders all over the world will go under?

----------


## Spartan

Hold on, you're getting fast and loose with recollection. My suggestion (idk think it was in this thread, but in case it was and in case you read it and are about to quote it, allow me to address it) that I hope this isn't the beginning of the end was based on combining all of this last month's Aubrey scandals into one factor that is equally weighted with the sagging price of natural gas, CHK's debt, and other major issues. Several people have had this nagging suspicion that CHK is a house of cards for a long time. Consider the Lost Ogle's version (written by an insider who works there) or the Rolling Stone, or the other _FEW_ critical looks that have been taken at CHK. Again, I hope I'm wrong on all of those things not looking good for CHK because we really need them to stay afloat (understatement of the year).

Now, to address my concerns about Aubrey stepping down as it relates to this thread. I was talking about the ambitious campus master plan, with more corporate expansion on the east, and initiating some even more impressive mixed-use expansion to the west. This plan is the brain child of Aubrey, arguably, and nobody else. Aubrey steps down, I wonder what happens to that campus master plan. Furthermore, taking a bigger look at that phenomenon, what does that say for CHK's longevity in OKC, not just CHK's longevity as a company? I don't care about CHK's longevity in other cities.

Suffice it to say, while CHK has no plans to move out of OKC _obviously_ and is doing a good job at entrenching themselves in OKC, I don't like the sound of a takeover effort that may be underway. That is not a process that has ever gone well for us. Usually it's a process that goes well for Houston, and to combine these talks of CHK takeover with assertions from CHK that they're looking more at oil at the moment. That doesn't mean that they're moving to Houston, but it does mean that Houston wouldn't be an illogical move as it would be if CHK was truly looking to remain undiversified, focusing on nat gas.

So that's my total opinion on the recent events. I think that there are some major issues, and I wish we could see some critical reporting from the Oklahoman. It's gotten slightly better at addressing the issues (but in a way to deny their possibility), but still smacks of cronyism in the coverage. I hope I'm wrong about all of these concerns, and if you can alleviate those concerns, be my guest.

----------


## BoulderSooner

there is no evidence that CHK is built on a house of cards

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## blangtang

A day with no bad news is a good day for Chesapeake

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## Pete

In Latest Sign of Trouble, Chesapeake Energy Hires Lehman Spin Doctor
Posted: 05/ 2/2012 11:25 am

In the latest sign that massive natural gas fracker Chesapeake Energy is in deep trouble, the company has retained George Sard, the CEO of Sard Verbinnen. Sard was described as a "spinmeister of the apocalypse" by Portfolio magazine in April 2009, because he has worked as a PR consultant for so many high-profile clients in moments of utter, humiliating public collapse.

Chesapeake is in distinguished company. Sard's clients have included the Madoff brothers (Ponzi scheme), Eliot Spitzer (prostitution), Martha Stewart (insider trading), former Lehman Brothers CEO Dick Fuld (Ponzi scheme), and AIG (Ponzi scheme). His firm was also on the scene during the Enron collapse -- JPMorgan hired him to beat back accusations that the bank was complicit in the Enron fraud (it eventually paid $135 million to settle SEC charges).

The first reports of Sard's hiring came today, amid news that Chesapeake's board had decided to replace CEO Aubrey McClendon as chairman (he will continue as CEO). The company made the move following two weeks of controversy first sparked by a Reuters report that the CEO had borrowed $1.1 billion in secret, personal loans in order to finance his investments in the companies' wells.

The reports raised serious conflict of interest questions and attracted new scrutiny from Chesapeake shareholders, the SEC and the IRS. The company's board has taken a series of steps to address the controversy, including ending the "Founders Well Participation Program" that gave McClendon stakes in Chesapeake wells. Its biggest shareholder, reclusive value investor O. Mason Hawkins applauded today's move. But Sard's hiring suggests that the board doesn't think the problems plaguing the company will go away any time soon.

Will Chesapeake emerge from the crisis in one piece, or will it go the way of Lehman or Enron? There appear to be fundamental problems with Chesapeake's business model that go beyond CEO shenanigans; a recent Rolling Stone article suggested that the company is something of a Ponzi scheme. In which case, it might make sense to hire a top-notch PR team...

----------


## Pete

Aubrey McClendon Needs to Go
By Matt Koppenheffer | More Articles 
May 2, 2012 | Comments (16)

Saying I'm frustrated with Aubrey McClendon is putting it mildly.

McClendon, the CEO of natural gas giant Chesapeake Energy (NYSE: CHK  ) , was making headlines again today as Reuters revealed that he was running a $200 million commodities hedge fund. This follows on the heels of a Reuters report last month detailing more than $1 billion in loans that McClendon took out against the stakes he owns in Chesapeake wells.

In response to the previous Reuters expose, Chesapeake stripped McClendon of his chairmanship and agreed to end the Founders Well Participation Program -- the cozy deal at the center of McClendon's $1 billion borrowing spree -- early. Originally, the FWPP was scheduled to run through 2015, but it will now end in June 2014.

But these steps aren't enough. There's only one solution to the problem: Aubrey McClendon needs to go. Now.

That's easier said than done. McClendon is not only CEO, but also a founder of the company and, thanks to that FWPP, a part owner of many Chesapeake wells. To many, McClendon is Chesapeake.

On the other hand, thanks to gambling away most his shareholdings with huge amounts of margin borrowing, McClendon is a very small Chesapeake shareholder at this point. According to recent filings,* McClendon owns less than 0.3% of Chesapeake's outstanding shares*. Meanwhile, his shenanigans have been dragging Chesapeake's name -- and stock -- through the mud. And while he apologized to shareholders for these "distractions," it's hard to consider any of this proper conduct for a public-company CEO.

But perhaps the bigger concern that few are talking about, is what this all means for the way that McClendon has been running Chesapeake. For one, a CEO's attention should be fixed on the company that he's supposedly leading -- not the smaller, personal well-ownership empire he's building or the hedge fund he's apparently running. Furthermore, almost everything coming out about McClendon underscores his sweet-tooth for gambling. A great piece from Jeff Goodell in Rolling Stone back in March speaks to this. Shareholders or potential shareholders should be sure to read that, but, in short, Goodell's conclusion is that McClendon's gambling streak has definitely shown up in Chesapeake's business approach.

Many investors have held onto the hope that the promise of natural gas would trump the poor governance and CEO excesses at Chesapeake. That has looked like a bad gamble to me for years, but today it looks downright scary.

That is, unless McClendon is replaced and a new regime is brought into this company.

Don't stop with McClendon
Public companies aren't structured so that the CEO can run the show. Sure, McClendon wielded a considerable amount of power when he was both CEO and chairman, but in a properly functioning company, the board of directors should be keeping a wild-child CEO in check.

That didn't happen at Chesapeake. In fact, as I see it, almost the exact opposite happened as the board catered to McClendon's needs, co-signed his desires, and bailed him out when he got in tight spots. And maybe it shouldn't be too surprising -- the environment in the boardroom seems like a pretty cozy one when on average board members are being compensated to the tune of $533,000 and getting use of the company's private jet.

So, *not only does McClendon need to go, but so does most of the board*.

Richard Davidson, Burns Hargis, Don Nickles, Frank Keating, and Pete Miller have all been on the board for more than a couple of years and have obviously done little to rein in McClendon in exchange for their princely directors' compensation. Unfortunately, because of Chesapeake's staggered board -- a shareholder-unfriendly practice that doesn't put all directors up for election at the same time -- only Davidson and Hargis are up for election this year. But replacing them would certainly be a start.

Don't look now, but McClendon has a buddy
Interestingly, in all of this coverage of Aubrey McClendon, very little of the harsh spotlight has fallen on his buddy and Chesapeake co-founder Tom Ward. Ward was president and COO of Chesapeake until early 2006, when he made the jump to take over SandRidge Energy (NYSE: SD  ) . Ward is currently the chairman and CEO of SandRidge.

According to Reuters, Ward was a partner and co-founder in the very hedge fund that's causing all of the noise around Chesapeake today. Even a quick leaf through SandRidge's proxy statement reveals much of the same clubby, "praise thy CEO" feel that has brought so many headaches to Chesapeake shareholders. Notably, though, SandRidge got rid of its version of the FWPP back in 2008.

In other words, while Aubrey McClendon may be taking a lot of heat here, *SandRidge shareholders may want to gird themselves as well*.

What you can do
Chesapeake has released a preliminary proxy statement (touting its great governance no less) that allows shareholders to get up to speed in preparation for voting. The annual meeting is June 8, and votes have to be in by June 6. Current shareholders can have their voice heard by voting and/or showing up at the annual meeting and sharing their thoughts.

In addition, three mutual fund companies -- Southeastern Asset Management, Wellington Management, and BlackRock (NYSE: BLK  ) -- currently own more than 25% of Chesapeake combined. Investors in these companies' funds can hit the phones and urge them to push Chesapeake for the wholesale reform that's needed to get the company on the right track.

----------


## jn1780

> In Latest Sign of Trouble, Chesapeake Energy Hires Lehman Spin Doctor
> Posted: 05/ 2/2012 11:25 am
> 
> In the latest sign that massive natural gas fracker Chesapeake Energy is in deep trouble, the company has retained George Sard, the CEO of Sard Verbinnen. Sard was described as a "spinmeister of the apocalypse" by Portfolio magazine in April 2009, because he has worked as a PR consultant for so many high-profile clients in moments of utter, humiliating public collapse.
> 
> Chesapeake is in distinguished company. Sard's clients have included the Madoff brothers (Ponzi scheme), Eliot Spitzer (prostitution), Martha Stewart (insider trading), former Lehman Brothers CEO Dick Fuld (Ponzi scheme), and AIG (Ponzi scheme). His firm was also on the scene during the Enron collapse -- JPMorgan hired him to beat back accusations that the bank was complicit in the Enron fraud (it eventually paid $135 million to settle SEC charges).
> 
> The first reports of Sard's hiring came today, amid news that Chesapeake's board had decided to replace CEO Aubrey McClendon as chairman (he will continue as CEO). The company made the move following two weeks of controversy first sparked by a Reuters report that the CEO had borrowed $1.1 billion in secret, personal loans in order to finance his investments in the companies' wells.
> 
> ...


Ok, that just sounds stupid to me: Hiring someone who worked with companies and people who have been proven guilty.  I thought the goal is to avoid the comparisons to Enron or Lehman?

*PR fail.*

----------


## OKCTalker

> except that it is up 2.2% today


Closed down 2.7% for the day at $17.19, down 23% for the year.

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## RedDollar

> Closed down 2.7% for the day at $17.19, down 23% for the year.


Uhhhhhh ...  not quite ,   there seems to be real support at 17.   No matter the news,  they havin trouble driving this lower than 17.

http://finance.yahoo.com/q?s=chk&ql=1

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## Pete

Chesapeake confirms SEC probe
Chesapeake Energy Corp. confirmed the company and CEO Aubrey McClendon have been notified of an information inquiry by the U.S. Securities and Exchange Commission.

BY JAY F. MARKS Business Writer jmarks@opubco.com | Published: May 3, 2012      4


Chesapeake confirmed the company and CEO Aubrey McClendon have been notified of an informal inquiry by the SEC's regional office in Fort Worth, Texas.


Read more: http://newsok.com/chesapeake-confirm...#ixzz1tqdM1nui

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## Spartan

In English?

Guys, my gut feeling on this is only getting worse...

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## RedDollar

> Chesapeake confirms SEC probe
> Chesapeake Energy Corp. confirmed the company and CEO Aubrey McClendon have been notified of an information inquiry by the U.S. Securities and Exchange Commission.
> 
> BY JAY F. MARKS Business Writer jmarks@opubco.com | Published: May 3, 2012      4
> 
> 
> Chesapeake confirmed the company and CEO Aubrey McClendon have been notified of an informal inquiry by the SEC's regional office in Fort Worth, Texas.
> 
> 
> Read more: http://newsok.com/chesapeake-confirm...#ixzz1tqdM1nui


Won't find anything substantial,   just the usual nitpiking stuff to justify the trip.

----------


## jn1780

> In English?
> 
> Guys, my gut feeling on this is only getting worse...


Confirms what we already knew was going to happen: Chesapeake and Aubrey McClendon are under the SEC's magnifying glass.

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## soonerguru

> Won't find anything substantial,   just the usual nitpiking stuff to justify the trip.


Apparently you didn't read the latest Reuters piece: a business professor said his secret hedge fund could amount to securities fraud. 

This is bad news for OKC, but it's going to get worse if they don't chop the head off the snake. McClendon needs to go and his cozy GOP politico buddies on the board.

----------


## Spartan

> Confirms what we already knew was going to happen: Chesapeake and Aubrey McClendon are under the SEC's magnifying glass.


Right right, saw that headline--my "in English" request was actually for red dollar, whose post I couldn't make out. 

Now I'm particularly curious what red dollar meant, now that he's asserting above that the SEC won't find anything. Let's hope that is the case, because I don't know how much more chaos such a volatile company could take.

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## Maynard

> Uhhhhhh ...  not quite ,   there seems to be real support at 17.   No matter the news,  they havin trouble driving this lower than 17.
> 
> http://finance.yahoo.com/q?s=chk&ql=1



Support _was_ $16.78, which was breached yesterday ($16.74 close).  A new 52-week low was put in at 9:30 this morning @ 16.70.  Some think yesterday was capitulation.  Some don't.

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## jn1780

> Right right, saw that headline--my "in English" request was actually for red dollar, whose post I couldn't make out. 
> .


He's talking about the long term technical patterns a stock follows. Its basically a imaginary line drawn across a graph that marks when people and computers buy or sell, but a lot more complex than this. Lol 

Usually goes out the window when something unexpected happens like more bad news coming out.

----------


## blangtang

Something to watch... the Sandridge conference call in the a.m. may bring some clarity/scrutiny on the McClendon/Ward hedge fund activity.  Or maybe not.  Sandridge may need to distance themselves from the Chesapeake story...I have no idea how this will play out!

----------


## BoulderSooner

> Apparently you didn't read the latest Reuters piece: a business professor said his secret hedge fund could amount to securities fraud. 
> 
> This is bad news for OKC, but it's going to get worse if they don't chop the head off the snake. McClendon needs to go and his cozy GOP politico buddies on the board.


did he stay at holiday inn express??

----------


## Swake2

Some people are certainly drinking the Kool-Aid. 

It wasn't a "business professor", it was a securities law professor. This isn't just smoke now, there are open flames.

----------


## Maynard

TEXT-Fitch revises Chesapeake Energy outlook to negative       05/04 09:15 AM

--------------------------------------------------------------------------------

(The following statement was released by the rating agency) 

May 4 - Fitch Ratings has revised Chesapeake Energy Corporation's Rating Outlook to Negative from Stable. In addition, Fitch affirms the company's existing ratings. A complete list of ratings is provided at the end of this release. Approximately $13 billion in debt is affected by today's rating action. The revised Outlook stems from a still aggressive capital spending program for 2012 in a very weak natural gas environment. The company's 2012 spending plans remain essentially unchanged in terms of magnitude and will create a large funding gap between cash flow from operations and capital spending and leasehold acquisitions which is expected to be filled mostly from proceeds from asset sales and various monetizations. Given the size of this gap (estimated by Fitch to be approximately $10 billion for 2012) Fitch believes that the company's credit quality is likely to come under pressure. As result of weak natural gas prices, operating cash flow before changes in working capital was just $910 million for the quarter. The difference between this and amounts spent during the quarter for capital expenditures and leasehold acquisition led to an increase in long-term debt of approximately 23%, from $10.6 billion at year-end 2011 to approximately $13 billion at March 31, 2012. 

Long-term debt plus non-controlling interests increased 29% to $15,455 at March, 31, 2012 from $11,963 at year-end 2011. Given the weak natural gas pricing environment, there exists the potential for a shortfall or delay in some of the expected proceeds from the remaining planned asset sales and monetizations this year. In the first quarter (1Q), Chesapeake announced an upward revision to 2012 capex guidance for well costs on proved properties from the $6 billion-$6.5 billion range to the $6.5 billion-$7 billion range, and for acquisition of unproved properties from $1.4 billion to $1.6 billion, despite the dramatic fall-off in organic cash flow from weak natural gas prices. Also of note was the fact that the company spent $2,182 million and $1,079 million in these categories respectively in the 1Q. While it had been clear that the 1Q would be higher than the remainder of the year due to time required to ramp down spending, these levels leave relatively little room in the next three quarters for the company to stay within its full year capex guidance. Fitch anticipates the company will be sharply free cash flow negative over the next three years. 

Chesapeake also announced an increase in the projected level of asset sales to meet the company's funding needs: Chesapeake has increased its planned asset sales in 2012 from $10 billion-$12 billion to $11.5 billion-$14 billion range. The inventory of assets to sell is deep (Permian Basin, Mississippi Lime, Eagle Ford VPP, Chesapeake Oilfield Services IPO), but the extent of sales raises questions about the ability to execute on all of these transactions in such a short timeframe, and the potential impact that sales could have on core operations and medium term growth prospects. The largest mitigating factors to this concern are Chesapeake's robust track record in executing monetizations at attractive valuations over the past four years, and the updated guidance still provides for $1.6 billion-$2.65 billion in post-asset sale free cash flow for debt pay down (before working capital changes). This debt is not maturing in 2012, which provides some flexibility to the expected funding requirements. 

Catalysts for a downgrade center among other things on the potential for further increases in debt levels, driven by failure to stay within outlined capital spending targets; further erosion in natural gas pricing; an inability to execute on asset monetizations on a timely basis, or a shortfall in monetization proceeds. Other negative catalysts include additional encumbrances of assets, or downward revisions to production guidance for 2012 or 2013. Corporate governance and Board of Director oversight remains a concern. Some initial steps have been recently taken that could positively affect governance and oversight over the long term. However, these are only initial steps and bear monitoring as governance and oversight can pose indirect issues for bondholders. Liquidity is primarily provided by the company's $4 billion senior secured revolver due 2015. Nearer-term maturities for Chesapeake are $464 million in 2013 and $1.6 billion in 2015. Key covenants are primarily associated with the senior secured credit facility and include maximum debt-to-book capitalization (70% covenant threshold) and maximum total debt-to-EBITDA (4.0 times covenant level). 

Fitch has affirmed the ratings for Chesapeake as follows: --Issuer Default Rating (IDR) at 'BB'; --Senior unsecured debt at 'BB'; --Senior secured revolving credit facility at 'BBB-'; --Convertible preferred stock at 'B+'. The Rating Outlook is Negative. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

----------


## soonerguru

So has the stock been downgraded to junk status?

----------


## Oil Capital

> So has the stock been downgraded to junk status?


"Junk" is a term used in connection with debt (bonds), not equity (stock).

My understanding is that any bonds rated below BBB are considered junk.  So, in the above Fitch ratings:

--Issuer Default Rating (IDR) at 'BB   *JUNK*';
--Senior unsecured debt at 'BB'  *JUNK*;
--Senior secured revolving credit facility at 'BBB-'*BORDERLINE JUNK*; 
--Convertible preferred stock at 'B+*JUNK*

----------


## Pete

The stock is still trading in the low 17's and is up slightly thus far today.

----------


## jn1780

> TEXT-Fitch revises Chesapeake Energy outlook to negative       05/04 09:15 AM
> 
> --------------------------------------------------------------------------------
> 
> (The following statement was released by the rating agency) 
> 
> May 4 - Fitch Ratings has revised Chesapeake Energy Corporation's Rating Outlook to Negative from Stable. In addition, Fitch affirms the company's existing ratings. A complete list of ratings is provided at the end of this release. Approximately $13 billion in debt is affected by today's rating action. The revised Outlook stems from a still aggressive capital spending program for 2012 in a very weak natural gas environment. The company's 2012 spending plans remain essentially unchanged in terms of magnitude and will create a large funding gap between cash flow from operations and capital spending and leasehold acquisitions which is expected to be filled mostly from proceeds from asset sales and various monetizations. Given the size of this gap (estimated by Fitch to be approximately $10 billion for 2012) Fitch believes that the company's credit quality is likely to come under pressure. As result of weak natural gas prices, operating cash flow before changes in working capital was just $910 million for the quarter. The difference between this and amounts spent during the quarter for capital expenditures and leasehold acquisition led to an increase in long-term debt of approximately 23%, from $10.6 billion at year-end 2011 to approximately $13 billion at March 31, 2012. 
> 
> Long-term debt plus non-controlling interests increased 29% to $15,455 at March, 31, 2012 from $11,963 at year-end 2011. Given the weak natural gas pricing environment, there exists the potential for a shortfall or delay in some of the expected proceeds from the remaining planned asset sales and monetizations this year. In the first quarter (1Q), Chesapeake announced an upward revision to 2012 capex guidance for well costs on proved properties from the $6 billion-$6.5 billion range to the $6.5 billion-$7 billion range, and for acquisition of unproved properties from $1.4 billion to $1.6 billion, despite the dramatic fall-off in organic cash flow from weak natural gas prices. Also of note was the fact that the company spent $2,182 million and $1,079 million in these categories respectively in the 1Q. While it had been clear that the 1Q would be higher than the remainder of the year due to time required to ramp down spending, these levels leave relatively little room in the next three quarters for the company to stay within its full year capex guidance. Fitch anticipates the company will be sharply free cash flow negative over the next three years. 
> ...


Yet, they keep charging the Cheaspeake credit card. They do realize their not the United States or Ben Bernake don't they? LOL

----------


## OUGrad05

> large yes blighted  no ...





> So has the stock been downgraded to junk status?


Junk does NOT mean default.  It simply is means the bond goes into a higher risk pool.  You may be surprised at how many companies/names are "junk" status on the bond market.  
There is good reason for CHK to be "junk" status at the moment, especially considering the situation continues to deteriorate.  CHK has a vast asset base to tap and will likely do so to keep the company afloat.  But their ability to raise cash is likely compromised due to the vents of the past week.  

CHK has enough operating margin to service their debt but capex will have to be greatly scaled back.

----------


## sooner88

CHK is still listed as the number one shale-drilling company to invest in according to the Bloomberg terminal.... They do have a lot of debt, but the cost/barrel compared to Devon and CLR is way below either company.

----------


## OUGrad05

> CHK is still listed as the number one shale-drilling company to invest in according to the Bloomberg terminal.... They do have a lot of debt, but the cost/barrel compared to Devon and CLR is way below either company.


Cost per bbl and/or cost/MCF is very easy to manipulate.  Just make sure you look at the entire picture when doing financial analysis  :Smile:

----------


## Oil Capital

> Junk does NOT mean default.  It simply is means the bond goes into a higher risk pool.  You may be surprised at how many companies/names are "junk" status on the bond market.  
> There is good reason for CHK to be "junk" status at the moment, especially considering the situation continues to deteriorate.  CHK has a vast asset base to tap and will likely do so to keep the company afloat.  But their ability to raise cash is likely compromised due to the vents of the past week.  
> 
> CHK has enough operating margin to service their debt but capex will have to be greatly scaled back.


Then why have they been conducting the fire sale of assets?

----------


## Oil Capital

> CHK has enough operating margin to service their debt but capex will have to be greatly scaled back.


duplicate post.  sorry.

----------


## zuluwarrior0760

> Won't find anything substantial,   just the usual nitpiking stuff to justify the trip.


I especially like the announcement CHK released on the SEC probe,
that it includes a disclaimer about "forward looking statements".

Only humor I can find in this.....

http://www.chk.com/News/Articles/Pages/1691417.aspx

----------


## OUGrad05

> Then why have they been conducting the fire sale of assets?


Well I'm not exactly sure they're taking it on the chin when they have been selling assets the last few years.  Their methodology is, buy up all the leasehold, drill enough to prove some reserve potential and then sell off pieces of it to fund more leasehold purchases and drilling.  That's been their strategy and they've been selling assets to fund various portions of capex basically since inception.  You can pull the financials for yourself and see just how outrageous their capital expenditures have been...

----------


## RedDollar

> Apparently you didn't read the latest Reuters piece: a business professor said his secret hedge fund could amount to securities fraud. 
> 
> This is bad news for OKC, but it's going to get worse if they don't chop the head off the snake. McClendon needs to go and his cozy GOP politico buddies on the board.


No , its not.

----------


## RedDollar

> Support _was_ $16.78, which was breached yesterday ($16.74 close).  A new 52-week low was put in at 9:30 this morning @ 16.70.  Some think yesterday was capitulation.  Some don't.


Support is at 17.30 ,  someone steps in and buys at that level

http://finance.yahoo.com/q/bc?s=CHK+Basic+Chart&t=1d

----------


## RedDollar

This is a whole bunch of crap being thrown against the wall,  hoping something sticks.

As Aubrey says, its merely a distraction.

Someone is gunning for Aubrey, someone very powerful.    Could be a number of forces,  he's made a lot of enemies.

----------


## RedDollar

> Well I'm not exactly sure they're taking it on the chin when they have been selling assets the last few years.  Their methodology is, buy up all the leasehold, drill enough to prove some reserve potential and then sell off pieces of it to fund more leasehold purchases and drilling.  That's been their strategy and they've been selling assets to fund various portions of capex basically since inception.  You can pull the financials for yourself and see just how outrageous their capital expenditures have been...


That's pretty much SOP in the oil industry, you get a lease, then you find the money to drill it,   and you spread the risk.

----------


## sooner88

Yeah you are right, it was just pretty interesting how high CLR was compared to both Devon and CHK.... I agree when you look at CHK's statements it's pretty hard to see something that looks positive, but it is so cheap right now if natural gas consumption increases it could be a pretty good buy

----------


## Maynard

> Support is at 17.30 ,  someone steps in and buys at that level
> ---
> ---

----------


## OUGrad05

> That's pretty much SOP in the oil industry, you get a lease, then you find the money to drill it,   and you spread the risk.


Well there are different ways of going about it, but in general yes you're correct.  You, Billy Bob or myself don't have to agree with the way McClendon is running the company...but frankly he doesn't give a flying crap what we think and I'm not sure he should.  

He definitely has questionable judgement IMO with regard to mixing personal finances/business but I certainly wish no ill on CHK or their employees.  The company's financials are ok if they cut their capital expenditures...so all this talk of bankruptcy seems premature and frankly it's downright scary for OKC.  Even if you disapprove of some decisions made, you shouldn't root for a company to go belly up...

----------


## jn1780

> Aubrey that you?  Lol


So much passion. Lol

A SEC investigation will primarily focus on Aubrey and they will most certainly call him out on not disclosing the hedge fund and the relationship it had with Cheaspeake. How much trouble he gets in remains to be seen.

Won't really affect Cheaspeake itself, though. I know, famous last words.

----------


## onthestrip

> Someone is gunning for Aubrey, someone very powerful.    Could be a number of forces,  he's made a lot of enemies.


Thousands of shareholders perhaps?

----------


## soonerguru

> Someone is gunning for Aubrey, someone very powerful.    Could be a number of forces,  he's made a lot of enemies.


Yes, of course. The pending SEC investigation has nothing to do with Aubrey's actual actions, it's just a crackpot scheme executed by some anti-Aubrey conspiracy. Get a grip, dude.

----------


## Maynard

Chesapeake should be open to buyout-top investor       05/07

--------------------------------------------------------------------------------

May 7 (Reuters) - Chesapeake Energy Corp's (CHK:$17.13,00$-0.26,00-1.50%) largest shareholder urged the natural gas company to remain open to acquisition offers despite the weakness of its share price. 

In a letter to Chief Executive Aubrey McClendon, Southeastern Asset Management, holder of a 13.6 percent stake in Chesapeake, acknowledged the "dangers of opening such conversations" as the company struggles with concerns about McClendon's business dealings, on top of the low natural gas prices. 

"However, we also don't want to use this large price-to-value gap as an excuse to refuse discussions with any potential acquirers who would be willing to pay a price today that recognizes the longer term value of the company," said the letter, filed with U.S. securities regulators on Monday and signed by Southeastern CEO Mason Hawkins. 

While experts caution that pulling off a sale of Chesapeake would be extremely complicated, Southeastern said last week that it planned to take a more active role in the affairs of the company. 

Discontent among Chesapeake investors has grown following a series of revelations about the company, including a Reuters report saying that McClendon has pledged his interests in Chesapeake wells as collateral for more than $1.1 billion of personal loans. 

The Southeastern letter urged the company to accelerate its sales of assets not core to its exploration and production business, and expressed concern about the amount of time Chesapeake's management has spent on "unproductive communications" at conferences and in media interviews. 

"We appreciated receiving the letter and look forward to further discussions with our largest shareholder in the days and weeks to come," Chesapeake spokesman Michael Kehs said. 

Shares of Chesapeake were down 1.3 percent, at $17.16, in late afternoon trading. The stock hit its lowest level in three years last week at $16.70, or more than 75 percent below its 2008 peak. 

"The problem you are going to have with Chesapeake is that it has become a very complex company because of the financings they've had to do," said Neal Dingmann at Suntrust Robinson Humphrey, who puts the company's net asset value at $30 per share. 

"Because of the complexity of the company, somebody is going to really have to want those assets." 

Dingmann's view was echoed by an investment banker who spoke last week on the condition of anonymity. "To the extent to which they have clean assets, those are the ones that they've basically marked for sale, because they can and because they have to," the banker said. "I think it's tough."

----------


## blangtang

Maynard's article is a little bit concerning, now that the largest shareholder is speaking out...

----------


## ou48A

Somewhere the intrinsic value of CHK makes it a good investment….. but where is the question?

http://www.rigzone.com/news/article....=117646&hmpn=1

Chesapeake Energy Corp., battered by a glut-driven collapse in natural-gas prices and growing investor distrust of its management, still is the cheapest way of buying into the U.S. shale revolution. 

*Investors can lay hands on the equivalent of one barrel of oil reserves from Chesapeake for $3.58, compared with $9.07 a barrel at Devon Energy Corp. or $30.47 at Continental Resources Inc., the dominant player in North Dakota's crude-rich Bakken Shale, according to data compiled by Bloomberg*.

On a price-to-cash flow basis, Chesapeake also is less expensive than any other major U.S. shale explorer.

Now that the board of the Oklahoma City-based company has said it will remove CEO Aubrey McClendon from the chairman's post and examine his personal transactions for any conflicts, analysts such as Bob Brackett at Sanford C. Bernstein & Co. said the focus is on how well the CEO follows through on promises to raise cash by selling assets in Texas, Oklahoma and Kansas. An incipient gas rally also portends well for a company whose output is 81 percent gas and that holds reserves vast enough to satisfy four years of U.S. household demand.

"Chesapeake is going to bounce back," said Gianna Bern, president of Brookshire Advisory & Research Inc. in Chicago, who owns shares of Chesapeake's publicly traded pipeline business, Chesapeake Midstream Partners LP. "There is no substitute for good geology and Chesapeake has leading positions in many of the richest American shale plays."

Onshore leader

Chesapeake is the largest holder of onshore drilling leases with 15.6 million acres under its control, an area half the size of New York state. The company has amassed the biggest leaseholds in 11 of the 15 richest U.S. oil-shale formations and three of the four biggest gas-shale regions. Chesapeake held proved reserves at the end of 2011 equivalent to 3.13 billion barrels of oil.

Chesapeake lost 43 percent of its market value in the past year as new wells in shale fields unleashed more gas than utilities, manufacturers and residential consumers could burn. The supply surplus, aggravated by a mild U.S. winter that curbed furnace usage, pushed prices to a 10-year low of $1.902 per million British thermal units April 19.

The stock had its steepest drop in three years May 2 as investors punished the company for an unexpected $71 million first-quarter loss and concern about conflicts between McClendon's personal finances and professional duties.

Inquiries under way

Chesapeake was the best performer Friday on the Standard & Poor's 500 Energy Index. The shares rose 1.2 percent to finish at $17.39.

Chesapeake's price-to-cash flow ratio is less than half of Devon or Chevron Corp., according to data compiled by Bloomberg. Range Resources Corp., which drills shale formations in Appalachia, has a ratio more than seven times bigger.

The board is examining whether McClendon's use of personal stakes in company-operated wells as collateral to obtain hundreds of millions of dollars in loans put the CEO at odds with shareholders' interests. Chesapeake is searching for someone outside of the company to replace McClendon in the chairman's spot.

The U.S. Securities & Exchange Commission has opened an informal inquiry, according to a company statement Thursday. Investigators will look into whether McClendon failed to disclose possible conflicts of interest, sources say. Chesapeake and McClendon are cooperating.

Tom Nelson, who helps manage $13.5 million in Chesapeake shares at Guinness Atkinson Asset Management Ltd. in London, is looking past the corporate-governance dust-up to what a recovery in natural gas prices will mean for Chesapeake's cash flow and profits.

Gas on the rise

"One thing that everyone is choosing to discount is a continued recovery in the gas price," Nelson said. "If and when that comes to pass, and we think it will in the next 24 months, then Chesapeake is in a very strong position."

The gas recovery may already have begun: The benchmark futures contract on the New York Mercantile Exchange rose 19 percent in the past two weeks to settle at $2.291 per million British thermal units. By the first quarter of next year, the price is expected to reach $3.60, based on the median of nine analysts' estimates compiled by Bloomberg, 53 percent more than Thursday's closing price.

The glut isn't going to last long because power generators in the U.S. are burning gas at a rate not usually seen until June, said Ben Smith, president of First Enercast Financial, a Denver-based gas broker. As utilities eschew coal in favor of cleaner burning gas, Smith expects domestic gas demand to meet or exceed the record levels reached during June to September 2011.

Debt reduction

"I'm very bullish on gas," Smith said. "We're seeing a significant demand response. Any price under $3 is too low."

Even with gas close to a 10-year low, Chesapeake expects to fulfill its pledge to reduce net debt to $9.5 billion by the end of this year from $12.6 billion at the end of the first quarter, said Jeffrey L. Mobley, Chesapeake's senior vice president of investor relations and research, in an interview.

After raising $2.6 billion from asset sales during the first four months of this year, the company plans to sell another $9.5 billion to $11 billion in oilfields and other properties, including everything it owns in Texas' Permian Basin, Mobley said.

"Our plan is still intact and on track to achieve the goals we set forth," he said.

Volatility remains

Some analysts, such as James Sullivan of Alembic Global Advisors in New York, are cautioning investors that Chesapeake's stock may be prone to volatile swings for some time to come. "We think there's going to be a lot of headlines in the weeks and months to come and we'd rather let some of that get resolved first," Sullivan said. "We're also looking to see some concrete action on debt reduction and some of the other financial metrics."

----------


## jn1780

Doesn't seem like they would need all these additional employees if the plan is to sell assets. What would they manage?

----------


## blangtang

from twitter, no idea if this is/isn't true:  

Hearing conflicting reports that $CHK is & is not in a hiring freeze. Who knows.

----------


## Easy180

> from twitter, no idea if this is/isn't true:  
> 
> Hearing conflicting reports that $CHK is & is not in a hiring freeze. Who knows.


Didn't notice the head shots of their typical 40 new employees in the Sunday Oklahoman this time

----------


## Maynard

> Support _was_ $16.78, which was breached yesterday ($16.74 close).  A new 52-week low was put in at 9:30 this morning [05/03/2012] @ 16.70.  Some think yesterday was capitulation.  Some don't.


CHK crossed below its previous 52-week low of $16.70 at 10:08am.

----------


## Pete

Exclusive: After McClendon's trades, Chesapeake board gave blessing

(Reuters) - In its latest employment contract with CEO Aubrey McClendon, Chesapeake Energy Corp gave him permission to trade commodities for himself after he already had begun doing so.

Giving the CEO explicit license to play the markets represented an extraordinary incentive that enhanced one of corporate America's most generous compensation plans and reinforced the unique treatment afforded to McClendon by Chesapeake.

Oil and gas producers say they typically prohibit such trading by executives because of the potential for conflicts of interest. Indeed, Reuters found that McClendon, 52, was granted greater leeway to participate in external ventures than were his top lieutenants.

The 2009 contract did, however, limit McClendon in at least one way: Months after his personal hedge fund shut down, the agreement explicitly banned McClendon from taking an active role in any hedge fund.

The contract raises new questions about what Chesapeake board members knew of McClendon's personal investments, and whether his dealings might be at odds with his fiduciary responsibilities as head of the second-largest natural gas producer in the United States.

It isn't clear why Chesapeake changed the contract. Two board members declined to comment, and Chesapeake spokesman Michael Kehs said only that McClendon's employment contracts "fall under board review." Through a personal spokesman, McClendon also declined to comment.

Some lawyers and commodity-trading analysts said they were troubled by provisions in McClendon's agreements with the company. At a minimum, they said, McClendon could be distracted from his job at Chesapeake by his outside business activities.

They also said McClendon could have used privileged Chesapeake information to advance his own trading.

"This is edge-of-the-universe contract language," said Saul Cohen, a retired securities lawyer who formerly served as general counsel at investment bank Lehman Brothers.

Last week, Chesapeake's board stripped McClendon of his chairmanship after Reuters reported that he had taken $1.1 billion in personal loans against his stakes in Chesapeake wells during the past three years. The loans, which came mostly from an investment-management company that also did business with Chesapeake, hadn't been disclosed to shareholders. The Securities and Exchange Commission and the Internal Revenue Service have launched inquiries.

Reuters subsequently reported that McClendon partially owned and helped run a $200 million private hedge fund from within Chesapeake's Oklahoma headquarters. The fund, Heritage Management Company LLC, operated between 2004 and 2008 and traded McClendon's own cash in markets including natural gas and oil, the same commodities that Chesapeake produces.

On Friday, Senator Bill Nelson, a Democrat from Florida, asked U.S. Attorney General Eric Holder to investigate McClendon's private commodity trading for potential fraud, insider trading or commodity price manipulation.

HEDGE FUND RESTRICTION

The 2009 contract, which extends for five years, is McClendon's first to include a specific mention of hedge funds or commodity market investments, part of a new sub-section governing the types of investments he could pursue.

It says McClendon is allowed to trade a range of financial instruments such as commodities - including "short positions, long positions or positions in options" in both futures and over-the-counter markets.

It also states that McClendon could put cash into a "passive investment entity," including a hedge fund, provided it "does not actively engage in (exploration and production) activities," and "for which the Executive does not directly or indirectly provide input, advice or management."

Why Chesapeake made the changes remains unclear. The revisions could indicate they were aware of McClendon's personal hedge fund and worried that such a side business might run afoul of shareholders, according to legal experts who reviewed McClendon's current and prior contracts.

The former head trader at the Heritage hedge fund, Peter Cirino, said McClendon and Chesapeake co-founder Tom Ward spent significant amounts of time managing Heritage between 2004 and 2008. That often included daily communications between McClendon and Heritage traders, weekly strategy calls that could be "exhaustive," frequent meetings with traders in New York and occasionally in Oklahoma, and meetings or calls between McClendon and investors, Cirino said.

Chesapeake's board hasn't said whether it knew about Heritage or whether it vetted the hedge fund's trading for any conflicts. Ward said he couldn't recall whether the fund was disclosed. Even though the company still allows McClendon to trade in commodities, the 2009 agreement does signal that it was tightening its grip to some degree.

"In 2004, they had a contract that was not nearly as long, not nearly as precise," said John Coffee, a contract law professor at Columbia University. "It looks like the board learned something over the years and was increasingly beginning to restrict his activities," Coffee said of McClendon.

TRAIL OF REVISIONS

Reuters reviewed McClendon's employment contracts with Chesapeake, filed with securities regulators, since 1997. In that time, the contracts have been revised or amended about a dozen times, for a variety of reasons.

Some of the revisions relate to the controversial Founders Well Participation Program, which allowed McClendon to buy as much as a 2.5 percent share in all wells that Chesapeake drills. In the wake of the Reuters investigation into McClendon's personal borrowing, Chesapeake's board announced it would discontinue the program in 2014.

One example of the changes comes in a section of the contract called "outside activities." Initially, that section imposed a blanket ban on McClendon serving as an officer, general partner or member of an outside enterprise. It did not differentiate between public or private firms.

In July 2001, that ban was relaxed. The new contract said he could become a "general partner or member of any corporation, partnership, company or firm," so long as the activity was a "passive investment" that involved "minimal" time. It barred him from any role in a "public" company.

In July 2005, shortly after Heritage was established, the contract was again revised. The new contract said he could not "engage in activities which require such substantial services" that McClendon would be "unable to perform the duties assigned to the Executive in accordance with this Agreement." It also said he could not "serve as an officer or director of any publicly held entity" but made no other mention of external management roles.

That text remains in place in the last contract, which took effect March 1, 2009. The new text addressing commodity trading and hedge funds also has been in place since then.

McClendon's contract gives him more latitude for outside ventures than his subordinates are allowed.

Chesapeake's contracts with at least four other senior executives say the executives may not "engage in other business activities independent of" Chesapeake. They specifically ban the executives from serving "as a general partner, officer, executive, director or member of any corporation, partnership, company or firm."

PAY TO STAY

During 2008, a year in which McClendon still operated the Heritage hedge fund, Chesapeake's board awarded him the biggest pay package of any Fortune 500 CEO. It was worth around $112 million. A group of shareholders later sued, calling the pay package too generous.

The company also gave McClendon a $75 million cash bonus that year - the same year that margin calls from his brokers forced McClendon to unload more than 90 percent of his Chesapeake shares. He suffered a $2 billion paper loss, and his selling contributed to an 88 percent fall in Chesapeake's share price from its all-time high of $74 that year.

In its disclosure statement of January 7, 2009, Chesapeake explained why it chose to compensate McClendon as it did: "Because of other entrepreneurial opportunities that exist in the industry and Mr. McClendon's reduced Company stock holdings, the Compensation Committee focused on providing a retention incentive to Mr. McClendon that the Compensation Committee believed would be effective for multiple years without issuing substantial equity awards at current stock prices, which the Compensation Committee views as depressed."

The company didn't elaborate on that statement.

----------


## Pete

Exclusive: Chesapeake CEO arranged new $450 million loan from company financier

By Jennifer Ablan
(Reuters) - In the weeks before Chesapeake Energy CEO Aubrey McClendon was stripped of his chairmanship over his personal financial dealings, he arranged an additional $450 million loan from a longtime backer, according to a person familiar with the transaction.

That loan, previously undisclosed, was made by investment-management firm EIG Global Energy Partners, which was at the same time helping arrange a major $1.25 billion round of financing for Chesapeake itself.

The new loan brings the energy executive's total financing from EIG since 2010 to $1.33 billion and his current balance due to $1.1 billion, this person said. It was secured by McClendon's personal stakes in wells that have yet to be drilled by Chesapeake - and by his own life-insurance policy.

A spokesman for McClendon declined to comment; a spokesman for Chesapeake didn't respond to a request for comment.

The latest insight into McClendon's personal financial deals comes in the wake of an April 18 Reuters investigation that found McClendon had borrowed heavily against his interests in wells owned by Chesapeake, mostly from EIG.

Last week, Reuters reported that McClendon had co-owned and actively invested in a $200 million hedge fund that bought and sold the same commodities produced by Chesapeake.

An outcry over potential conflicts of interest in the loans prompted inquiries by the Securities and Exchange Commission and the Internal Revenue Service. It also spurred Chesapeake's board on May 1 to remove McClendon as chairman (though not as chief executive) and to declare an early end to a controversial perk at the center of the borrowings.

All told, McClendon has taken out loans worth $1.55 billion since 2009 from EIG and other lenders to fund his participation in Chesapeake's Founders Well Participation Program. That perk enables him to receive a stake of up to 2.5 percent in all the wells Chesapeake drills in return for shouldering the same percentage of the wells' costs.

The latest McClendon loan was arranged in late March through a McClendon-controlled company called Pelican Energy LLC, which was formed on March 6.

The deal was initially intended to be significantly larger, up to $750 million, said the person familiar with the transaction. It was scaled back last week after the Chesapeake board announced the early end to the well-stake perk, which is now slated to conclude in June 2014.

The newest financing for McClendon closed shortly before EIG joined with other investment firms and hedge funds, such as TPG Capital and Magnetar Capital, in purchasing preferred shares in a newly formed Chesapeake subsidiary that has an interest in some of the company's wells. EIG invested $100 million in that deal, called CHK Cleveland Tonkawa, which raised $1.25 billion for Chesapeake.

An EIG spokeswoman declined to comment on the newest loan or on concerns of some analysts over EIG's dual role as a financier to Chesapeake and its CEO.

In an April 23 letter to investors in two of EIG's investment funds, EIG chief executive officer R. Blair Thomas said it is "simply untrue" that there was any conflict of interest in its loans to McClendon and dealings with Chesapeake.

The Securities and Exchange Commission has opened an informal inquiry into Chesapeake's well program and the transactions involving McClendon.

In the letter, Thomas discussed two earlier loan deals that EIG had done with McClendon, involving McClendon-controlled entities called Larchmont Resources LLC and Jamestown Resources LLC. There was no mention in the letter of the financing deal completed in March to Pelican Energy.

The person familiar with the deal said Pelican was not mentioned in the letter because EIG clients "already knew about Pelican" and the loan hasn't been disbursed yet.

This person added that when Pelican was launched, EIG sent a letter and "information packet" to clients advising them of the new financing and opening the loan vehicle up to investor participation.

EIG, which spun out of the Los Angeles-based bond shop TCW in 2011, has $13 billion of assets under management.

In the latest $450 million financing, EIG secured as collateral all the assets of Pelican Energy LLC. These include McClendon's interests in wells Chesapeake might drill in 2013 and the first half of 2014. The EIG financing to Pelican will be used to enable McClendon to continue in the Chesapeake well program through June 2014.

For years, McClendon used companies he controls, including Larchmont, Jamestown and Arcadia Resources LP, to hold his stakes in the Chesapeake wells.

EIG funded Larchmont and Jamestown at $375 million and $500 million, respectively. EIG did not lend any money to Arcadia, which borrowed as much as $225 million in 2009.

The investors in the EIG funds that lent to McClendon include U.S. public pension funds, foundations and wealthy investors in Europe and Australia.
In his April 23 letter to clients, Thomas of EIG defended the two prior loans to McClendon, writing: "The crux of the story as it relates to EIG seems to be that we got too good a deal for our investors."

(Reporting by Jennifer Ablan; additional reporting by Brian Grow, Anna Driver and Jonathan Stempel; Edited by Matthew Goldstein and Michael Williams)

----------


## soonerguru

*Shareholder urging Chesapeake not to dismiss acquisition offers*

This, from the article, is a quote from the biggest institutional shareholder of Chesapeake stock:

 “We urge the company to take action in three areas: debt targets, management focus and strategic options,” Southeastern CEO O. Mason Hawkins and two other officials wrote.

Southeastern said Chesapeake's current share price is far below its net asset value, so it would not support a “lowball” bid for the company.
*“We also don't want to use this large price-to-value gas as an excuse to refuse discussions with any potential acquirers who would be willing to pay a price today that recognizes the longer term value of the company,”* officials wrote Monday in a letter to McClendon and Chesapeake's board.

http://newsok.com/article/3673337/

This is disturbing on several levels. The most obvious fear is that Chesapeake's largest shareholder is telling the board to sell off all or most of its assets and consider all acquisition offers. This is a harrowing turn of events for OKC.

And reading Pete's post above, I don't care what Aubrey has done for the community. Big whoop. He took other people's money and threw it around to build local good will. I have never heard anything kind said about the guy. I've heard from people who I know very well and are not prone to hyperbole that he's a megalomaniacal a-hole. Fine. Whatever. It doesn't matter.  The guy is risking not only his company's future, but the future of his shareholder investors and this city's economy. 

He and his rubber-stamp, overpaid board need to go NOW. The guy cannot control his personal impulse to spend money and be a big shot at Deep Fork buying $400 bottles of wine to show off for Rolling Stone. He's like a drunk. He has no ability for introspection.

----------


## jn1780

> *Shareholder urging Chesapeake not to dismiss acquisition offers*
> 
> This, from the article, is a quote from the biggest institutional shareholder of Chesapeake stock:
> 
>  “We urge the company to take action in three areas: debt targets, management focus and strategic options,” Southeastern CEO O. Mason Hawkins and two other officials wrote.
> 
> Southeastern said Chesapeake's current share price is far below its net asset value, so it would not support a “lowball” bid for the company.
> *“We also don't want to use this large price-to-value gas as an excuse to refuse discussions with any potential acquirers who would be willing to pay a price today that recognizes the longer term value of the company,”* officials wrote Monday in a letter to McClendon and Chesapeake's board.
> 
> ...


NewsOk seems to be a day late to the party. Reuters reported this yesterday.

----------


## ljbab728

And another lawsuit.

http://newsok.com/chesapeake-shareho...rticle/3673754

----------


## Maynard

Chesapeake Energy Corp (CHK:$16.37,$-0.56,-3.31%) crossed below its 52-week low of $16.55 on 8:42 AM on May 09, 2012.


Some are enjoying the ride, some aren't.

----------


## OKCTalker

$14 million + $10 million per year? That's nothing - Wait until someone brings up the overpayments for real estate.

----------


## Oil Capital

> $14 million + $10 million per year? That's nothing - Wait until someone brings up the overpayments for real estate.


Unless there is more to it than simply "overpaying", it's going to be pretty difficult to make an issue of that, it seems.  I guess if you can CLEARLY PROVE that they massively overpaid, there might be an argument re:  their duty to properly care for company assets.  But that is a pretty difficult case to prove.   The mystery is WHY did they overpay in the first place (if they did indeed overpay)?

If someone can find some kickbacks of that there was a conflict of interest in any of them (e.g. Aubrey had an interest in the seller, similar to the conflict of interest in the Chesapeake/Thunder transaction), THEN you'd have something.

----------


## soonerguru

> NewsOk seems to be a day late to the party. Reuters reported this yesterday.


You know, NewsOK made a big deal about hiring two people to cover energy issues, and yet all of the stories they run about the Chesapeake imbroglios are Reuters pieces or dated material. I find it hard to believe these reporters couldn't dig up some fresh content on their own. 

I can only imagine the reporting resources the Oklahoman would throw at a story if the scandal involved a teacher, public employee, or, God forbid, a Democratic politician. With Aubrey's foibles, we get wire copy and a smarmy editorial cautioning readers not to "rush to judgment" about McClendon. Obviously, it appears Clay Bennett and Aubrey's business partnership is preventing the paper from doing its job of digging for news.

----------


## Pete

guru, remember that the Gaylords no longer have any ownership in OPUBCO.

And I happen to know they are working on at least one story of consequence.

----------


## soonerguru

Yes, you are correct, but they still are on the editorial board. Good to know they're working on something and not just getting scooped by all of these out of town media organizations.

----------


## OKCTalker

OilCap - it's indisputable that they've overpaid for almost every piece of real estate, and that many of the purchases were NOT strategic to their core business of energy production or providing office space for that purpose. Most notable are NHP & CC (both of which are retail shopping centers), the wine storage building on Classen (out of the ground but cancelled) and the Christian Science Church. When their purchases began in earnest almost a decade ago, people learned quickly to hold out, raise their price to 2-3x FMV, and wait for a signed contract. CHK Land paid in almost every instance. 

There were never any alleged kickbacks or conflict of interest in the deals, just a massive geographic expansion of the empire using OPM. It's the "OP" - shareholders - who are expressing their displeasure by filing suits.

----------


## Questor

Christy Gaylord Everest (grand-daughter of EK Gaylord) is the CEO of OPUBCO and the former editor in chief of The Oklahoman.  OPUBCO is wholly-owned by the new parent company in Colorado but as far as I know they have left OPUBCO alone as its own independent entity for now.

Everest is married to Clay Bennett, owner of the Thunder.  Bennett co-owns the Thunder with... Aubrey McClendon.

----------


## soonerguru

> Christy Gaylord Everest (grand-daughter of EK Gaylord) is the CEO of OPUBCO and the former editor in chief of The Oklahoman.  OPUBCO is wholly-owned by the new parent company in Colorado but as far as I know they have left OPUBCO alone as its own independent entity for now.
> 
> Everest is married to Clay Bennett, owner of the Thunder.  Bennett co-owns the Thunder with... Aubrey McClendon.


Everest is NOT married to Clay. He married into the Gaylord family when he married EL Gaylord's daughter, Louise.

----------


## soonerguru

Oh, Jesus Christ, what now? Oh. This. This is a motherfracker of a fallout. Drip....drip....drip....This is going to get U-G-L-Y for Chesapeake and for OKC, it's very said to say. And yet again, the Oklahoman has none of its own reporting. They should fire those new energy "reporters."

*Reuters — Special Report: Chesapeake's deepest well: Wall Street*


Read more: http://newsok.com/reuters-special-re...#ixzz1uRDsiJiz

----------


## ljbab728

sooner, you're rants against the Oklahoman are getting a little tiresome and mean little. It almost seem like you have something personal against them.

----------


## soonerguru

> sooner, you're rants against the Oklahoman are getting a little tiresome and mean little. It almost seem like you have something personal against them.


Yes, I do. I've grown up living with their mediocre journalism. I for one would like to see them win a Pulitzer, but they are embarrassingly predictable. Your defense of them is irrational and tiresome. They aren't covering the biggest business story in the state this year because of their cozy friendships. I don't know how this "means little" unless you're an idiot who doesn't understand the basic tenets and ethics of journalism, you're friends with the publisher and don't enjoy see them justifiably critiqued, or you just like to engage in arguments you cannot win.

----------


## ljbab728

> Yes, I do. I've grown up living with their mediocre journalism. I for one would like to see them win a Pulitzer, but they are embarrassingly predictable. Your defense of them is irrational and tiresome. They aren't covering the biggest business story in the state this year because of their cozy friendships. I don't know how this "means little" unless you're an idiot who doesn't understand basic journalism.


Well I'm not a journalist but I can certainly spot someone who has an ax to grind that doesn't just involve journalism.  I'm not defending anyone, I'm just calling it as I see it about your posts.  As for being an "idiot" I think you will find that the moderators don't take kindly to that kind of reference.

If you don't like the Oklahoman quit reading them.  It's that simple.

----------


## soonerguru

> Well I'm not a journalist but I can certainly spot someone who has an ax to grind that doesn't just involve journalism.  I'm not defending anyone, I'm just calling it as I see it about your posts.  As for being an "idiot" I think you will find that the moderators don't take kindly to that kind of reference.
> 
> If you don't like the Oklahoman quit reading them.  It's that simple.


Who cares if I have an ax to grind? I've never held the paper in high regard, but then again, neither has anyone else. They're not covering the biggest energy news story in the state despite hiring two new energy reporters and making a big deal of it. That is absurd. I must give them credit, however, for doing a great job of running stories written by other organizations on their website. Maybe they could just fire their reporting staff and become Reuters distributors.

----------


## ljbab728

> Who cares if I have an ax to grind? I've never held the paper in high regard, but then again, neither has anyone else. They're not covering the biggest energy news story in the state despite hiring two new energy reporters and making a big deal of it. That is absurd. I must give them credit, however, for doing a great job of running stories written by other organizations on their website. Maybe they could just fire their reporting staff and become Reuters distributors.


As I said, no one is forcing you to read any of their articles.  I have had many complaints about the Oklahoman since I first started reading it in the 50's.  I'm still a subscriber though and will continue to be even if they run a few Reuter's articles.

----------


## soonerguru

> As I said, no one is forcing you to read any of their articles.  I have had many complaints about the Oklahoman since I first started reading it in the 50's.  I'm still a subscriber though and will continue to be even if they run a few Reuter's articles.


I have no problem with them running Reuters articles. That's the primary source of all of this news. My critique is they don't go after their associates with the same zeal as they go after, say, a Moore teacher who posts on Facebook and fraternizes with students. The bigger critique is that the whole organization is proving itself to be incompetent in gathering information on the biggest news story of the year, one in their own backyard. There's a reason why the paper is held in such low regard, and this example is the most blatant I've seen in recent years.  They have literally abdicated the reporting on this story to people in New York. Either they're unwilling to report on this and put their resources behind it or they simply can't do it. Either way, it makes them look like a joke. 

Like I said above, I would love to see the paper rise to the occasion and do its job and cover this major news, but I've read it far too long to expect as much. If you've ever spoken to anyone who actually works there, you will know they kill stories that are uncomfortable for their friends. It's just the way they do it and is one of the primary reasons the OK has the poor reputation it does.

And I'm forced to wonder: why is this newspaper, which has used its editorial page for decades to criticize and punish its political and cultural detractors, beyond simple criticism? To do so is not a "rant."

----------


## ljbab728

But that seems to be the only focus of your posts, sooner, instead of what's happening at Chesapeake.  That's what makes it a rant.
Why don't you just start another thread about the Oklahoman?

----------


## jn1780

> Oh, Jesus Christ, what now? Oh. This. This is a motherfracker of a fallout. Drip....drip....drip....This is going to get U-G-L-Y for Chesapeake and for OKC, it's very said to say. And yet again, the Oklahoman has none of its own reporting. They should fire those new energy "reporters."
> 
> *Reuters — Special Report: Chesapeake's deepest well: Wall Street*
> 
> 
> Read more: http://newsok.com/reuters-special-re...#ixzz1uRDsiJiz


They can ride out the storm..........As long as the storm does not get bigger. Cough cough

----------


## soonerguru

> But that seems to be the only focus of your posts, sooner, instead of what's happening at Chesapeake.  That's what makes it a rant.
> Why don't you just start another thread about the Oklahoman?


Your point is well taken. The Chesapeake story is the story, not the Oklahoman. I'll give you that. I don't understand, however, why you don't acknowledge the failure of our major paper to take on such a big piece. I'm holding out hope that what Pete said is true, and that they're marshaling their resources to do their job.

----------


## ljbab728

> Your point is well taken. The Chesapeake story is the story, not the Oklahoman. I'll give you that. I don't understand, however, why you don't acknowledge the failure of our major paper to take on such a big piece. I'm holding out hope that what Pete said is true, and that they're marshaling their resources to do their job.


I'm reserving judgement on that for now.  You could be right or you could be totally wrong.  We will eventually see.

----------


## blangtang

C'mon now, if you all are gonna have a fight at least make it entertaining for the rest of us to read!

----------


## ljbab728

> C'mon now, if you all are gonna have a fight at least make it entertaining for the rest of us to read!


We charge admission for that, blangtang.  LOL

----------


## OKCTalker

Ladies, put your purses down.

----------


## Pete

> Christy Gaylord Everest (grand-daughter of EK Gaylord) is the CEO of OPUBCO and the former editor in chief of The Oklahoman.  OPUBCO is wholly-owned by the new parent company in Colorado but as far as I know they have left OPUBCO alone as its own independent entity for now.
> 
> Everest is married to Clay Bennett, owner of the Thunder.  Bennett co-owns the Thunder with... Aubrey McClendon.


They've hired a new publisher and editor since their buy-out.  They've hired back several energy reporters and there is already more investigative reporting across the board.

Editorials from other Anschutz publications are frequently run in the Oklahoman.

There has been a tremendous amount of change since the purchase -- ask anyone that works at OPUBCO.

----------


## joanssmith@hotmail.com

> OilCap - it's indisputable that they've overpaid for almost every piece of real estate, and that many of the purchases were NOT strategic to their core business of energy production or providing office space for that purpose. Most notable are NHP & CC (both of which are retail shopping centers), the wine storage building on Classen (out of the ground but cancelled) and the Christian Science Church. When their purchases began in earnest almost a decade ago, people learned quickly to hold out, raise their price to 2-3x FMV, and wait for a signed contract. CHK Land paid in almost every instance. 
> 
> There were never any alleged kickbacks or conflict of interest in the deals, just a massive geographic expansion of the empire using OPM. It's the "OP" - shareholders - who are expressing their displeasure by filing suits.


The overpayment is not limited to "non-core" assets.  For example, they paid Bronco approx. $15 million/rig in that acquisition.

----------


## Oil Capital

> OilCap - it's indisputable that they've overpaid for almost every piece of real estate, and that many of the purchases were NOT strategic to their core business of energy production or providing office space for that purpose. Most notable are NHP & CC (both of which are retail shopping centers), the wine storage building on Classen (out of the ground but cancelled) and the Christian Science Church. When their purchases began in earnest almost a decade ago, people learned quickly to hold out, raise their price to 2-3x FMV, and wait for a signed contract. CHK Land paid in almost every instance. 
> 
> There were never any alleged kickbacks or conflict of interest in the deals, just a massive geographic expansion of the empire using OPM. It's the "OP" - shareholders - who are expressing their displeasure by filing suits.


Understood.  But I am skeptical that any of that translates into a successful shareholder suit.  1.  It will be hard to PROVE overpayment that is of sufficient extent to be actionable.  (Keep in mind, market price is the amount a willing buy will accept from a willing seller in an arms-length transaction.  These transactions, assuming they are all arms-length, are, by definition market prices.)   2.  invest in things that are not strategic to their core business are not against the law or a violation of the officers' or directors' duties to the corporation.  3.  Even if they "overpaid", what, exactly is the claim that is to be made by shareholders in this matter?  Have shareholder suits been filed regarding the real estate and other side investments?

----------


## Maynard

Chesapeake VPP deals saddle it with $1.4B in undisclosed liability, WSJ says -- 05/10/2012 -- 2:50PM



> Chesapeake Energy (CHK) has made a number of long-term commitments known as volumetric production payments, or VPPs, that require it to deliver specific amounts of oil and natural gas each month through 2022 and these deals saddle the company with about $1.4B of previously unreported liabilities over the next decade, according to The Wall Street Journal.

----------


## Pete

> Understood.  But I am skeptical that any of that translates into a successful shareholder suit.  1.  It will be hard to PROVE overpayment that is of sufficient extent to be actionable.  (Keep in mind, market price is the amount a willing buy will accept from a willing seller in an arms-length transaction.  These transactions, assuming they are all arms-length, are, by definition market prices.)   2.  invest in things that are not strategic to their core business are not against the law or a violation of the officers' or directors' duties to the corporation.  3.  Even if they "overpaid", what, exactly is the claim that is to be made by shareholders in this matter?  Have shareholder suits been filed regarding the real estate and other side investments?


Good points.

The biggest issue shareholders are likely to raise is the investment of hundreds of millions in real estate that has has nothing to do with Chesapeake Energy.  Not only have they bought NH Plaza and developed Classen Curve, they are losing tons and tons of money doing so.  The shareholders have the right to see the P&L from these real estate investments.  Not only have they sunk hundreds of millions but it's unlikely they are getting paid much in the way of rent.  It's widely known that WF, Balliets and other tenants were given not only sweetheart lease deals, but CHK also paid to build out their space and relocate them.

It's also rumored that McClendon now has a partial ownership in Balliet's.  If so, big conflict of interest for one of his businesses to be leasing back from CHK, especially at way below market rates.  He/CHK are also supposed to be behind the new NH Market so there would be similar issues there.

Just as a very small example in their billion dollar plus real estate investment, they have sunk about $20 million into condos in complexes around NH Plaza.  One complex (Kings Court) required over $4 million and they similar tore the place down and it's been sitting as vacant land for years.  It's just over an acre.  Worse yet, they've put about $15 million into three other complexes (Grandmark, Sherwood Arms and NH Manor) but don't own all the units in any, so they can't even pull those buildings down and are stuck with taxes and HOA fees for dozens of empty units not worth half what they have paid.



It's easy to separate out their expenditures by what is for employees (their campus and a bunch of other office buildings around town) and what isn't.  The money spent for housing employees is wildly extravagant.  And more to the point, the buildings constructed are worth much less than what they have invested because they have way overspent on the underlying property.  The AVERAGE price per acre of the property CHK has been buying is about $2 million an acre.


I think what will happen is that the shareholders will ultimately want a full, separate accounting for the real estate dealings and when they see the numbers, you can count on plenty more freak-outs and lawsuits.

----------


## Questor

> Everest is NOT married to Clay. He married into the Gaylord family when he married EL Gaylord's daughter, Louise.


You're right, Bennett is married to Everest's sister.

----------


## Questor

> They've hired a new publisher and editor since their buy-out.  They've hired back several energy reporters and there is already more investigative reporting across the board.
> 
> Editorials from other Anschutz publications are frequently run in the Oklahoman.
> 
> There has been a tremendous amount of change since the purchase -- ask anyone that works at OPUBCO.


I guess I would just like to see them give as much coverage to this story as they did to Feed the Children a few years ago.  A day did not go by at the time without there being a new, in-house story on their front page.  Often times they would just leave the same unchanging story linked from their main page for days or weeks.  I have rationalized they did this because FTC is a large international organization and there were many odd things going on with them.  Well, here we have a large international company and there seems to be some odd (just saying odd, not saying bad) stuff going on there too.  Is it not worthy of at least the same level of coverage?

----------


## sooner88

This is a pretty relevant video in regards to CHK.

----------


## OKCTalker

WSJ reporting this morning on Page 1 about a previously-undisclosed $1.4 billion, off balance sheet liability from CHK's VPP deal. The Journal reviewed 10 publicly-filed VPP documents in four states which show "Chesapeake's liability for those costs is far larger than previously thought by investors and analysts, most of whose estimates were lower than $600 million." One analyst was quoted as saying that CHK's "financial statement visibility still needs to be improved." 

Understatement of the week.

----------


## Maynard

Chesapeake: McClendon Received $108M From Sale Of Stake In Wells       05/11 10:37 AM

--------------------------------------------------------------------------------

HOUSTON (Dow Jones)--Chesapeake Energy Corp. (CHK:$16.84,00$-0.34,00-1.98%) on Friday disclosed that embattled Chief Executive Aubrey McClendon has received $108 million for his minority stakes in wells the company has sold.

Chesapeake had previously said that entities controlled by McClendon were parties to a 2011 deal in which the company sold its assets in Arkansas'sFayetteville Shale to BHP Billiton Ltd. (BHP, BHP.AU) for $4.75 billion, participating "at the same price and on the same terms and conditions" as Chesapeake.

But until a securities filing on Friday, Chesapeake had not said how much McClendon and limited liability companies he controls earned in this or other deals. The disclosure adds detail to how McClendon benefits from a controversial corporate perquisite that gives him a small stake in every well the company drills, which has come under increasing scrutiny in recent weeks.

McClendon, 52, also has to pay a share of the costs of drilling all of the wells, which totaled $128 million last quarter and $457 million in 2011. To pay for these costs, he has pledged his interests in the wells as collateral to borrow up to $1.4 billion from financial firms, including some that have done business with Chesapeake.

Chesapeake has said that the perquisite, known as the Founder Well Participation Program, aligns McClendon's interests with shareholders because it gives him a financial stake in the wells the company drills. But in the wake of these revelations, Chesapeake and McClendon agreed to terminate the program early. The board has also stripped McClendon of his chairmanship and will appoint a non-executive chairman.

The board is reviewing McClendon's financial transactions, and the U.S. Securities and Exchange Commission has launched an informal inquiry.

----------


## Maynard

Pushing Chesapeake on governance, by proxy and fax       05/11 01:43 PM

--------------------------------------------------------------------------------

* Armstrong wants yearly board votes at Chesapeake

* Armstrong gains NY state backing for June vote

* Chesapeake argues for status quo under new state law 

By Ross Kerber

May 11 (Reuters) - One of the earliest critics of Chesapeake Energy Corp (CHK:$16.451,0$-0.729,0-4.24%) is a 70-year-old Denver investor with no patience for e-mail. 

Armed instead with just a telephone and a fax machine, Gerald Armstrong pushed for corporate governance changes at the Oklahoma energy company long before the recent attention on the oversight of its founder and Chief Executive Officer, Aubrey McClendon. 

In 2008 and 2009, Armstrong convinced a majority of Chesapeake shareholders to back proposals for annual elections of directors, something he said would make them more accountable. 

After those votes, Oklahoma adopted a law that effectively undermined his victories. Now, Armstrong is at it again, asking company stockholders to approve in June a measure to reincorporate Chesapeake in Delaware, which would render the Oklahoma law irrelevant. 

Armstrong expects that the measure to reincorporate Chesapeake in Delaware will gain favor with big institutional investors in light of the current furor following Reuters reports revealing McClendon has taken out loans worth $1.5 billion to fund his participation in a Chesapeake well drilling incentive plan. 

"Aubrey McClendon is not walking on water," Armstrong said. 

One supporter of changing where Chesapeake is incorporated is New York State Comptroller Thomas DiNapoli, who oversees about $140 billion in state pension funds, a spokesman said. 

Armstrong hopes other big investors will follow suit and the influential Council of Institutional Investors mentioned the proposal favorably in a recent newsletter. 

Asked about Armstrong and the push to reincorporate Chesapeake in Delaware, a Chesapeake spokesman referred to language in the company's proxy. In that regulatory filing, Chesapeake argued there are business advantages for the natural gas company if it remains incorporated in Oklahoma and that its current structure has its own governance benefits such as making it easier to defend against a hostile takeover bid. 

Armstrong is part of a loose network of independent shareholder activists who file scores of proxy measures every year. Many of these proposals are not adopted, but over time the measures can send a message. 

Research firm FactSet SharkRepellent found that Armstrong filed 66 shareholders proposals in 2010 and 27 in 2011. In both years, his proposals on average received about 52 percent support among the votes cast. 

Armstrong speaks with an emphasis on detail that shows his background in business as president of a Colorado land company from 1973 to 2006. Since he often targets smaller companies, he is not as well-known as other sha reholder activists suc h as Evelyn Davis. Also working against his notoriety is the dislike he developed for e-mail when he tried it. 

"I got so much junk!" he says. 

Armstrong owns 900 shares of Chesapeake. He says he started buying the shares in 2005, when they cost around $30 per share, and he thought they were poised to rise. That happened for a while, but now they are trading around $17. 

"It looks like a diminishing return at this point," he said.


Chesapeake makes up less than 1 percent of his total portfolio, which is concentrated on smaller companies. 

Unlike so-called "socially responsible investors," Armstrong says he only buys stocks he thinks are good investments and only gets involved in proxy efforts when changes seem necessary. Often, Armstrong does not travel to shareholder meetings, but enlists others to speak for his proposals. 

Armstrong says he only wants to improve the way companies are run. 

"I'm not a troublemaker," he says. Company managements "make the trouble."

----------


## blangtang

delaying their quarterly filing, shares tanking again...

----------


## Maynard

CHK is trading with a 15-handle now.  Fresh 52-week low, down -10+% @ $15.41.

----------


## Maynard

Chesapeake up against low-key activist Mason Hawkins       05/11 02:13 PM

--------------------------------------------------------------------------------

* Chesapeake shareholder Hawkins occasional activist

* Hawkins' value strategy has led to uneven performance

* Hawkins' fund has stake in Chesapeake since 2006 

By Sam Forgione

NEW YORK, May 11 (Reuters) - O. Mason Hawkins, whose $34 billion mutual fund firm is Chesapeake Energy Corp's (CHK:$15.88,00$-1.30,00-7.57%) largest shareholder, is best known as a Warren Buffett-style value investor who takes big stakes in companies and holds them, often for years. 

But occasionally Hawkins turns activist and agitates for corporate change. His firm, Southeastern Asset Management, owns 13.6 percent of the embattled natural gas company, whose shares are down 41 percent since Southeastern began building its stake six years ago. 

Chesapeake's board has come under fire after Reuters publicized that the company's co-founder and Chief Executive Officer Aubrey McClendon had borrowed $1.5 billion against stakes he received in wells drills by Chesapeake. 

Hawkins, chairman and chief executive officer of Southeastern, sent a letter to Chesapeake's board on May 7 urging them to be open to an approach by a potential acquirer. A few days earlier, Hawkins applauded the board's decision to strip McClendon of his title as chairman. 

Just a few months ago, Hawkins was praising McClendon for his ability to monetize the company's oil, gas and land assets. 

Yet with shares of Chesapeake plunging about 10 percent since the initial Reuters story on April 18 about McClendon's loans, Hawkins is emerging as the voice of the Oklahoma-based company's beleaguered stockholders. 

He took a similar activist strategy with Olympus, the Japan-based optics manufacturer, after it got embroiled in an accounting fraud scandal last October. 

But even before the disclosure about the loans to McClendon, shares of Chesapeake had fallen 54 percent since September 2008 as a result of a collapse in natural gas prices. 

Hawkins' strategy of focusing on company fundamentals and seeking out stocks he believes are undervalued is one pioneered by Buffett at Berkshire Hathaway (BRK/A:$122,820.00,00$-130.00,00-0.11%) . But the returns of Hawkins' flagship Longleaf Partners Fund, which holds Southeastern's Chesapeake stake, have been anything but Buffett-like in the past five years. 

Hawkins declined to comment on Chesapeake or his funds' performance, but emailed: "We appreciate your interest." 


GRAHAM ACOLYTE 

Hawkins, 64, was raised in Georgia and currently runs Southeastern out of Memphis, Tennessee. He is an acolyte of renowned value investor Benjamin Graham - also Buffett's idol - and donated $1 million to the Graham-Buffett Teaching Endowment fund in 1997. 

Hawkins, an avid pheasant hunter, is known for his in-depth research into company management and told business students in a 2005 speech that he reviews "everything from their college days to their current CEO status." 

There is little biographical information on the company's website and he is reluctant to speak to the press, rarely giving interviews. 

Longleaf Partners Fund, which has $8.63 billion in assets and invests in companies as diverse as Walt Disney Co (DIS:$45.67,00$0.39,000.86%) , construction company Vulcan Materials (VMC:$40.03,00$0.04,000.10%) and Abbott Laboratories (ABT:$62.13,00$-0.09,00-0.14%) , has a five-year annualized return that is down about 2.42 percent. By comparison, mutual fund research firm Lipper reports other funds with similar investment styles are down just 0.4 percent over the same period. 

Over the past five years, Berkshire Hathaway (BRK/A:$122,820.00,00$-130.00,00-0.11%) class A Shares are up 12.6 percent. 

This year Longleaf is up 8.37 percent, modestly trailing the 8.49 percent gain in the S&P 500. 

Longleaf suffered a big loss in 2008, during the height of the financial crisis, when it plunged 50.6 percent. Meanwhile, the S&P 500 and the fund's main competitors were down about 37 percent, according to Lipper data. 

But Longleaf bounced back in 2009 with a 53.6 percent return that dominated its peer group. 


LONG-TERM VIEW 

Fund experts and Hawkins admirers say lagging performance from time to time is to be expected with a fund that goes after beaten down stocks and generally invests in no more than 25 companies at a given time. 

"If you're a value investor like they are, you're going to have times where you're very much out of step with the market. And they have been out of step with the market for the last couple of years," said Don Phillips, president of fund research at Morningstar. 

John Rogers, the head of Ariel Investments, said "the short-term performance is totally irrelevant to me," and likened Hawkins' letters to shareholders to those of Buffett and PIMCO co-founder Bill Gross. Rogers, whose mutual fund firm follows a similar strategy to Southeastern's, said Hawkins' funds are offered in the 401K plan for Ariel's employees. 

Hawkins' faith in Chesapeake had not waned much until recently. 

Longleaf bought over 20 million shares of Chesapeake in the second quarter of 2006 and has steadily increased its exposure ever since, except for a 13-million share reduction in the first quarter of 2008, according to regulatory filings. As of May 2, 2012, the fund owned almost 90 million shares. 

Over that period, Chesapeake's stock has plunged 41 percent. 

Hawkins, in his 2011 letter to investors, generally praised McClendon's stewardship of the company. 

"Aubrey McClendon, co-founder and CEO, has been controversial but has consistently monetized assets at far above cost," Hawkins wrote. 


PUSH FOR CHANGE 

With Olympus, Hawkins only went activist in late October after the accounting scandal broke, eventually calling in November for key members of the company's board to resign or be replaced. 

In March, Southeastern reduced its stake in Olympus to 3.95 percent from 5.09 percent, after its proposal for a new lineup fell short of getting sufficient shareholder support. 

Hawkins has also signaled that Southeastern may push for change at Vulcan Materials Co (VMC:$40.03,00$0.04,000.10%) and Martin Marietta Materials Inc (MLM:$76.72,00$-0.27,00-0.35%) by filing 13D stakes in each this year, which give shareholders special voting and investment power under Securities and Exchange Commission rules. 

Those who know Hawkins say that his activism stems from his conviction in his holdings rather than a desire to seek out conflict. 

"On the scale of those that just go out and raise money to be activist, he's not on that scale at all," said Mario Gabelli, chairman and chief executive officer of GAMCO Investors Inc. 

Gabelli added that Hawkins doesn't advertise his activism, but adopts it when he senses "something wrong in the company in terms of corporate governance."

----------


## Maynard

> CHK is trading with a 15-handle now.  Fresh 52-week low, down -10+% @ $15.41.


Welp, that 15-handle didn't last long -- trading in the 14's now (day low @ 14.49).

----------


## Maynard

> delaying their quarterly filing, shares tanking again...


Wasn't that odd?  The 'delayed filing', then the 10Q filing, then the bad news in the filing.




--------------------------------------------------------------------------------


Chesapeake may delay assets sales - filing       05/11 03:04 PM


May 11 (Reuters) - Chesapeake Energy Corp (CHK:$14.802,0$-2.378,0-13.84%) may delay assets sales in order to preserve cash flow needed to comply with requirements of its corporate credit facility, the company said in a regulatory filing on Friday. 

Chesapeake has previously said it planned to sell or monetize assets in order to reduce its debt and cover a spending shortfall.

----------


## SharkSandwich

Chesapeake Energy CEO on shaky ground with W.Va. land mortgages

By Erich Schwartzel / Pittsburgh Post-Gazette 
BROOKE COUNTY, W.Va. -- Most of the clusters of land that Chesapeake Energy has leased for natural gas drilling in this rural West Virginia county are pooled into rectangular shapes that lean northwest, the better to allow the rock below to fracture properly and the better to make room for a massive drill.

Yet the only two Brooke County properties that the Oklahoma company's CEO Aubrey McClendon has chosen to mortgage his personal drilling stakes in do not fit that mold.

Marred by gaps of land out of the company's control, neither cluster appears likely to see the level of drilling needed to pay back Mr. McClendon's loans.

That may be strategic.

By mortgaging properties that appear to be some of his company's least desirable assets, Mr. McClendon can raise money off holdings that might not otherwise be profitable. And should he default on the loans, he would lose a stake in property that wasn't his company's best bet anyway.

The arrangement protects Mr. McClendon from bigger personal losses while exposing the company's shareholders to the kind of risky financial deals that have drawn scrutiny and caused the stock price to plummet in recent weeks.

Meanwhile, the private equity firms lending the money for the mortgages haven't specified what research went into the properties, and shareholders have been told little about the specific pieces of farmland that are being used by Mr. McClendon to raise money on the promise of future drilling.

The issue of the CEO's mortgages has been in the spotlight lately, although the program that allows Mr. McClendon to purchase a 2.5 percent stake in every well drilled by Chesapeake Energy has been in place for years. Mr. McClendon has been borrowing against the stakes he acquired through the Founders Well Participation Program, allowing him to raise cash at a time when competitors are pulling back and waiting for natural gas prices to rise.

The undisclosed mortgages, taken out by Mr. McClendon's Jamestown Resources company, are said to top $1 billion -- an amount of money that critics say indicates an unsustainable practice of constant leveraging.

Critics see a parallel strategy in Mr. McClendon's high-risk personal portfolio and the company's ongoing debt problems, with more than $10 billion in debt reported last quarter. For his part, Mr. McClendon has said he's aligning his personal portfolio with his company's success, assuring shareholders that's the recipe for an incentivized executive.

But in Brooke County, the CEO's personal portfolio is aligned with some of his company's least promising assets.

One cluster of land that he has borrowed against has a sizable chunk of necessary property missing in the middle -- courtesy of a neighbor who refuses to sign a lease. Another is a jagged assembling of properties that looks nothing like the other pooled units in Brooke County.

Even in the case of the most promising land units, the risk of using these oil and gas interests as collateral seems high.

Industry activity underground has slowed because natural gas prices have dipped to levels that not even the private equity firms granting the mortgages anticipated when underwriting them. And up on the surface, the promise of lucrative future drilling is compromised by the politics and drilling delays of the Marcellus region, whether it's because of neighbors who refuse to allow drilling on their land or firms that lease land right next door.

Brooke County's example raises the question: How valuable are the properties being used to raise this controversial capital?

• 

In 2005, Chesapeake shareholders approved Mr. McClendon's participation in the Founders Well Participation Program, an arrangement that allowed the CEO to take a working 2.5 percent interest in each well his company drills. Mr. McClendon's quiet mortgaging of those stakes has prompted shareholder lawsuits, forced Mr. McClendon to give up his chairmanship position and raised questions about Chesapeake's aggressive expansion into natural gas-rich shale regions in Appalachia.

The mortgages -- first reported by the Post-Gazette on March 25 -- borrow against whole drilling units and is financing his share of the well costs.

Chesapeake has assembled its West Virginia properties into "units" that treat multiple plots of land as one giant holding, often with several wells on each.

Units in Brooke County tend to follow a similar shape: they are relatively clean, tilted rectangles that slant toward the northwest. The units are laid out that way because drillers fracture shale rock in a northwest direction, running perpendicular to the east-facing formation. That creates the maximum amount of fissures and allows shale gas to escape more freely.

Only two units in Brooke County don't have the layout conducive to northwest-facing drilling. Those are the two properties that Mr. McClendon has mortgaged.

Each already has one well on the property, but any future development needed to fully drain the acreage is going to face several impediments.

Drillers typically space wells about 1,000 feet apart, and will usually drill horizontally underground at least 3,000 feet, said Tim Carr, a professor of geology and geography at West Virginia University.

Using maps that Chesapeake submitted to Brooke County officials, it becomes clear that the John Hupp North and Mildred Mani units are unlikely to see the same scale of drilling activity as the unmortgaged properties.

One unit, the 461-acre John Hupp, has a sizable piece of acreage missing from the middle that would stop any additional drilling rig from traveling the optimal 5,000 feet underground.

That missing acreage is property owned by Marion Stone, a Brooke County woman who refuses to sign a lease with Chesapeake over what she sees as unfair lease terms and company practices.

Chesapeake has drilled one well on the John Hupp unit, along its far west portion. Any well that might run parallel to that first drill would be cut short by Ms. Stone's unleased property.

Another land cluster, called the Mildred Mani unit, is a jumbled, 254-acre shape with angular cuts and one current well. Buying up the surrounding property to make the unit more symmetrical would be difficult, as well. Most of it is owned by BP and Somerset Minerals LP.

Still, Mr. McClendon has been able to generate cash flow from these two less-than-desirable holdings through mortgages with EIG Global Energy Partners, a Washington, D.C.-based energy investment company.

The two properties represent a small portion of Chesapeake's holdings in Brooke County.

The company owns more than 11,000 acres there, most of it acquired through a land swap with driller Range Resources in 2010. Pooling several properties into giant "units" allows the company to minimize surface impact and extract gas from multiple leaseholds using a single rig, the company says.

Work on the Hupp and Mani units is further complicated because companies often save money by planning sequential wells on the same unit. That helps avoid the need to move rigs and equipment far distances.

"Shale gas is like McDonald's," said Mr. Carr. "You're making your money on your ability to do it efficiently."

Chesapeake referred questions to Ron Hutcheson, a crisis management specialist responding to inquiries about Mr. McClendon's personal assets. Mr. Hutcheson declined comment for this story.

• 

While the Hupp and Mani units illustrate the physical challenges in treating oil and gas interests as a traded commodity, both units point also to the built-in market risks that come with trading natural gas mortgages like the home mortgages that soured the economy in 2008.

Natural gas prices have plummeted to their lowest levels in years, dipping below $2 per Mcf and forcing companies across the industry to temper Marcellus Shale operations and reduce projections.

When EIG agreed to take on Mr. McClendon's loans, the company underwrote the mortgages at a time when natural gas was selling at around $6 per Mcf, said a source with knowledge of the firms' agreement.

Now that gas prices have fallen sharply, any return for EIG on these mortgages could take up to six years, the source said -- perhaps triple the amount of time the company initially hoped.

Proponents of the mortgage arrangement say the energy sector is not a get-rich-quick business, and that EIG and Chesapeake see this as a long-term strategy.

Yet EIG is protecting itself, too, with interest rates on Chesapeake's loans as high as 13 percent.

"It's the equivalent of a payday loan," said Mark Hanson, a Chicago-based analyst at Morningstar Inc. "It only speaks to the corner that Mr. McClendon has put himself into. You only go to a loan shark when you have nowhere else to go."

EIG and the other firms that issued Mr. McClendon's mortgages don't stand to lose if the company or its CEO file for bankruptcy.

That's because the company is required to continue paying so-called working interest partners off a well's revenue, even in the event of a bankruptcy brought on by the recent trouble, meaning royalty checks would still go to landowners and EIG would still receive payments on its loans.

Should either bankruptcy occur, however, it might jeopardize EIG's mortgaging of any future wells that Chesapeake drills.

Mr. McClendon's personal 2.5 percent program isn't due to expire until June 2014

----------


## OKCTalker

Stock closed down 13.9% today at $14.85 on late news that they're delaying asset sales due to compliance concerns with existing credit facilities. Is the decline in stock price now having a profound affect on market cap, which in turn is jeopardizing loan covenants? Or put more simply, are they running out of unpledged assets they can sell?

----------


## SharkSandwich

http://www.bloomberg.com/news/2012-0...ke-energy.html

Pickens Says He’s Sold Off Holdings of Chesapeake Energy
By Kelly Bit and Katherine Burton - May 10, 2012 11:01 PM CT .

T. Boone Pickens, the billionaire energy investor, said he’s sold off his shares in Chesapeake Energy Corp. (CHK), his third-biggest stock holding at year-end. 

“We do not own Chesapeake stock,” Pickens said yesterday at the SkyBridge Alternatives Conference in Las Vegas. “We didn’t like natural gas.” 

Chesapeake’s directors said last week they will strip Aubrey McClendon of the chairman’s post and are conducting an internal review of his personal transactions involving corporate jet travel, and the U.S. Securities and Exchange Commission opened an informal inquiry. The stock declined 23 percent in 2012 through yesterday. 

Asked whether it was “the politics of the company” that spurred his share sale, Pickens said, “It was not.” 

“Aubrey is a good friend,” Pickens said. “The guy has pulled off some unusual deals. He’s done some very innovative things. He’s in a spot where he’s spending more than his cash flow.” 

BP Capital Management, the investment firm Pickens founded in 1996, held 570,055 shares of Chesapeake as of Dec. 31, according to data compiled by Bloomberg. Its biggest equity holdings were BP Plc (BP/) and McMoRan Exploration Co. (MMR) 

Pickens said the price of West Texas Intermediate oil could reach as high as $128 a barrel later this year. The oil for June delivery traded at about $96 a barrel yesterday.

----------


## Maynard

Chesapeake Energy Corporation Enhances Financial Flexibility with $3.0 Billion Unsecured Loan to Be Repaid from 2012 Asset Sales       05/11 06:19 PM

--------------------------------------------------------------------------------

OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation (CHK:$14.81,00$-2.37,00-13.80%) today announced it has entered into a $3.0 billion unsecured loan from Goldman Sachs Bank USA and affiliates of Jefferies Group, Inc. The net proceeds of the loan, after payment of customary fees and original issue discount (if any), will be utilized to repay borrowings under the company’s existing corporate revolving credit facility. 

The new facility, which ranks pari passu to Chesapeake’s outstanding senior notes, matures on December 2, 2017 and may be repaid at any time this year without penalty at par value and carries an initial variable annual interest rate through December 31, 2012 of LIBOR plus 7.0%, which is currently 8.5%, given the 1.5% LIBOR floor in the loan agreement. During the remainder of the year, Chesapeake plans to complete asset sales totaling $9.0-$11.5 billion and intends to use a portion of the proceeds from these asset sales to repay the loan. Chesapeake has received strong interest from prospective buyers of its Permian Basin asset sales process and its Mississippi Lime joint venture process, and the company expects to complete these two transactions in the 2012 third quarter. 

Management Comments

Aubrey K. McClendon, Chairman and Chief Executive Officer, said, “This short-term loan from Goldman and Jefferies provides us with significant additional financial flexibility as we execute our asset sales during the remainder of 2012. 

As previously announced, Chesapeake’s business strategy is evolving in 2012 from the unconventional resource play identification and leasehold capture strategy of the past seven years to a strategy now focused exclusively on developing the 10 core plays in which we have built a #1 or #2 position and on continuing our transition from natural gas to liquids, reducing capital expenditures and paying down long-term debt. We believe Chesapeake has built the nation’s best collection of E&P assets, and we are 100% committed to delivering on the very substantial growth and value embedded in these assets for our shareholders through a relentless focus on developing our 10 core plays.”

----------


## adaniel

^^
So does this pretty much amount to a bailout?

----------


## Allentown

I cant wait to read through this thread; interesting insights.  Im following this myself and hope that I might be able to contribute to this dialog.

----------


## aggie steve

That's a 'band-aid' not a 'bailout'.

Hope I'm wrong, but it's starting to reek Enron style.

----------


## OKCTalker

Chairman and Chief Executive Officer?

----------


## OUGrad05

> That's a 'band-aid' not a 'bailout'.
> 
> Hope I'm wrong, but it's starting to reek Enron style.


How is this turning into Enron?  Considering there are few scalable similarities at this point that's a bold statement.

The off balance sheet issues are quite disturbing but that doesn't make CHK the next Enron unless there's a LOT more we dont' know about.

----------


## Easy180

> How is this turning into Enron?  Considering there are few scalable similarities at this point that's a bold statement.
> 
> The off balance sheet issues are quite disturbing but that doesn't make CHK the next Enron unless there's a LOT more we dont' know about.


At this point in the game would anyone be shocked to find out that there is a LOT more we don't know about?

----------


## jn1780

> At this point in the game would anyone be shocked to find out that there is a LOT more we don't know about?


Well, right now Chesapeake is follow the same pattern of denial and deception that we have become accustomed to from failing companies over the past four years.

Hopefully, the similaries end at some point.

On that note, Cheaspeake will do be ok as long as they have the bank mobsters on their side. Ex. The Goldman Sachs lending deal.

----------


## ljbab728

> Your point is well taken. The Chesapeake story is the story, not the Oklahoman. I'll give you that. I don't understand, however, why you don't acknowledge the failure of our major paper to take on such a big piece. I'm holding out hope that what Pete said is true, and that they're marshaling their resources to do their job.


It appears that this is not from Reuters.  I don't think the Oklahoman is avoiding anything.

http://newsok.com/chesapeake-energy-...rticle/3674828

http://newsok.com/article/3674829/

http://newsok.com/article/3674827/

----------


## Questor

Yeah they finally started beefing their coverage up on Friday. Glad to see it.

----------


## OKCTalker

The Oklahoman isn't burying the story, but they're being thrashed in depth and speed by Reuters and the WSJ. Today's DO stories contain no new information, no mention of recent disclosures (late quarterly filing, suspension of asset sales or the $3 billion credit line from Goldman Sachs), or additional depth/context.

----------


## lasomeday

> The Oklahoman isn't burying the story, but they're being thrashed in depth and speed by Reuters and the WSJ. Today's DO stories contain no new information, no mention of recent disclosures (late quarterly filing, suspension of asset sales or the $3 billion credit line from Goldman Sachs), or additional depth/context.


Tulsa World has had some articles as well that differ from the above.  I can't find them today, but they are interesting.

----------


## soonerguru

> It appears that this is not from Reuters.  I don't think the Oklahoman is avoiding anything.
> 
> http://newsok.com/chesapeake-energy-...rticle/3674828
> 
> http://newsok.com/article/3674829/
> 
> http://newsok.com/article/3674827/


Nice to see them begin reporting on this.

----------


## Pete

To be fair, OPUBCO just hired back several of their energy reports as all this Chesapeake news started to break.

They've only been back on the job a very short time and I'm sure it's taken a fair amount of time to ramp up.

----------


## blangtang

Icahn is back, according to Wall Street Journal...

----------


## Pete

> Icahn is back, according to Wall Street Journal...


That's very, very scary to me.

Let's hope he's just bargain hunting and looking for a quick flip.

----------


## Midtowner

Not strategic to their core business?  Maintaining an excellent campus surrounded by quality establishments to shop at and have a drink after work is not key to attracting top talent?

----------


## jn1780

> Not strategic to their core business?  Maintaining an excellent campus surrounded by quality establishments to shop at and have a drink after work is not key to attracting top talent?


It would be a great if they were a tech company and intellectual property was a critical part of their business.

----------


## soonerguru

The fact that they are unable to sell assets to reduce debt -- their stated corporate plan -- due to their byzantine financial structure is worrisome indeed. Essentially, the company is facing a liquidity crisis, and it appears they have been engaged in raising revenue through the sale of derivatives and other "off balance sheet" financing, and they are locked in to future drilling agreements just to satisfy this debt. This is why people use the Enron comparisons. They need to borrow to pay for the other borrowing they've done, and they're unable to do so. Meanwhile, their stock price has been hammered. This is a spiraling mess, and Aubrey McClendon and his cozy board members are to blame. 

I'm beginning to think the only prayer this company has of survival is to sell, and I'm guessing that's what will happen. We've seen this movie before and we know how it ends. This could be very bad news for OKC.

----------


## OKCTalker

CHK has always claimed that their business dealings don't conceal anything improper, they're just very complicated and beyond what the average person can understand. That may be so, but the truly smart people who have provided prior financing are now either withholding funds or offering it at very high rates - 8.50% was Friday's rate for $3.0 billion in unsecured financing.

----------


## jn1780

> CHK has always claimed that their business dealings don't conceal anything improper, they're just* very complicated and beyond what the average person can understand* .


Such a cop out. They make it sound like they reinvented basic arithmetic. Maybe a bank can get away using that excuss, but an energy company can't.

----------


## Boomer3791

McClendon: Chesapeake will raise needed money 

Chesapeake Energy Corp. CEO Aubrey McClendon said Monday the company will be able to complete asset sales to fund its current drilling plans. 

By Adam Wilmoth | Published: May 14, 2012 Oklahoman     

Chesapeake Energy Corp. will have the cash it needs to fund its current drilling budget and complete its transition to oil production by 2014, CEO Aubrey McClendon said in a conference call Monday morning. McClendon clarified a series of announcements late Friday that startled investors and caused the company's stock price to lose more than $1 billion in value in about 45 minutes.

Chesapeake filed its first quarter report Friday, a day after it had been due. That evening, the company announced it had agreed to a $3 billion unsecured loan.

“The Goldman and Jeffries term loan will provide us with greatly enhanced financial flexibility,” McClendon said Monday.

McClendon also said the company has had strong interest in its planned asset sales and has had to cut off the number of buyers interested in Chesapeake's Permian Basin holdings in the “double digits.”

“We expect those transactions to close in the third quarter, and we will use the proceeds from those transactions to pay off the Goldman and Jeffries loan,” McClendon said. “We also plan to sell sufficient noncore assets in 2013 to make sure we are well-funded next year as we complete our natural gas-to-liquids transition and reach our goal of being cash-flow positive in 2014.”

Chesapeake has chosen to delay or cancel its planned volumetric production payment for the Eagle Ford shale, instead opting to go with the $3 billion loan.

“We decided this unsecured $3 billion term loan, which will provide a long runway into 2012 and allows us to complete our asset monetization from a position of strength was the right way to go,” McClendon said. “That's what we've done. We've applied the proceeds to our (revolving credit facility). We have a lot of room. We have a lot of things planned for June. We have things planed in the third quarter. We'll just play it on out.”

McClendon and Chief Financial Officer Nick Dell'Osso spent much of the 67-minute call detailing the strengths of the embattled company.

McClendon pointed out that even without the assets the company is trying to sell, Chesapeake owns “assets easily identifiable as being worth at least $50 billion to $60 billion” even though the company's enterprise value is now about half that.

McClendon also sought to reassure investors of his personal involvement in the company's transition and recovery.

“There could be no CEO in America today more determined and motivated than I am to deliver the value of its company's assets to its shareholders,” McClendon said. “I do understand fully where we are, where we have been and also where we are going. I am 100 percent confident that our asset harvest strategy will deliver great value to Chesapeake investors in the quarters and years ahead.”

McClendon also addressed reports that activist investor Carl Icahn may be buying a significant stake in the company.

“I wouldn't be surprised if Carl became a shareholder,” McClendon said. “He did in 2010, and within six months the price went up. If he comes in again, I'm pretty confident he will make a lot of money.”

----------


## aggie steve

From WSJ 5/14




> In the call, Mr. McClendon reiterated that Chesapeake, which grew rapidly by throwing armies of so called land men into emerging oil and gas fields, now intends to go into "asset harvest" mode and concentrate on producing from the assets it already owns. *A sharp reduction in its lease-seeking workforce would enable it to save $350 million in expenses, he said.*


And here we go.

As always, employees and contractors are the first to go.  I know a lot of these folks.  There's a good chance they can find other work, but it probably won't be in OK.

Also, what good is "asset harvest mode" if the assets are already leveraged to the hilt?  Why in the world did this company utilize derivatives as a financing vehicle?

For those that don't know: derivatives = disaster


After reading various articles over the weekend (including the Oklahoman), it seems I'm not the only person saying the situation is very 'Enronish'.

----------


## ljbab728

> McClendon: Chesapeake will raise needed money


Boomer,  I don't know if you've followed posts here long enought to know this.  Steve with the Oklahoman has requested that if we cite their stories we provide a link with maybe a short snipit instead of giving the entire article here.

This is the newest update with McClendon commenting on the possible involvement of Carl Icahn.

http://newsok.com/mcclendon-activist...rticle/3675588

----------


## Maynard

> Chesapeake Energy Corporation Enhances Financial Flexibility with $3.0 Billion Unsecured Loan to Be Repaid from 2012 Asset Sales       05/11 06:19 PM
> 
> --------------------------------------------------------------------------------
> 
> OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation (CHK:$14.81,00$-2.37,00-13.80%) today announced it has entered into a $3.0 billion unsecured loan from Goldman Sachs Bank USA and affiliates of Jefferies Group, Inc. The net proceeds of the loan, after payment of customary fees and original issue discount (if any), will be utilized to repay borrowings under the company’s existing corporate revolving credit facility. 
> 
> The new facility, which ranks pari passu to Chesapeake’s outstanding senior notes, matures on December 2, 2017 and may be repaid at any time this year without penalty at par value and carries an initial variable annual interest rate through December 31, 2012 of LIBOR plus 7.0%, which is currently 8.5%, given the 1.5% LIBOR floor in the loan agreement. During the remainder of the year, Chesapeake plans to complete asset sales totaling $9.0-$11.5 billion and intends to use a portion of the proceeds from these asset sales to repay the loan. Chesapeake has received strong interest from prospective buyers of its Permian Basin asset sales process and its Mississippi Lime joint venture process, and the company expects to complete these two transactions in the 2012 third quarter. 
> 
> Management Comments
> ...


Chesapeake increases bridge loan to $4B vs $3B -- CHK falls  -6%

       05/15 08:39 AM

--------------------------------------------------------------------------------

By Smita Madhur

NEW YORK, May 15 (RLPC) - Chesapeake Energy Corp has upsized its bridge loan to $4 billion from $3 billion, sources told Thomson Reuters Loan Pricing Corp on Tuesday. 

The issuer has also tightened the discount at which it is offering to price the loan to 97 cents on the dollar from initial guidance of 96 cents on the dollar. 

Chesapeake is said to have netted commitments of around $12 billion, mainly from high yield bond accounts and hedge funds. Books close on the loan at 10 a.m.

The loan, which is led by Goldman Sachs and Jefferies, is talked at a rate of 700bp over Libor with a 1.5 percent Libor floor. 

Proceeds from the loan are to repay borrowings under the company's existing revolving credit facility. The new facility ranks pari passu to Chesapeake's outstanding senior notes. It is set to mature on Dec. 2, 2017. 

Chesapeake's loan has drawn strong interest from investors looking to earn a rich yield. Hedge funds, in particular, are believed to be keen takers for the loan. 

"I like it because of the near-term paydown," said a loan investor. 

But loan investors with lower risk appetites have been quick to point out their perceived pitfalls of the loan. 

The most notable criticism is that the bridge loan is unsecured and the company will still have liquidity and covenant issues. 

"In a bankruptcy, we would be pari passu to at least $9.5 million of senior bonds," said an investor who turned the deal down. 

He added that the company's EBITDAX is expected to decline 40 percent this year due to low gas prices and the company's lack of hedging. Meanwhile, total debt is expected to increase from $10.6 billion in 2011 to $21.9 billion in 2012, he said. 

"They are still spending aggressively despite the lack of liquidity. In 2012, they plan to spend $12.5 billion in capex compared to $3.2 billion in EBITDA," he added. 

During the remainder of the year, Chesapeake plans to complete asset sales totaling $9-11.5 billion and intends to use a portion of the proceeds from these asset sales to repay the bridge loan. If the asset sale does not fully repay the loan, pricing steps up to 800bp over Libor. 

Additionally, if the loan is not fully repaid by Jan. 1, 2013, pricing steps to 1,000bp over Libor with a Treasuries plus 50 make-whole provision. The provision benefits investors and creates an incentive to the issuer to pay down the loan beforehand. 

Chesapeake has received strong interest from prospective buyers of its Permian Basin asset-sales process and its Mississippi Lime joint venture process and the company expects to complete these two transactions in the third quarter of 2012, the issuer said in a press release earlier. 

Beginning on May 11, 2013, lenders will have the option to exchange their loans for 11.5 percent notes.

----------


## Maynard

S&P Cuts Chesapeake's Credit Rating Further Into Junk On Funding Needs       05/15 08:57 AM

--------------------------------------------------------------------------------

DOW JONES NEWSWIRES 

Standard & Poor's Ratings Services moved Chesapeake Energy Corp.'s rating a step further into junk territory, citing revelations of potential conflicts of interest by Chairman and Chief Executive Aubrey K. McClendon, revised production expectations and higher funding needs.

Reports last month suggested McClendon borrowed as much as $1.1 billion over the last three years, pledging some of the company's oil and gas wells as collateral. Chesapeake initially rebuffed the notion that its CEO's borrowing against some of its assets raised a conflict of interest. But earlier this month, Chesapeake's board and McClendon agreed to terminate the controversial contract 18 months before it had been scheduled to end.

S&P lowered its ratings on Chesapeake Energy a notch to double-B-minus from double-B, leaving it three steps below investment grade. The outlook is negative.

"The downgrade reflects mounting turmoil stemming from revelations that underscore shortcomings in Chesapeake's corporate governance practices, covenant concerns, and the likelihood Chesapeake will face an even wider gap between its operating cash flow and planned capital expenditures than we had previously anticipated," said credit analyst Scott Sprinzen.

The ratings company said the recent turmoil could hamper Chesapeake's ability to meet its external funding requirements amid weak operating cash flow and aggressive ongoing capital spending.

Chesapeake recently reported its first-quarter loss narrowed as the natural- gas producer reported a smaller derivative loss from the year-ago period and as production increased. But company has said it expects a significant decrease from the first-quarter's peak capital expenditure levels during the remainder of 2012 and in 2013 as its further reduces drilling activity in dry natural gas plays and reduce spending on new leasehold.

Last week, Moody's Investors Service lowered its outlook on Chesapeake to negative from stable, saying the company's recent operating results revealed a large capital spending funding gap this year. Moody's still rates Chesapeake at Ba2, two steps into junk territory.

----------


## OKCTalker

CHK bond prices are not being as widely-reported, but are falling in value as expected. See also a loan covenant saying that the interest rate jumps from 8.5% to 11.5% if no repaid this year (I don't understand why they'd trade 2.75% debt for 8.5% debt, which will rise to 11.5% in seven months). Excerpted from a Monday evening WSJ story: 

Chesapeake's most-traded bond, due in 2020, fell 5% to 91.64 cents on the dollar, according to pricing service Benchmark Solutions. About $850 million of the oil-and-gas driller's debt changed hands, accounting for 10% of all corporate bonds traded, according to MarketAxess.

Concerns about the possibility of default rose—the cost of insuring $10 million of Chesapeake bonds for one year against a potential default jumped by 36% to $727,000. Ratings agencies have assigned the company's debt double-B ratings, below investment grade, and last week Moody's Investors Service lowered the outlook to negative.

But the flexibility doesn't come cheaply. The unsecured loan carries an initial interest rate of 8.5% that increases to 11.5% if it isn't repaid by the end of the year. Chesapeake will use the proceeds to pay down the balance on its credit line; the company said Monday it has drawn down more than $3 billion on the line, which carries a 2.75% interest rate. So the new loan will increase its costs by about $173 million, and far more if the rate rises next year.

----------


## Pete

Stock is down well below $15 thus far today.

You can't imagine natural gas prices coming up much any time soon, especially with the summer months looming.

Perhaps if they actually complete some big asset sales they may finally see a bit of an up-turn.

----------


## Boomer3791

Pricey Chesapeake medicine highlights its sickness

By Christopher Swann and Robert Cyran

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Pricey medicine can help. But in Chesapeake Energy’s case, it shows how sick the company is. The embattled energy firm is borrowing $3 billion at 8.5 percent to repay a loan whose terms might otherwise prevent asset sales. This buys time. But it makes even more obvious Chesapeake’s unsustainable reliance on selling assets to fund its persistent cash drain.

Chesapeake, America’s second-largest natural gas producer, has been cash-flow negative for a decade. Fitch Ratings reckons it faces a $10 billion shortfall this year. Aubrey McClendon, the chief executive now beset by questions over financial conflicts of interest, recently sounded characteristically confident that the gap could be bridged by asset sales. The company is targeting up to $14 billion of them this year.

But the firm’s quarterly filing with regulators on Friday – curiously delayed – painted a less optimistic picture. Chesapeake said it might have to delay and rejig asset sales to avoid flogging off assets needed as collateral or cutting cash flow below the level required by its debt covenants. The shares slumped 14 percent, and have lost about half their value in the past year.

The main stumbling block appeared to be the firm’s $4 billion revolving credit facility. The new, much more expensive loan from Goldman Sachs and Jefferies unveiled later on Friday will repay that, easing concerns that a cash flow squeeze could force more asset sales only to have lenders demand repayment, creating a fresh cash deficit.

But it’s a temporary reprieve. Chesapeake still needs to reduce its debt and wring more dollars from its wells. Selling choice oil assets while gas properties suffer with ultra-low prices only whittles away further at the company’s long-term earning power.

And McClendon’s credibility is diminishing fast. Unsavory revelations about his dealings and the company’s governance, Chesapeake’s complexity and off-balance sheet obligations, and tough gas market conditions have hammered the share price and the company’s credit. McClendon has convened a conference call on Monday, less than two weeks after the last telephonic gathering. Analysts may not cut him the same slack this time. The expensive injection of new debt makes Chesapeake’s illness look worse, not better.

----------


## Boomer3791

Analysis: Sharks circle McClendon's Chesapeake
By Anna Driver and Carrick Mollenkamp

HOUSTON/NEW YORK | Mon May 14, 2012 6:15pm EDT 

HOUSTON/NEW YORK (Reuters) - Chesapeake Energy Corp's increasing shift from bank loans to costly funding is raising fresh questions about how long the spigot of cash will remain open and whether the company can sell enough assets quickly enough to pay for day-to-day operations.

The company's problems were brought into sharp focus Monday when CEO Aubrey McClendon, who has a reputation for scrambling to close financing deals, told skeptical stock and bond holders how his company will use a loan from Jefferies & Co. and Goldman Sachs to pay down a $4 billion loan commitment from banks.

While McClendon expressed confidence Chesapeake can find buyers for assets, the $3 billion loan announced on Friday evening was a sign that potential bidders were taking advantage of the company's weakening liquidity and offering low-ball bids for assets.

"The way I look at is, I know they have some desirable assets," Phil Weiss, analyst at Argus Research, said. "At some point, doesn't the buyer on the other side of the table say 'this company is in trouble, I'm going to hold out for better?'"

The company's shares fell nearly 14 percent on Friday after Chesapeake said in a quarterly filing it would delay or cancel a production deal on oil-rich acreage in South Texas, a transaction that would have brought in $1 billion for the cash-starved company.

Seeking to reassure investors, the Oklahoma City, Oklahoma company said on Monday it is on track to close deals that will bring up to $11.5 billion this year, funds that are essential to closing a gap of around $9 billion. Shares closed up nearly 5 percent on Monday, but are down over 30 percent for the year.

While the loan provides some short-term relief, worries remain. Bond investors are nervous not only about future asset sales, which are effectively required by the new loan, but also about other new loans that may become secured ahead of the bonds, according to Alexander Diaz-Matos of New York credit-research firm Covenant Review LLC.

"I see this term loan today and I worry what is the next step," said Diaz-Matos, a lawyer and expert in bond covenants. "The loan has a blanket protection against future secured debt," Diaz-Matos said, noting that is the "top-line concern" for bond investors, "who don't have meaningful protection against secured loans."

"After reviewing Friday's 10-Q, we believe the company's financial footing has further deteriorated," Sterne Agee analyst Tim Rezvan told his clients on Monday, noting the 5-year loan's pricey 8.75 percent interest rate signaled desperation for cash.

Trading in Chesapeake debt securities was active with bonds maturing in 2020 being quoted around 91.50 cents and 92.50 cents on the dollar. On Friday, those bonds closed at 93.50 cents on the dollar, but not before starting the day around 97 cents on the dollar.

Investors increasingly are betting that Chesapeake's stock will fall. Those investors, known as short sellers, seek to profit when they borrow shares and then sell them in the hope of buying them back at a lower price for a profit.

The percentage of shares outstanding on loan, which indicates the shares are being loaned to short sellers, has risen to 12.5 percent of shares outstanding from 3.3 percent at the beginning of the year, according to Markit Group.

Another indicator is the cost of insuring Chesapeake's debt against potential default, which rose to its highest level in more than a year. Five-year credit default swaps widened by 52 basis points to about 804 basis points. That means it costs $804,000 a year for five years to insure $10 million of debt.

CDS prices have climbed more than 45 percent in the past 50 days, signaling sharply rising concerns about the company's ability to service its debt.

Still, some noted McClendon's past fund-raising prowess. "About the only thing you can say about Aubrey is he really knows how to raise money," Mike Breard, oil analyst with Hodges Capital in Dallas, said.

TAPPED OUT?

Chesapeake's recent misfortunes, which include Reuters' revelation that McClendon has arranged to borrow more than $1 billion against well interests granted to him as a company perk and resulting regulatory probes, may give buyers an upper hand, analysts and investment bankers said.

The company's major asset currently on the market is its 1.5 million acres of lease holdings in the oil-rich Permian basin, which has become one of the hottest exploration regions in North America in recent years.

It has also said it plans to find a joint venture partner in another liquids-rich region, the Mississippi Lime basin. It said it expects to close both deals in the third quarter.

"All of the divestitures are at risk," said one investment banker who spoke on the condition of anonymity. "They're all challenged. If you're a buyer and you smell blood would you give full value?"

McClendon said in a conference call on Monday that the company opened its data room for the Permian basin acreage last week, and three possible buyers have already looked at the information. He said more than 10 companies have expressed interest in the assets.

Acreage in the Permian basin has become highly sought after in recent years, with deals bringing in as much as $17,000 an acre (0.4 hectare) for assets believed to be particularly oil heavy.

While Chesapeake has one of the largest land positions in the basin, bankers said some buyers were worried that the company's lease holdings in the region are too gas heavy and spread out to fetch premium prices.

Chesapeake is hoping to bring in around $5 billion from the sale, according to two investment bankers working in the industry. But bankers said the company may have trouble reaching that number.

"It's the most attractive asset on the face of it, and people are looking at it and saying, 'We're not sure how good it is, we're not sure if we're really interested,'" another banker said. "It will be a reasonable process. This is a core area for a lot of people. But if I were a buyer I'd be looking at it and saying this is a seller who needs to sell."

Companies have not yet submitted bids for the assets. Still, given the price tag and that buyers may have to invest new capital in the properties to keep developing them, bids are likely to come from only large oil and gas companies, like Occidental Petroleum, Apache Corp and Marathon Oil.

Chesapeake has about 2 million acres in the Mississippi Line, a formation in northern Oklahoma and Kansas that contains natural gas and oil.

One challenge facing Chesapeake's Mississippi Lime JV has been that some of its previous partnerships -- especially in so-called dry gas regions -- have turned sour.

For instance, Chesapeake signed a deal to sell 25 percent of its Fayetteville shale acreage to BP Plc in 2008. While Chesapeake later sold out of its side in the partnership, BP took a $393 million write down on the value of the assets in 2011.

"It's been a pretty unsuccessful adventure for guys," one investment banker said. "It accrues more value for Chesapeake than for its partners, so a lot of guys are reluctant to go into a JV with him."

----------


## Boomer3791

Chesapeake shares drop as loan increased to $4 billion
Tue May 15, 2012 12:20pm EDT 

(Reuters) - Chesapeake Energy Corp shares dropped as much as 6.5 percent early on Tuesday after sources said the natural gas producer had increased a new bridge loan to $4 billion from $3 billion.

The company, which faces a funding shortfall of about $10 billion this year, said on Friday that Goldman Sachs and Jefferies Group would provide it with $3 billion.

Chesapeake's cash flows have shrunk as natural gas prices slumped to their lowest levels in a decade, putting pressure on the second-largest U.S. producer of the fuel to raise money.

Corporate governance concerns have also weighed on Chesapeake's shares since Reuters reported last month that Chief Executive Officer Aubrey McClendon had borrowed at least $1.1 billion against his personal stakes in the company's wells from lenders who also had dealings with Chesapeake.

The new loan from Goldman and Jefferies was designed to give the company more breathing room to sell assets in two U.S. oil fields. Chesapeake has said it will sell those assets in the third quarter.

Also on Tuesday, ratings agency Standard & Poor's said it had cut Chesapeake's credit rating to "BB-" from "BB," one notch lower into noninvestment, or "junk," status.

The new unsecured bridge loan will replace an existing $4 billion debt facility. Company executives said on Monday they had drawn more than $3 billion of that existing debt line.

"If you were skyrocketing toward that $4 billion ceiling of yours, $3 billion probably wouldn't cut it," said oil analyst Mark Hanson of Morningstar in Chicago.

"I guess it's not surprising that they would increase the amount of flexibility that they needed, given their cash burn," Hanson said, which estimated it at $12.5 million a day.

Funding need for the company are likely to be higher over the next two years than previously expected, according to S&P credit analyst Scott Sprinzer, who described Chesapeake's liquidity as "less than adequate" in a statement.

Shares of Chesapeake were down 4.8 percent at $14.77 in morning trading after falling as low as $14.52 earlier in the day.

----------


## Maynard

CNBC has mentioned the Thunder a couple of times recently (on-air today):

http://m.cnbc.com/us_news/47417557



> Has Chesapeake’s Buying Of Thunder Tickets Inflated The Market? 
> 
> CNBC.com | May 14, 2012 | 04:18 PM EDT
> 
> 
> 
> As the Oklahoma City Thunder gets ready to take on the Los Angeles Lakers in the Western Conference semifinals tonight, there’s an off-the-court distraction that could impact the team’s business. 
> 
> Chesapeake Energy [ CHK 14.542  -0.978 (-6.30%) ] CEO Aubrey McClendon, who owns 19.2 percent of the Thunder, has been under fire in recent weeks for admitting to his participation in a program that enabled him to buy a personal stake in every well the company drilled. 
> ...

----------


## Boomer3791

I believe we are witnessing the final death spiral of Chesapeake Energy. It may take months, but ultimately I cannot imagine that the company that exists when the smoke clears will bear any resembalance to the one that exists today. We are witnessing history in the making.

----------


## Maynard

> Stock is down well below $15 thus far today.
> 
> You can't imagine natural gas prices coming up much any time soon, especially with the summer months looming.
> 
> Perhaps if they actually complete some big asset sales they may finally see a bit of an up-turn.



Chesapeake Energy Corp sets a new 52-week low       05/15 11:53 AM

--------------------------------------------------------------------------------

Chesapeake Energy Corp (CHK:$14.4576,$-1.0624,-6.85%) crossed below its 52-week low of $14.49 on 12:53 PM on May 15, 2012.

----------


## Pete

> borrowing $3 billion at 8.5 percent


That's a quarter of a billion in annual interest alone.


I'm beginning to worry that their complex financial structure is going to be a real hurdle to even selling off assets just to meet their cash flow requirements.

And assuming they can pull themselves out of this short-term situation, their longer term prospects are still very concerning.

----------


## Pete

> I believe we are witnessing the final death spiral of Chesapeake Energy. It may take months, but ultimately I cannot imagine that the company that exists when the smoke clears will bear any resembalance to the one that exists today. We are witnessing history in the making.


I think before things get a whole lot worse, they will shake up the management team and get someone in there that can figure out how to manage their massive asset base and their equally massive debt structure.

However, it's widely understood that McClendon will never step down voluntarily.

----------


## onthestrip

Chpk has spent $3.2 million on Thunder season tickets this season...just another way for Aubrey to take Chpk dollars and put them in his own pocket. Kind of like the arena naming rights deal, although he decided to donate those proceeds to try to fend off the criticism.

----------


## Boomer3791

Big stock position puts Chesapeake employees at risk

NEW YORK | Tue May 15, 2012 1:19pm EDT 

NEW YORK (Reuters) - The woes of Chesapeake Energy Corp are hitting shareholders hard, including its employees.

Thousands of Chesapeake workers have retirement portfolios that are heavily invested in Chesapeake stock, which has declined sharply following revelations about Chief Executive Aubrey K. McClendon's business dealings.

But while retail and institutional investors have sold the stock, employees don't always have that option.

Overall, 38 percent of Chesapeake Energy's Savings & Incentive Stock Bonus Plan - the only 401(k) plan available to the majority of the firm's employees - is in company stock, far above the 10 percent many plan consultants advise.

Currently, Chesapeake says about 4,000 employees are restricted from selling shares the company puts into their retirement portfolios to "match" the employee's own contribution in the plan.

Most companies stopped offering 401(k) matches in stock after the 2001 collapse of Enron Corp, where employees were unable to sell their shares as the company went bankrupt.

Despite regulatory reforms aimed at reducing worker exposure to employer stock, Chesapeake is among a minority of companies that still offer 401(k) matching contribution in shares, highlighting the risk of tying a worker's nest egg to an employer's success.

Chesapeake's stock had dropped almost 40 percent to $15.52 at Monday's close since its high this year of $25.58 in March. The shares were down nearly 7 percent on Tuesday, hit by a rating downgrade and word the company had increased a new bridge loan.

"Employees are naturally worried," said Greg Womack, an Edmond, Oklahoma-based financial adviser who says he has been fielding calls from concerned Chesapeake employees. "If the stock doesn't recover, this is a substantial part of people's retirement."

Chesapeake's retirement plan, to be sure, has been a generous one, and helped put the Oklahoma City-based company on Fortune's 100 Best Places to Work since 2008.

The company matches every dollar a salaried employee invests in the 401(k) plan - up to 15 percent of an employee's salary - with shares of stock. That's more than three times the typical match.

Stock matching programs help companies keep employee interests aligned with corporate goals. They also offer big tax benefits and substantial financial savings to companies.

Out of more than 13,000 employees, the 4,000 workers who cannot sell shares in the stock plan only represent 5 percent of the plan assets, said Michael Kehs, a Chesapeake spokesman, who declined to give total assets in the plan or plan details.

Those 4,000 employees are newer employees, who likely are making small contributions to the plan, thus accounting for the 5 percent, said Don Stone, managing partner of Chicago-based Plan Sponsor Advisors, a plan consultant.

"But just because they may have small balances in their 401(k) plans doesn't change the fact that it could be a big percentage of those employees' money," Stone said.

According to a Chesapeake's 2010 filing on its 401(k) plan, which is the latest available, the plan had $490 million in assets as of December 31, 2010. The firm's 149 union employees are offered a different 401(k) plan that matches employees' contributions in cash - 50 cents for every dollar up to 4 percent of employees' salaries, Kehs said.

Chesapeake requires employees in its retirement plan to hold stock for the maximum amount of time allowed by law: until they have been employed for three years or have reached age 55.

"Chesapeake has created a fairly volatile situation here," said Greg Ash, a partner at Kansas City-based Spencer Fane Britt & Browne LLP, which represents employers on retirement plan issues.

"In an industry in which the stock price can go up and down quickly and especially with all of the recent headlines, I would hope they are talking about removing the three-year lock in (for the employee match)," said Ash.

Chesapeake's workers can invest their own contributions in company stock or in an array of more than 28 investment options, according to BrightScope, which tracks 401(k) plans and rates the plan above-average compared to its peers.

Chesapeake says 95 percent of the plan assets and 98 percent of the vested plan assets can be diversified.

On average, employers match worker contributions up to 3 to 4 percent of their salary, almost always with cash, according to plan consultants. Some companies offer slightly more.

Only 12 percent of companies provide a company stock match, down from 45 percent in 2001, according to benefits consultancy Aon Hewitt. And only 1.2 percent of plans that give a match in company stock do not allow employees to sell that stock immediately.

Three former employees interviewed by Reuters said they still held Chesapeake shares and were holding onto their stock with the hope that it would rebound.

For others, what was once an attractive perk doesn't seem that way anymore.

"At the time, I viewed it as a company putting their money where their mouth is," said one former employee, who has left the company.

Now that he's in his thirties and has a family, he said he would not be as comfortable with the idea.

Many companies offer an Employee Stock Ownership Plan (ESOP) inside a 401(k) - which is what Chesapeake offers - and supplement it with another kind of retirement benefit plan to provide employees more diversification, according to Michael Keeling, president of the Employee Stock Ownership Plan Association, a trade group. But there is no additional plan available for non-union employees at Chesapeake.

EDUCATIONAL EFFORTS

Chesapeake "routinely reviews the plan design and investments taking into account all Internal Revenue Service and Department of Labor guidelines," the company spokesman said in an email to Reuters.

Principal Financial Group runs the company's financial literacy education program. According to Principal documents about the program supplied to Reuters by Chesapeake, the company regularly sends educational materials about its 401(k) plan to employees that emphasize the need to diversify.

Five former employees interviewed by Reuters agree that the company makes concerted efforts to educate plan participants.

Despite these efforts, more than one-third of Chesapeake's plan remains in company stock, down from a high of 77 percent in 2005, but still way above industry average.

The average 401(k) plan had 11.4 percent in company stock at the end of 2010, down from 13 percent in 2009, according to an Aon Hewitt survey of 401(k) plans that, in total, served more than 12 million employees.

LITIGATION LIABILITIES

From 1997 through July 2010, 211 class action lawsuits were filed against employers over company stock, according to Cornerstone Research.

While these cases tend to be dismissed or settled, the threat of a suit and the bad publicity and legal hassles that come with it has led many companies to stop offering stock matches, said Bill McClain, a consultant for Mercer who advises 401(k) plans.

"If you have major movement in the company stock it could be very well made into a lawsuit," McClain said.

But it could be hard to get traction for litigation, given that Chesapeake's 401k plan is an ESOP.

In a regular 401(k) plan with a company stock fund, it would be easier to make a case that the plan should have removed the stock fund if the stock fell dramatically, said Elizabeth Nedrow, a partner at Holland & Hart LLP, who represents employers in these cases.

"That argument is harder to make with an ESOP because by statute there is a presumption that the plan is supposed to invest in company stock," Nedrow says.

(Reporting By Jessica Toonkel; Matt Robinson; Additional reporting by Jennifer Cummings; Editing by Lauren Young, Jennifer Merritt and Tim Dobbyn)

----------


## SharkSandwich

> That's a quarter of a billion in annual interest alone.
> 
> 
> I'm beginning to worry that their complex financial structure is going to be a real hurdle to even selling off assets just to meet their cash flow requirements.
> 
> And assuming they can pull themselves out of this short-term situation, their longer term prospects are still very concerning.


They are leveraging every asset they can, including rights to future production, just to survive the short term.  Assuming they can survive the short term with rabbit-out-of-the-hat financing and loans, how will they survive the long term with no cash flow (assuming nat gas prices don't rise 150% in the next 12 months)?  Eventually, there is nothing more to leverage and the creditors will come calling.  When you sell your future, you have no future.

----------


## BoulderSooner

> They are leveraging every asset they can, including rights to future production, just to survive the short term.  Assuming they can survive the short term with rabbit-out-of-the-hat financing and loans, how will they survive the long term with no cash flow (assuming nat gas prices don't rise 150% in the next 12 months)?  Eventually, there is nothing more to leverage and the creditors will come calling.  When you sell your future, you have no future.


they have not come close to "leveraging every asset they can" .....

----------


## Boomer3791

I've recently learned that Martha Burger (SVP of Human & Corporate Resources at CHK) is retiring. According to Forbes, Burger, who is 58, made $4.76MM in 2010. Looks like at least some folks are starting to head for the exits before the building burns down...

----------


## SharkSandwich

> they have not come close to "leveraging every asset they can" .....


Why then are they paying 8.75% interest on a $4B unsecured loan?

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## OKCTalker

> Chpk has spent $3.2 million on Thunder season tickets this season...just another way for Aubrey to take Chpk dollars and put them in his own pocket. Kind of like the arena naming rights deal, although he decided to donate those proceeds to try to fend off the criticism.


Can you show how a portion of ticket sales go to Aubrey McClendon? Also, how did he receive "proceeds" from the arena's name?

----------


## Oil Capital

> they have not come close to "leveraging every asset they can" .....


Didn't they just announce that they were slowing down asset sales because such sales would put them in violation of loan covenants?   That sounds very much like a company that is "leveraging every asset they can" or pehaps has already "leveraged every asset it can."

----------


## Oil Capital

> Can you show how a portion of ticket sales go to Aubrey McClendon? Also, how did he receive "proceeds" from the arena's name?


Well, doesn't he own roughly 18% of the team?  Therefore, it stands to reason that roughly 18% of the ticket sales "goes" to Aubrey McClendon.  Same for the naming revenue.  Of course it does not go directly from Chespeake into Aubrey's pocket.  But that is hardly necessary in order for it to be a conflict of interest.

----------


## SharkSandwich

> Didn't they just announce that they were slowing down asset sales because such sales would put them in violation of loan covenants?   That sounds very much like a company that is "leveraging every asset they can" or pehaps has already "leveraged every asset it can."


This.

----------


## OKCTalker

> Well, doesn't he own roughly 18% of the team?  Therefore, it stands to reason that roughly 18% of the ticket sales "goes" to Aubrey McClendon.  Same for the naming revenue.  Of course it does not go directly from Chespeake into Aubrey's pocket.  But that is hardly necessary in order for it to be a conflict of interest.


The City of OKC owns the arena, and CHK pays $3 million per year to the City for naming rights.

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## Diesel54

> The City of OKC owns the arena, and CHK pays $3 million per year to the City for naming rights.


Nope.
http://newsok.com/aubrey-mcclendon-i...rticle/3670438

----------


## OKCTalker

Well DANG! I was looking at Wiki which reports this: 

On July 22, 2011 a twelve-year naming rights partnership was announced, the partnership between the Oklahoma City Thunder and Chesapeake Energy Corporation to rename the arena Chesapeake Energy Arena.[9] The agreement between Chesapeake and the Thunder has an initial annual cost of $3.0 million with a 3.0% annual escalation.[9] Included in the agreement Chesapeake will have its branding throughout the building, prominent premium placement on the high-definition scoreboard and on new state-of-the-art interior and exterior digital signs. Most of the new signs will be in place before the start of the Thunder’s 2011-12 season.[10]

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## onthestrip

> Can you show how a portion of ticket sales go to Aubrey McClendon? Also, how did he receive "proceeds" from the arena's name?


Diesel54 just linked a story that shows how Aubrey receives "proceeds" from the naming rights. As well as all the in game advertising chpk does with the team. And yes, as a part owner, he definitely profits when tickets are sold. Quite interesting that Chpk is the biggest sponser of the Thunder as well as the biggest ticket buyer, all of which benefit Aubrey as an individual.

It was apparently enough of a conflict of interest for him to voluntarily donate his share of the arena naming rights "proceeds"

----------


## Pete

> It was apparently enough of a conflict of interest for him to voluntarily donate his share of the arena naming rights "proceeds"


The naming rights deal was finalized 10 months ago and he only made this announcement after the media started to turn up the heat regarding his other possible conflicts of interest.

That timing, coupled with the lack of specifics about the proposed donation(s), gives the strong impression of damage control.

----------


## Pete

Just saw this in relation to them increasing their bridge financing to $4B:




> The loan will pay an initial interest rate of 8.5 per cent, rising to 11.5 per cent if it has not been paid off by the start of next year.


That means that CHK could be paying fully half a billion a year in interest just on this one loan.

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## jn1780

Aubrey: "We got a loan! Lets go to the casino!"

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## onthestrip

> The naming rights deal was finalized 10 months ago and he only made this announcement after the media started to turn up the heat regarding his other possible conflicts of interest.
> 
> That timing, coupled with the lack of specifics about the proposed donation(s), gives the strong impression of damage control.


Ya thats what I meant. I should have said he semi-voluntarily donated the proceeds. It was certainly an act of damage control

----------


## dankrutka

Just curious, but what are do most people think the possibilities are if CHK fails? What does failure look like? Is CHK likely to stay in OKC? Emerge as a different company? Be bought out and moved? 

OKC has such great positive momentum right now and I am worried that Aubrey could kill it through his recklessness. How worried should I be? I've followed this situation for quite a while, but my knowledge in this area is very limited. Thanks...

----------


## adaniel

After doing some research on my own, I'm not really worried about some sudden collapse. I would be the last person to defend Chesapeake, but there is a lot of armchair quarterbacking on here right now. They are guilty of some very poor decision making, but the Enron comparisons are moronic, considering that most of Enron's assets were completely fraudulent. CHK as of now has a lot of assets, is paying its bills, and generating revenue. Had it not been for one-time adjustments CHK would have actually made money last quarter (albeit much less its peers) than instead of recording a net loss of $71 million last quarter. 

Now, long term. Well that's a whole 'nuther story. They will definitely be hobbled in the future by their massive debt load, even if natural gas prices go up (which they will and already are). Should natural gas prices be this low this time next year, I wouldn't be shocked if they started having targeted layoffs, although should things progress to that point they would hardly be the only one. But that is a Chesapeake problem, not an OKC problem. 

OKC is bigger than one company. We now have Continental (which is staffing up bigtime), the Boeing transfer, and whatever mystery company may or may not be coming to the area. We are well positioned to be the unofficial hub of the Mississippian play, compared to Wichita or Tulsa. The hiring at CHK was pretty unsustainable IMO and was going to slow eventually. But we have enough going on in OKC to continue the momentum.

Personally, I am much more worried about the next round of BRAC and how it will affect Tinker.

----------


## Roadhawg

I'm not positive but I thought I heard on the news last night that Chesapeake's credit rating was dropped again to BB-.  Can't swear to it but thought I heard that.

Yep I did hear that...    http://www.koco.com/news/money/Chesa...z/-/index.html

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## Pete

Here are some possible worst case scenarios:

1) Assets may be over-stated and leveraged through so many complex financing schemes that  they can't sell them as soon and/or for as much as they would like, and then dominoes start to fall.  I could foresee a scenario not unlike McClendon's own margin call debacle where they just get caught out (like not being able to repay the new $4B bridge loan, triggering massive interest payments) resulting in a catastrophic chain reaction.

2) Icahn or another outside force blows them apart and sells off their assets, leaving very little in OKC.

3) They die a slow death, where they have to keep selling and laying off people until the company is sold or merely a shell of it's former self.


I, too, think the Enron comparison is probably not justified apart from their off-balance sheet dealings.

As much as I hate to say this, Chesapeake's situation reminds me much more of Penn Square Bank.

----------


## ou48A

*“Is CHK a Ch. 11 candidate?* 
There is a definite possibility they have liquidity issues.”


Where Will Chesapeake Energy's Cash Come From?

http://seekingalpha.com/article/5863..._sectors&ifp=0

Friday May 11th was an interesting day for Chesapeake Energy (CHK) with the delayed filing of their 10Q. The stock was down over 15% intraday and closed down almost 14%. The main catalyst for this was the disclosure that selling certain assets may violate certain credit covenants. My question is, if they can't sell the assets they wanted to, where is the cash to fund their massive capex program going to come from? Their 10Q looks rather dire:

Current Assets: $3.9B
Current Liabilities: $6.7B
Unevaluated Properties: $17.6B (we will get to this later)
Cashflow from Operations: $274 MM
Q1 Drill & Complete (Net of carries) Capex: $2.5B
Q1 Land Acquisition (Net of carries) Capex: ~$1B
Q1 Midstream/Oilfield Services/etc Capex: $0.75B
Total Capex in Q1: ~$4.25B
There is quite the disparity between capex and cash from operations. They have said that capex was going to be front-loaded in the first quarter so we should annualize these numbers over 2012 to get a better idea of what is going on.

CHK is projecting total capex for 2012 will be $7.5-$8B on the D&C side, $1.6B on the land side, and $2.5B-$3.5B for their midstream, oilfield services, etc. The grand total is $11.6B-$13.1B. $11.6B in capex net of drilling carries is crazy for a company of their size. Look at some of the other independents' projected 2012 capex. Keep in mind these companies listed below are much larger than CHK:

Anadarko Petroleum (APC): $7B
EOG Resources (EOG): $7.5B

As a side note, these independents have only spent ~$2B in capex for Q1 2012. CHK has them doubled at roughly half the market cap.

Extrapolating cash from operations out over four quarters gives you $1.1B in cash coming in. Expected capex is 10 times cash from operations. They are looking at a $10B deficit. Some may counter that natural gas prices will rise and bring up cash from operations. This may be true, but even if you double cash from operations, they are still looking at a $9B gaping hole in their cash flow statement. Now, deficit spending is not something new to CHK, however, the company is in new waters this time with $13B in debt already and more importantly, being virtually unhedged on their major product, natural gas.

They announced in the 10Q that they will have to delay selling certain assets to avoid violating credit covenants. Which assets are they talking about? It had to have been something material. The only material assets they have specifically talked about selling was the Permian. The rest of their plan was to VPP the Eagle Ford and JV the Mississippian Lime. Selling out the Permian assets was a critical piece of their planned asset sales. If they can't sell that, or can't sell for awhile, where is the cash going to come from? The Eagle Ford VPP and Mississippian Lime JV, based on past VPPs and JVs, will probably bring in roughly $3B. Don't forget that a good chunk of this will be drilling carries from the JV which is spread out over a few years.

Speaking of drilling carries, Chesapeake has done multiple joint ventures that involve drilling carries. Drilling carries aren't even going to come close to saving them. They are mostly gone and the capex numbers above are net of drilling carries anyways. They only have $1.9B in drilling carries remaining. A few problems with these carries are that they are spread over a few years and the fact that over $500 MM of these carries are in the Niobrara, a play which has not worked out extremely well for CHK.

Stock issuance? After the beating they have taken, I don't think anyone is expecting an equity offering. Although, with current management, I would not rule out anything. Debt would go against their 25/25 plan to reduce debt to $9.5B by EOY. Assuming they get $3B for the VPP and JV and the Permian sells for a generous $8B, they are just cashflow neutral. They won't even be close to getting the current $13B in debt down to $9.5B.

Selling the Permian also sells one of the very things they are looking to increase: liquids. The "Western" portion is where the Permian Basin is located. This division provides 30% of the total liquids produced by CHK. You can also tell from the realized prices per region that this area is where most of the oil CHK produces is located. Realized prices are in the $8x range vs. the other areas where they are $6x. This is, in my opinion, one of the reasons CHK still does not break out oil and NGLs on their statements of revenue. The oil volumes are pitiful and they are planning on selling most of it.

All of this boils down to one thing...I think capex has to be cut dramatically. At some point CHK needs to take a look and see that they can't be spending double the capex of companies that are double the size of them. It's just not sustainable. Cutting capex brings huge problems when you have $18B in unevaluated properties on your balance sheet. O&G leases have terms and must be drilled to be retained. I think CHK is looking at asset writedowns anyway due to the way their asset valuations are calculated using trailing gas prices. They will be looking at even more writedowns on their $18B of undeveloped acreage as leases expire due to cutbacks in capex.

*Is CHK a Ch. 11 candidate? There is a definite possibility they have liquidity issues*. Their three revolvers are drawn down to the point of only having ~$2B remaining on them. The borrowing limits of two subsidiary revolvers were recently cut by the lenders. Current liabilities dwarf current assets by almost $3B. The difference in AP and AR eat up just about all of the cash on the balance sheet.

Obviously the company understands these issues due to the emergency Goldman loan late on Friday night. The terms of this loan should give you a good sign of the deteriorating credit worthiness of CHK. Earlier this year they placed ten year notes for 6.125% and seven year notes for 7%. The loan from Goldman is a five year loan at 8.5%. All of this to pay down a revolver that has an interest rate of a couple percent. Death spiral?

The issues with the Board and CEO are well discussed and I won't dig deep into them here. The issues are extensive and range from excessive director/CEO compensation to *the CEO recklessly gambling with the company's cash flow hedges to the CEO running a hedge fund while running CHK. I think the shareholders would do well to install a new Board and new management with more realistic goals of what the company can accomplish.* Reducing debt to $9.5B by EOY while filling the cashflow gap or expecting to be cashflow positive in 2014 are pretty lofty goals especially when cash from operations is only a measly $1B/yr. Management should take a look at what is actually achievable/sustainable and trim acreage and capex to meet. All of the assets in the world mean nothing if you can't drill them.

I personally think the company has some good potential if they take the right steps. The right steps are drastic and will probably hurt the egos of a few, but they are necessary. *One of those steps includes showing the CEO the door*. He is a loose wheel who brings about a new news story everyday which can give you an instant 15% haircut on your long position. Today it looked like a few big players are getting tired of the haircuts. The selling blocks were huge with some volume ticks showing 5 million shares traded within a minute or two. Another huge step needed is to cut the size of the company drastically. There's too much acreage. Sell it. Capex and cash from ops can't keep up.

On the opposite side, I don't think CHK is a good short candidate due to the fact that if the board were to wise up and show AM the door, I believe the stock would jump fairly high. It did a 10%+ jump when it was announced he was going to no longer be chairman. The jump from no longer being CEO should be much greater. I think it is best to sit this one out until some clarity is given on company direction.

----------


## jn1780

> Here are some possible worst case scenarios:
> 
> 1) Assets may be over-stated and leveraged through so many complex financing schemes that  they can't sell them as soon and/or for as much as they would like, and then dominoes start to fall.  I could foresee a scenario not unlike McClendon's own margin call debacle where they just get caught out (like not being able to repay the new $4B bridge loan, triggering massive interest payments) resulting in a catastrophic chain reaction.


Having a complex financing scheme is extremely risky right now because the financial system is extremly unstable. Lots of potencial black swans out there in the world and Chesapeake is unprepared for any kind of "hiccup" in the system.

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## Maynard

S&P rates Chesapeake Energy Corp       05/16 01:10 PM

--------------------------------------------------------------------------------

    May 16 - Standard & Poor's Ratings Services today assigned its 'BB-' rating to Chesapeake Energy Corp.'s $4 billion senior unsecured term loan due Dec. 2, 2017. The recovery rating is '3', which indicates our expectation of meaningful recovery (50% to 70%) in the event of a default.	

Standard & Poor's lowered the ratings on Chesapeake on April 26, 2012, and 	again on May 15, 2012. The downgrades reflected a confluence of factors, including turmoil over revelations about its CEO's personal financial transactions and increased funding risks stemming from weak internal cash generation and very heavy capital expenditures.	

Our corporate credit rating on Chesapeake is 'BB-' and the rating outlook is negative.	

Chesapeake recently announced that it had entered into a $4.0 billion unsecured term loan facility, maturing in 2017, with proceeds to be used to repay borrowings under the company's existing corporate revolving credit facility. Borrowings may be repaid at any time this year without penalty, and Chesapeake has stated it intends to do so, out of asset sale proceeds.  Although this transaction enhances Chesapeake's near-term financial flexibility, it is costly for Chesapeake: the newly-issued debt carries an initial variable annual interest rate through Dec. 31, 2012, of LIBOR plus 7.0%, which is currently 8.5%, given the 1.5% LIBOR floor in the loan agreement. Subject to certain limitations, the interest rate would step up to a fixed rate of 11.5% if the loan is not repaid by May 11, 2013.	



RATINGS LIST	
Chesapeake Energy Corp.
 Corporate credit rating                  BB-/Negative/--	

New Rating	
 $4 billion senior unsecured term loan    BB-	
  Recovery rating                         3

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## Pete

Interestingly, Icahn filed his first quarter report and he does not hold any CHK stock.

Probably a good thing, although he could provide a much needed kick in the tail.


Stock closed just barely over $14 today.  They had recovered a bit but I think when the Icahn news got out, it was all downhill from there.

Should be a very interesting shareholders meeting in a month.

----------


## Maynard

> Interestingly, Icahn filed his first quarter report and he does not hold any CHK stock.
> 
> Probably a good thing, although he could provide a much needed kick in the tail.
> 
> 
> Stock closed just barely over $14 today.  They had recovered a bit but I think when the Icahn news got out, it was all downhill from there.
> 
> Should be a very interesting shareholders meeting in a month.




Investors want Chesapeake annual meeting delayed       05/16 03:25 PM

--------------------------------------------------------------------------------

May 16 - Shareholders have asked a judge to delay Chesapeake Energy Corp's (CHK:$14.04,00$-0.61,00-4.16%) annual meeting, arguing that more disclosures are needed about Chief Executive Aubrey McClendon's compensation and personal loans taken out against his share in company wells. 

Investors need more information to make "an informed vote" on three shareholder proposals and the re-election of Richard Davidson and Burns Harris to the board of directors at the meeting planned for June 8, said the motion filed in U.S. District Court in Oklahoma City, Oklahoma. 

Reuters reported on April 18 that McClendon had arranged loans totaling $1.1 billion where his interest in thousands of wells granted as a corporate perk were put up as collateral. 

The bulk of the loans were made by EIG Global Energy Partners, an investment firm that also provides significant amounts of funding to Chesapeake. Both situations could put McClendon's interests at odds with shareholders, analysts and academics said. 

Since the Reuters investigation, Chesapeake and McClendon have expanded their disclosures about his well interests and the program that grants him 2.5 percent of every well the company drills. The program, called the Founders Well Participation Program (FWPP), will be terminated 14 months early. 

A spokesman for Chesapeake said the meeting schedule had not changed. 

That motion to postpone Chesapeake's annual meeting was made as part of a lawsuit filed in April seeking more disclosures about the FWPP. 

Shares of Chesapeake fell to a low of $13.90, and closed down 4 percent on Wednesday at $14.04.

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## Pete

CHK stock trading well below $14 today.

I read through their proxy statement for their June 6th shareholders meeting and found this.

Keep in mind, they are just giving stock; these are not options.  Their HR person has averaged almost $5 million for the last several years.

During this period, McClendon was #2 in total compensation for all CEO's in the U.S.  Their other top execs aren't far behind.


Consider that in 2008, their stock was trading around $70 per share, and as of today is is about $13.60.  In other words, the stock has fallen over 80% during these years.

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## ou48A

> Interestingly, Icahn filed his first quarter report and he does not hold any CHK stock.
> 
> Probably a good thing, although he could provide a much needed kick in the tail.


The ability of Carl Icahn to buy very many CHK shares may be currently limited by his takeover of CVR Energy Inc. (CVI)

“CVR rose 1 percent to $30.35 at the close in New York. The shares have gained 62 percent this year. The owner of refineries in Coffeyville, Kansas, and Wynnewood, Oklahoma, has benefited from a boom in onshore shale-oil production that lowered the cost of crude it buys”
I have a small position in CVI

----------


## Maynard

Credit worries intensify for embattled Chesapeake       05/17 10:42 AM

--------------------------------------------------------------------------------

By Joy Ferguson and Melissa Mott

NEW YORK, May 17 (IFR) - Credit markets are signaling steadily growing concerns about troubled oil and gas producer Chesapeake Energy, raising pressure on the company to deliver on its strategy of planned asset sales. 

The company's bonds, protection on those bonds and its shares have all been battered in recent months following a series of Reuters reports revealing potential conflicts of interest in loans extended by the company to Chief Executive Aubrey McClendon against personal stakes in the company's wells. 

The reports have come as Chesapeake grapples with a 2012 funding shortfall of $9 billion to $10 billion as natural gas prices remain at their lowest in a decade. The company managed this week to tap the capital markets for a $4 billion bridge loan -- but investors are still worried. 

"They need too large of an asset sale over too short of a time, otherwise they are going to have a liquidity crisis," said Marc Gross, portfolio manager at RS Investments' high-yield and floating-rate bond funds. 

"All of the problems they are having today is because they didn't expect $2 gas, and it's hurting them a lot more than they are letting on. The company is under stress," he said. 

The cost of insuring Chesapeake bonds against potential default jumped on Thursday after hedge fund manager T Boone Pickens dumped 71,000 of its shares. 

Five-year credit default swaps were last trading 26 basis points wider at a record wide of 887, surpassing the previous historical wide of 828 seen in Jan, 2009. 

That means it costs $887,000 a year for five years to insure $10 million of debt. Shares hit a fresh 52-week low of $13.50. 

Shorter-term contracts are looking even more ominous, with one-year CDS close to 1,000, about double its level a week ago. 

The one-year contract is less liquid than the five-year and can balloon wider or compress swiftly due to market technicals. But it is highly sensitive to the market's perception of credit risk. 


SENTIMENT FADING FAST 

The CDS price movement has been accompanied by an increase in net notional, or CDS positions, as measured by data provided by the Depository Trust Clearing Corp.

Data for the four-week period ending May 12 shows a more than 10 percent increase in dollar equivalent to about $1.3 billion, suggesting a rapid deterioration in sentiment and in risk aversion. 

The company's CDS credit curves have dramatically flattened in the one-month period and several are now inverted, suggesting investors are even more fearful about what's ahead. 

Standard & Poor's this week expressed concern about a covenant breach in the next three quarters as the company's debt levels climb. The company's loan covenants already state its debt cannot exceed 4 times its lagging 12-month EBITDA. Total debt as of March 31, 2012 was $13.1 billion, while EBITDA was weak, at $838 million. 

S&P downgraded the credit to BB-, citing "increased funding risk stemming from weak internal cash generation and very heavy capital expenditures," alongside the revelations about the CEO's tangled personal financial transactions. 

It was the second downgrade in three weeks and comes after Moody's a week earlier changed the outlook on its Ba2 rating to negative from stable. 

"Their entire thesis has changed over the last couple of weeks," said Gross. "This was a company that said they had investment grade metrics and in the short term would be an investment grade company, and now they've been downgraded twice". 

Philip Adams, credit strategist at GimmeCredit, agreed. 

"This story would not have as much traction if natural gas was at $6 per million cubic feet and CHK was "A"rated and generating gobs of free cash flow," he said. "One of the consequences of being sub-investment grade is that spread volatility can be 'manic." 

Chesapeake's bonds have been some of the most active and worst performing credits for the past several weeks. Chesapeake's benchmark 6.625% notes due 2020 traded at 90.50 today (Thursday), down two points from yesterday. Since May 1, the 6.625% notes have dropped over eight points. 

"They are fading back to a mid high-yield company, so the class of investors changes," said Gross. "It's now a true high yield play, and with some hair on it, because of the investigations and disclosures, and Chesapeake has had to migrate into different hands." 

Hedge fund and pure high-yield funds have replaced insurance companies and pension funds as holders of the debt as the notes get downgraded, forcing higher quality funds to sell out of the name.

----------


## Pete

Where the heck has MikeOKC been lately?

He's been all over CHK for years and now that things are hitting the fan in earnest he's been completely AWOL for a couple of weeks.

----------


## Maynard

Several Investment Funds Shed Chesapeake Shares In 1Q       05/17 12:21 PM

--------------------------------------------------------------------------------

HOUSTON (Dow Jones)--Several large hedge funds and investment advisory firms sold large positions in Chesapeake Energy Corp. during the first quarter.

The sales by some of the largest movers and shakers on Wall Street is a sign that the company was losing some its luster with key investors even before it was rocked by a governance scandal in April.

The company has long been criticized by analysts for the Byzantine financial arrangements it needs in order to fund its expensive drilling program. Chesapeake, the second-largest natural gas producer in the U.S., bore the "brunt of investor anger" when a mild winter led to decade-low natural gas price levels, said Oppenheimer analyst Fadel Gheit.

In any case, by shedding the shares, these investment funds spared themselves a major drop--Chesapeake is trading at $13.50, at a 52-week low and down 42% from the end of the first quarter. In recent weeks, revelations about Chief Executive Aubrey McClendon's personal loans from financial institutions that had done business with Chesapeake triggered further scrutiny of the company's finances and prompted the board to strip McClendon of his chairman role.

Also, concerns about liquidity resurfaced last week when the company warned in a filing that it might delay deals in order to protect its revolving credit facility. In a sharp twist, the company obtained a $4 billion loan to pay its credit facility, but that has so far failed to assuage investors. The stock is down 3.5% in midday trading Thursday.

S.A.C. Capital Advisors LP, the hedge fund run by prominent financier Steve Cohen, shed 91% of its Chesapeake shares during the first quarter, retaining only stock worth about $541,645 as of March 31.

Millennium Management LLC sold 86% of its shares in the Oklahoma City-based oil and gas company, and at the end of the first quarter had about $5.7 million worth of shares left.

Fidelity Management & Research Co., which serves as investment advisor to Fidelity's mutual funds, sold 59% of its Chesapeake holdings, but it held shares worth $164 million at the end of the quarter.

Highbridge Capital Management LLC sold all its Chesapeake holdings in the first quarter. Two Sigma Investments LLC sold 98% of theirs. OZ Management LLC shed 64%. Adage Capital Advisors LLC sold 57% of its Chesapeake stock.

A contrarian bet: Citadel Advisors LLC, which sextupled its Chesapeake holdings to 2,952,233 shares, worth $68.4 million at the end of the first quarter.

All of the firms either declined to talk about their positions or didn't respond to requests for comment. The information about their holdings comes from regulatory filings and other disclosures compiled by Dow Jones Newswires.

----------


## dankrutka

> Where the heck has MikeOKC been lately?
> 
> He's been all over CHK for years and now that things are hitting the fan in earnest he's been completely AWOL for a couple of weeks.


I was just thinking that. He was continually dismissed, or castigated, by many on this board for trying to point out what we all know now - CHK is a ticking time bomb.

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## ou48A

While far more details have become much more clear…… for several years it’s not been too hard to see that CHK was being operated in a far more risky way than other similar energy Co. Going back over 10 years this has always kept me from buying CHK stock. 
Hard lessons are still remembered well from the early 1980’s oil bust. Its best we remember them VERY, VERY well.
CHK operations were and are a constant reminder of the energy companies who failed around the nation during the 1980’s. 

I’m not sure how they will do it, but I sure hope CHK can survive in OKC.

----------


## Allentown

I’m reading through this board a little after registering recently and I may have stumbled upon something;

http://www.okctalk.com/showthread.ph...660&highlight=

This guy says something about;

“Maybe it’s not so much a case of me being ‘weird’ as those of you who believe you have your finger on the pulse of OKC need to pull your heads out and realize what is happening right in front of you……and how it may impact your state if corrective action isn’t taken.”

I’m wondering if that ‘kook’ has any role in any of this?

----------


## Pete

I saw this mentioned elsewhere and it's an interesting thought...

Perhaps Devon would be interested in some or all of Chesapeake's assets?

Devon has tons of cash and cash flow and if things really got bad for CHK, perhaps they would step in and take on a bunch of their employees as well as their assets.

----------


## soonerguru

> I saw this mentioned elsewhere and it's an interesting thought...
> 
> Perhaps Devon would be interested in some or all of Chesapeake's assets?
> 
> Devon has tons of cash and cash flow and if things really got bad for CHK, perhaps they would step in and take on a bunch of their employees as well as their assets.


Nice thought but I don't see that happening.

----------


## Pete

How about Devon teaming with SandRidge and Continental to divide them up??

All have aggressive growth goals and the need to hire lots more people.

----------


## SharkSandwich

> How about Devon teaming with SandRidge and Continental to divide them up??
> 
> All have aggressive growth goals and the need to hire lots more people.


I could see Devon and/or SandRidge bidding on some of CHK's Permian assets, but I don't see them filling the employee void if the CHK ship goes down.

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## soonerguru

They're better off letting CHK fail first and then they can have their pick of employees. Seriously doubt Devon has any interest in investing in a bunch of overpriced -- and only partially developed -- real estate in Nichols Hills.

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## lasomeday

> I saw this mentioned elsewhere and it's an interesting thought...
> 
> Perhaps Devon would be interested in some or all of Chesapeake's assets?
> 
> Devon has tons of cash and cash flow and if things really got bad for CHK, perhaps they would step in and take on a bunch of their employees as well as their assets.


LOL, not going to happen.

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## ljbab728

A vote for ousting Hargis and Davidson from the board?

http://newsok.com/new-york-city-comp...rticle/3676516

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## Roadhawg

News last night said there was a drive to vote out a couple board members

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## Pete

Shareholders meeting is in about a month and there are lots of upset people.

----------


## OKCTalker

JP Morgan's $2 billion loss was announced shortly before their shareholder's meeting, but after proxy votes were cast. Their shareholders didn't have the opportunity to change their votes, and are furious. CHK shareholders don't want the same thing happening to them, especially with significant information being discovered almost daily.

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## OKCTalker

After the market closed today, Reuters reported cuts to CHK directors' compensation. Their pay has been reduced by 20% to $350,000 consisting of $100,000 cash and $250,000 "equity" (I suppose CHK stock), and "personal" use of their aircraft has been eliminated. 

Is this the best that CHK can do to appease unhappy shareholders on the subject of director compensation? They would still receive far more than directors at comparably-sized companies. Also, a 20% reduction to $350,000 implies a current level of $437,500, but I recall most of the directors were in the $500's. As for "personal" use of the aircraft, as slippery as CHK is, I can see that directors will be given "business" reasons for all future flights on the aircraft, and their travel hours won't be significantly curtailed. As a reminder, Devon reported total use of private aircraft last year - business and personal - to be $98,000. 

Getting CHK to cut costs is like fighting a drunk for the bottle.

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## ou48A

Maybe a little good news for CHK


http://www.bloomberg.com/news/2012-0...tml?cmpid=yhoo

May 18, 2012 3:23 PM CT


Rising natural-gas prices have provided some relief to Chesapeake Energy Corp. (CHK), which has seen its shares plummet this year on management controversy and a looming cash-flow shortfall. 

Gas rose to a 13-week high of $2.705 per million British thermal units on the New York Mercantile Exchange today. The fuel has gained 42 percent since touching a 10-year low last month of $1.902. Chesapeake, the second-largest U.S. gas producer, told investors on May 2 that $2 per million Btu gas prices would result in a loss this year, whereas at $3 the company would be profitable. 

Chesapeake, based in Oklahoma City, rose 6 percent to $14.36 at the close in New York. The shares are still down 36 percent this year after Chesapeake began a review of Chief Executive Officer Aubrey McClendons personal loans backed by stakes in company wells and said it may run out of cash as early as next year. 

Every penny in gas price helps, Biju Perincheril, a New York-based analyst for Jefferies & Co., said today in an interview. Todays gains increased the average gas price for the year to $2.406. Jefferies forecasts gas will average $2.75 this year, Perincheril said. 

Gas prices will continue to rise until the summer and may reach as much as $3 per million British thermal units as companies continue to slow production and electricity producers switch from coal to gas, Michael A. Hall, a Denver-based analyst with Robert W. Baird & Co., said in an interview. 

Its unclear if the price increase will last long enough to help Chesapeake and other gas producers with their cash crunch, Hall said. He expects prices to rise to $3.75 in 2013. 

Futures contracts show gas prices averaging $3.656 in 2013.

----------


## soonerguru

> After the market closed today, Reuters reported cuts to CHK directors' compensation. Their pay has been reduced by 20% to $350,000 consisting of $100,000 cash and $250,000 "equity" (I suppose CHK stock), and "personal" use of their aircraft has been eliminated. 
> 
> Is this the best that CHK can do to appease unhappy shareholders on the subject of director compensation? They would still receive far more than directors at comparably-sized companies. Also, a 20% reduction to $350,000 implies a current level of $437,500, but I recall most of the directors were in the $500's. As for "personal" use of the aircraft, as slippery as CHK is, I can see that directors will be given "business" reasons for all future flights on the aircraft, and their travel hours won't be significantly curtailed. As a reminder, Devon reported total use of private aircraft last year - business and personal - to be $98,000. 
> 
> Getting CHK to cut costs is like fighting a drunk for the bottle.


This is nothing. It's embarrassing, actually. The hubris of this company is insane. They don't seem to understand that they are in a crisis. These little changes are window dressing.

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## Maynard

Fitch Downgrades Chesapeake Energy On Aggressive Capital Spending       05/18 05:32 PM

--------------------------------------------------------------------------------

DOW JONES NEWSWIRES

Fitch Ratings downgraded Chesapeake Energy Corp.'s (CHK:$14.36,00$0.81,005.98%) rating further into junk territory, citing the natural gas producer's aggressive capital spending amid weak natural gas prices.

Chesapeake's rating was lowered one notch to double-B-minus from double-B, placing it three notches below investment grade. The outlook remains negative, as the rating firm expects funding gaps to persist at the company.

Fitch and Moody's Investors Service lowered their outlooks on Chesapeake to negative earlier this month, pointing to the company's aggressive capital spending program.

Chesapeake's push to develop gas and oil from shale rocks has helped create a U.S. energy boom. Chesapeake and other companies have been so successful at finding natural gas that the price of the fuel recently hit a 10-year low.

Separately, a series of revelations detailing possible conflicts-of-interest issues involving Chesapeake Chief Executive Aubrey McClendon has a brought fresh wave of criticism against the company and its board. Doubts about Chesapeake's governance, complicated finances and natural-gas prices near historic lows have cost Chesapeake billions of dollars in market value.

----------


## Allentown

> Personally, I am much more worried about the next round of BRAC and how it will affect Tinker.


I like this post!

----------


## BrettM2

> I like this post!


Tinker was recently selected to be the new command base for the new Air Logistics Complex idea that the Air Force is switching to.  Now, rather than be one of three depots, we are the command depot with a Lt. General in charge.  That should help us fight off any BRAC ideas.

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## Easy180

> Tinker was recently selected to be the new command base for the new Air Logistics Complex idea that the Air Force is switching too.  Now, rather than be one of three depots, we are the command depot with a Lt. General in charge.  That should help us fight off any BRAC ideas.


Wasn't aware of that...That should put us closer to the bottom of the list

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## Pete

CHK's stock is up to almost $15 again, so things seem to have stabilized, at least in the short-term.


More on their Board pay:




> A Bloomberg review of company filings show some outside directors on the company board have received other benefits apart from compensation, including the hiring of relatives and donating to universities that the board members also serve, according to Bloomberg.
> 
> Bloomberg reports that Chesapeake’s directors will still be paid 34 percent more than the average company board members’ pay at 15 other exploration and production companies last year, despite the 20 percent cut.

----------


## soonerguru

> *CHK's stock is up to almost $15 again, so things seem to have stabilized, at least in the short-term.*
> 
> 
> More on their Board pay:


Dead cat bounce?

----------


## Pete

Natural gas prices are up and all the energy stocks are doing better.

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## ou48A

> Dead cat bounce?


It could be.
But these things usually take months to years to fully play out.

The poor economy is another factor helping to hold down NG prices and few expect significant economic improvement any time soon. 
We are coming up on hurricane season and if we see several events that result in prolonged shut-ins it could help boost prices?

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## Pete

Chesapeake Directors Firm Paid $343 Million Amid Ties
By Bradley Olson - May 21, 2012 1:15 PM PT
Bloomberg.com

Chesapeake Energy Corp. (CHK)s decision to cut directors pay and other perks may save the company up to $1.65 million a year without addressing investors concern that the board failed to rein in Chief Executive Officer Aubrey McClendons borrowing and spending spree.

The boards history of close ties to McClendon, of being paid more than directors at similarly sized energy companies and of rewarding the CEO even as Chesapeake plunged in value may hinder its ability to oversee a turnaround of the company.

Chesapeake Energy Corp. initially defended CEO Aubrey McClendons practice of using his stakes in Chesapeake wells as loan collateral, stating April 18 that directors were fully aware of the existence of McClendons financing transactions. Photographer: F. Carter Smith/Bloomberg
The companys flip flop on how much it knew about a program it approved that allowed McClendon to acquire a 2.5 percent share in each of the companys wells -- and amass more than $846 million in debt from companies and banks also doing business with Chesapeake -- has sparked demands from some investors for new directors.

They had an obligation to make themselves fully aware, to review and disclose these transactions, said Michael Garland, executive director of governance for the New York City Comptroller, who controls pension funds that own 1.9 million Chesapeake shares and has proposed shareholders replace two of the boards outside directors at the annual meeting next month. The board has repeatedly failed to exercise independent oversight, Garland said. Now, Theyre circling the wagons.


Employing Relatives
Chesapeake has business ties to some of its eight outside directors, whove received benefits aside from their compensation, according to a Bloomberg review of past disclosures. Those benefits include hiring a directors relatives, donating millions of dollars to the university overseen by a board member, and doing business with a company headed by its lead director.

*National Oilwell Varco Inc. (NOV), a drilling equipment maker headed by lead director Merrill A. Pete Miller, has been paid more than $343 million by Chesapeake since 2009,* according to a Chesapeake filing with the U.S. Securities & Exchange Commission.

*The son and daughter-in-law of Frank Keating, a former Oklahoma governor and a Chesapeake director since 2003, worked for Chesapeake in real estate and land acquisition roles. Chip Keating was paid $251,515 in 2009* for working in real estate development for the company, according to a company filing.

*Chesapeake has given more than $10 million in funding to the Oklahoma State University system, and board member Burns Hargis has been president of its flagship campus since 2008.* The company has helped fund a new business school, a natural-gas training center, an endowed faculty chair, student scholarships and tickets for sporting events, according to filings and university publications.


Director Loan
*Chesapeake also did business with BOK Financial Corp. (BOKF), where Hargis served as vice chairman and is now a director.*

*BOK is controlled by Tulsa billionaire George Kaiser. In May 2009, Kaiser filed a notice in Oklahoma County that he had lent money to McClendon and his wife.* The loan was secured by their interests in two companies, including the entity that holds most of McClendons well interests, the filing shows. It doesnt show the amount of the debt.

*Frederick Whittemore, a director of the company from 1993 to 2011, loaned money to McClendon against his personal interests in the Chesapeake wells in 1998*, according to an Oklahoma County filing.

Trusts benefiting siblings of another previous board member, Breene Kerr, were paid $6.39 million by Chesapeake in 2007 for oil and gas royalty interests on more than 5,750 net mineral acres. Kerr could not be reached for comment.


Question of Independence
*While none of these relationships are illegal or exceed the rules set by the New York Stock Exchange, they raise doubts about the boards independence*, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware in Newark.
The modern trend is to avoid such questions, Elson said. Directors shouldnt be in a position where they have to be asked about their objectivity.

Chesapeake remains confident of the boards independence, said Michael Kehs, a company spokesman. Chesapeake is handling all requests for comment from directors, Kehs has said.

Each of Chesapeakes directors has built a superb reputation based on impeccable credentials, independent judgment and unwavering integrity. We take great pride in our board.


Above-Average Pay
Even after cutting their own pay by 20 percent, directors will continue to be steeply paid. The companys new plan, announced Friday, rewards directors 34 percent more than the average $260,752 in compensation received last year by board members at 15 other exploration and production companies on the Standard & Poors 500 Index, according to Bloomberg calculations.

Only three of the 16 companies, Apache Corp. (APA), Anadarko Petroleum Corp. (APC) and EOG Resources Inc. (EOG), paid more to their board members in 2011, according to data compiled by Bloomberg.

Chesapeake directors now will receive $100,000 in cash and $250,000 in stock, and will no longer be allowed 40 hours of personal jet travel at company expense. The reported cost of non-cash or stock compensation to directors, including the jet travel, was $1.09 million in 2011, according to a company filing.

*A little pay cut and cutting their use of the jets, its a band-aid over a gaping chest wound,* Graef Crystal, a compensation expert and Bloomberg News consultant based in Las Vegas, said in an interview. It doesnt go to the heart of the problem.


Generally Not Fully
The company initially defended McClendons practice of using his stakes in Chesapeake wells as loan collateral, stating April 18 that directors were fully aware of the existence of McClendons financing transactions. In an April 26 statement, directors backtracked, saying they were only generally aware of the loans but didnt review or approve any individual transactions.

*Concerns about the boards oversight of the company and what directors knew about McClendons personal loans have led investors including Southeastern Asset Management Inc. and the California Public Employees Retirement System to call for reforms.*

McClendon owed $846 million as of Dec. 31 on loans he accumulated to fund the cost of drilling, a requirement of the so-called Founders Well Participation Program. He took loans from firms that had business dealings with Chesapeake, including Wachovia Corp., prompting questions from shareholders and analysts over whether the deals constituted a conflict of interest.


Federal Investigations
*The Securities & Exchange Commission and the Internal Revenue Service are investigating the program, which has been halted by the board.* Directors last month said they will strip McClendon of his chairmanship as soon as they find an outsider to replace him in the role.

Chesapeakes board, besides Miller, Keating, Hargis and McClendon, includes Louis A. Simpson, chairman of SQ Advisors LLC, Richard K. Davidson, former chairman of Union Pacific Corp., Charles T. Maxwell, chairman of American DG Energy Inc., Kathleen M. Eisbrenner, deputy chairman of Flex LNG Ltd., and Donald L. Nickles, former U.S. Senator from Oklahoma.

Chesapeake cut McClendons pay 15 percent last year to $17.86 million in response to shareholders concerns that he was paid too much. The companys stock has fallen 45 percent since the beginning of 2011. Chesapeake rose 3.8 percent to $14.91 at the close of trading in New York.


Egregiously Weak
McClendons reduced pay package included $13.6 million in stock awards, a $1.95 million bonus and $975,000 in salary, the Oklahoma City-based company said in an April 20 filing.

Excluding McClendon, *directors in 2011 earned an average of $533,163, according to Bloomberg calculations, more than twice the $288,958 annual average of directors at Exxon Mobil Corp. (XOM), which is 40 times larger than Chesapeake in size.*

Institutional Shareholder Services and Egan-Jones Proxy Services, which advise investors on governance and proxy votes, u*rged shareholders today to vote against Hargis and Davidson, the two outside directors up for re-election at the companys June 8 annual meeting. Chesapeake needs board-level change, ISS said in a statement released today to clients.

Citing egregiously weak board oversight, Egan-Jones also advised investors to vote against Chesapeakes executive pay plan because it is not tied sufficiently to performance.*

The boards compensation and business ties to Chesapeake may make it impossible for shareholders to trust that they can lead the company in a new direction, said Garland, of the New York City Comptrollers office.

Whether they were fully aware, or generally aware, at the end of the day it doesnt really matter, Garland said. The only ties between a director and a company ought to be a directorship. When you have conflicts, it can compromise their independence.

----------


## Pete

By the way, it seems Bloomberg has joined Reuters in taking a very hard look at various aspects of Chesapeake's business practices.

I've been contacted by both publications and I have the feeling this is just the beginning of a series of reports, as the more they dig the more they seem to find.


Remember, everything that has come out on CHK over the last month or so has been as the result of investigative reporting.  Chesapeake has only addressed these issues and made some small changes as a reaction to these published reports.

The Journal Record just reported that some shareholders have filed to stop Chesapeake from selling any more assets until they get more disclosure on some of these issues.

----------


## soonerguru

> Remember, everything that has come out on CHK over the last month or so has been as the result of investigative reporting.  Chesapeake has only addressed these issues and made some small changes as a reaction to these published reports.


Precisely. This terrible PR strategy must result from the fact that they are hiding stuff. They've violated some of the primary principles of public relations: First, when you have bad news, you get it out, get it all out, and figure out a way to spin a mea culpa. As you point out, they simply take reactionary baby steps. All this accomplishes is getting the media to do more digging. And why wouldn't they? The more they dig the more they find.

Secondly, and perhaps most important, is that for their PR to work, they have to be forceful in their response to the demand for reform. They have definitely not done that. Therefore, their stock is tanking and they're facing more and more lawsuits.

They supposedly brought in some whiz kid crisis PR guy but my guess is that the Chesapeake crowd is too arrogant to follow good advice (or they have to stonewall because there may be something extralegal they are hiding).

----------


## Pete

It's pretty clear by the way they operate that Chesapeake likes to keep things private, and thus are not going to volunteer any of the issues like those that have recently been brought to light.

By the same token, you get the feeling there is plenty more, it just hasn't been unearthed as of yet.  The real estate stuff is an example of hundreds of millions that has been spent very extravagantly and without any obvious purpose.  I know the Oklahoman is looking into this but others have stopped short of any real investigation due to the thousands of separate transactions and complex web of LLC's.

My strong feeling is that as long as the current management team and board is in place, the only way any of this will come out is through outside investigation.  It also follows that if outsiders can find these issues just with what is in the public domain, there is much more that only management would know.

How many issues have been revealed by a handful of focused reporters in just the last month?  At least a dozen and there seems to be a new one every day or two.


I'm not saying I believe there is something illegal going on there, just all kinds of conflicts of interest, nepotism, wild spending and off-balance sheet obligations.  And I think we are only just now seeing the tip of the iceberg.

----------


## ou48A

HOUSTON - Chesapeake Energy Corp. Tuesday said it stands by its plan to expand its oil production, saying it will spend nearly all of its 2013 capital budget on drilling in oil fields.

Chesapeake, the biggest natural-gas production company behind Exxon Mobil Corp. has seen its stock plummet in the past year as gas supply has reached a seasonal record. Its plan to shift away from gas to more-profitable oil suffered a setback in the first quarter when the company said it had missed its oil-production target.

"We're working hard to escape the gravity of natural-gas prices," Jeff Mobley, Chesapeake's senior vice president of investor relations, told an audience at the UBS Global Oil and Gas Conference. "The vast majority of capital--90% next year--is going toward liquid-rich plays."

About 40% of Chesapeake's planned $7 billion capital budget in 2013 is earmarked for drilling in the liquids-rich Eagle Ford shale formation in South Texas, Mobley said.

The company still plans on spending 7% of its capital budget on dry gas production despite gas prices being stuck under $3 a million British thermal units. Prices have only started recovering after hitting a decade low of $1.90 in late April, a drop caused by a mild winter that cut demand for home heating and resulted in an overhang of gas supplies.
http://www.rigzone.com/news/article....=1&a_id=118058

----------


## ljbab728

A letter to shareholders is not impressing many.

http://newsok.com/chesapeake-directo...rticle/3678183




> The New York City comptroller was not swayed by the letter.
> 
> “Had the board responded meaningfully to repeated concerns from shareowners over the years, Chesapeake would not be in the costly governance mess it is in today,” Liu said in a statement Wednesday. “The changes now being offered, overdue and only incremental, may address some symptoms of a captive board, but hold harmless the root problem — the directors themselves and their failure to protect long-term shareowner value.”
> 
> Industry analyst Fadel Gheit said Wednesday's letter is unlikely to change many opinions.
> 
> “I don't think it's saying anything that people are unaware of,” said Gheit, an analyst with Oppenheimer in New York. “Obviously people are angry and frustrated. They have lost a lot of money. They have the right to demand a change.
> 
> “The board of directors should have some fiduciary responsibility and should have sounded the alarm much sooner than when the media attention started. That's what they're there for and what they're handsomely compensated for.”

----------


## soonerguru

> A letter to shareholders is not impressing many.
> 
> http://newsok.com/chesapeake-directo...rticle/3678183


Unfortunately, I'm starting to genuinely believe Chesapeake as a company is toast -- at least as we know it today. I will be shocked if it's not acquired and split up within the next few months. I spoke at length to an oil and gas investor about it yesterday and he believes it's on the chopping block. 

I sincerely hope this is not the case. To me, the best outcome is for the board to change hands and for McClendon to be reassigned to another role other than CEO. If this is done -- which I don't expect to happen -- I think that gives Chesapeake a real chance to survive this. 

It was alarming to read the initial slideshow Chesapeake had planned to present at the meeting yesterday. It spoke of the recent problems as a massive "negative media campaign." As if none of the facts brought to light are at the heart of the problems the company finds itself in today. That, to me, signals just how much denial has set in within that company's culture. Not a good sign of how they will take care of problems that have been brought to light. 

One wonders just how much more stuff we don't know.

----------


## Pete

> It was alarming to read the initial slideshow Chesapeake had planned to present at the meeting yesterday.


Where did you see this?

----------


## soonerguru

I'm fairly sure I read it in the Oklahoman yesterday, but it appears they've spiked the story. In the story -- wherever I read it -- Chesapeake's PR guy said the slide "was not intended to be in the presentation," and it was replaced. Here's an actual visual depiction of the slide from another source:

http://www.businessinsider.com/chesa...ampaign-2012-5

----------


## Pete

First of all, these reports are coming from various different and highly credible news sources:  Reuters, Bloomberg, the Wall Street Journal among others.  I suppose they all got together and decided to team up against Chesapeake?

Secondly, everything they reported was true and verified.

And finally, Chesapeake has basically admitted to everything themselves and have made a bunch of changes as a result.



The fact they even drafted this says a lot.

----------


## soonerguru

> First of all, these reports are coming from various different and highly credible news sources:  Reuters, Bloomberg, the Wall Street Journal among others.  I suppose they all got together and decided to team up against Chesapeake?
> 
> Secondly, everything they reported was true and verified.
> 
> And finally, Chesapeake has basically admitted to everything themselves and have made a bunch of changes as a result.
> 
> 
> 
> The fact they even drafted this says a lot.


Yes, and more galling is their terminology of "attacks." Attacks? WTF are they smoking? These aren't "attacks," they're reports. The "circle the wagons" mentality in that company is why I think it's a goner. 

How many times have companies in the past faced relentlessly negative PR situations and stood tall and faced them? For example, the Tylenol scare, or more recently, the situation with Toyota (although that was initially very poorly handled). 

Chesapeake's stock is in the tank because investors don't have faith in the company right now. The way to restore faith is not to dodge and deflect, but to 'fess up, show a strong inclination to reform, and assure investors that "We at Chesapeake will do everything possible to restore your confidence. We are making dramatic changes. Here they are."

Unfortunately, Aubrey seems like such a narcissist that this will simply not happen. Factual news stories from reputable media sources will be characterized as political attacks, and other nonsense.

----------


## soonerguru

To add: just reading that slide is tragically comical. It seems like "Baghdad Bob" is running the PR machinery. "Better days are ahead." What, when the SEC investigation is complete? When they have to pay off a high-interest $4 billion loan? When all of the investor lawsuits reach the court room? Are these "better days?"

----------


## ou48A

> Yes, and more galling is their terminology of "attacks." Attacks? WTF are they smoking? These aren't "attacks," they're reports. The "circle the wagons" mentality in that company is why I think it's a goner. 
> 
> How many times have companies in the past faced relentlessly negative PR situations and stood tall and faced them? For example, the Tylenol scare, or more recently, the situation with Toyota (although that was initially very poorly handled). 
> 
> Chesapeake's stock is in the tank because investors don't have faith in the company right now. The way to restore faith is not to dodge and deflect, but to 'fess up, show a strong inclination to reform, and assure investors that "We at Chesapeake will do everything possible to restore your confidence. We are making dramatic changes. Here they are."
> 
> Unfortunately, Aubrey seems like such a narcissist that this will simply not happen. Factual news stories from reputable media sources will be characterized as political attacks, and other nonsense.


At this point I have got to agree with you soonerguru. 

CHK talks about their move to liquids. 
They made this move late in the game and prices are now declining. 
This will not help their bottom line as much as they seem to indicate, at least anytime soon.

Sloppy management is still sloppy management no matter where it moves or what it produces.

----------


## soonerguru

Chesapeake does not assume the responsibility that is required from being a publicly traded company. They seem annoyed that investors would want to know facts about their governance. They can't stand this "nuisance" brought on by reporters trying to understand CHK's multilayered, complicated corporate financing to report on it to a global audience of investors. They seem like they should just be a privately held company, where all the good old boys play golf together and toss back a few rounds. 

They have not been "attacked." A definition of a political attack is the Swift Boat campaign waged against John Kerry in 2004, which was partially funded by Aubrey McClendon! He for one should know the difference between a report and an attack.

----------


## onthestrip

This just shows Aubrey is oblivious or just trying to feed more chpk kool-aid to employees and sympathizers. This is funny yet sad

----------


## Pete

Newsok just tweeted that Carl Icahn has announced a 7.5% interest in Chesapeake.  He's already sent a letter to their board regarding a "substantial credibility gap".

Remember, their annual shareholder meeting is in two weeks and things are going to get very interesting.

As much as Icahn's ownership scares me, his heavy hand may be exactly what Chesapeake needs.

----------


## SharkSandwich

Icahn reports 7.6 pct Chesapeake stake, seeks to replace 4 directors
Fri May 25, 2012 4:19pm EDT 

May 25 (Reuters) - Activist investor Carl Icahn reported a 7.6 percent stake in oil and gas company Chesapeake Energy Corp , and asked for at least four members of its board to be replaced.

The corporate-raider-turned-activist investor wanted 2 board seats for his own representatives and 2 for Chesapeake's largest shareholder Southeastern Asset Management.

Icahn holds 50.1 million shares in the company, according to a regulatory filing.

----------


## Pete

Looking at his SEC filing:

Started buying 4/19/12 and compiling shares through yesterday 5/24/12.
Now has more than 49 million shares purchased for a total of just over $775M.
Average purchase price was $15.70 a share.  It closed today about $15.80.

----------


## Teo9969

Here we go.

----------


## Pete

Wow, change out at least four board members....

CHK only has 9 now plus they have to bring on a new board chair.

----------


## Pete

Icahn Discloses Chesapeake Stake, Didn't Get What He Wanted From Dinner With McClendon
Forbes.com

Billionaire investor Carl Icahn made it official Friday, disclosing a 7.6% stake in Chesapeake Energy in an SEC filing. Rumors had been swirling for weeks that Icahn was building a stake in the natural gas producer.

In a letter alongside the filing, Icahn wrote to the Chesapeake board that there is a credibility gap, due to the directors failure to oversee management and hold it accountable.

In the letter, Icahn reveals he recently had dinner with Chesapeake Chief Executive and current Chairman Aubrey McClendon, urging that direct shareholder representation on the board be considered:




> The next day we were informed that the board refused to even consider this request prior to the selection of a chairman of their choosing.  We believe that this response was completely disingenuous and illogical.  Why is appointing a new chairman, sometime out in the future, an excuse for putting off considering whether to have shareholders, the true owners of the company, have immediate representation on this very flawed board in this very fluid situation?


The Chesapeake board made the right call to split McClendons roles after intense scrutiny over sweetheart deals allowed to the co-founder, Icahn says, but having the current board select a new chairman without shareholder approval  is akin to asking the fox, who has plundered the henhouse, to choose another fox to assist it in standing guard over the remaining hens.

Icahns view: four current directors (other than former GEICO chief Lou Simpson) should be replaced. Under the proposal Icahn would get to name two new directors, with another large shareholder  such as Chesapeakes biggest, Southeastern Asset Management  naming the other two.
Friday does not mark Icahns first involvement with Chesapeake. As Forbes Christopher Helman wrote May 14:

Less friendly is McClendons relationship with Carl Icahn, who is expected to soon disclose that he is once again building a stake in Chesapeake. Icahn bought up more than 5% of Chesapeake shares in late 2010 and forced McClendon to agree to a dramatic debt reduction plan that culminated in the early 2011 sale to BHP Billiton Petroleum of Chesapeakes entire holdings in the Fayetteville shale of Louisiana for nearly $5 billion. McClendon told me last fall that by the time Icahn liquidated his Chesapeake shares after the BHP deal, he had ended up making roughly $500 million on the trade.
Icahn, who spoke to my Forbes colleague Steve Bertoni in 2011 about his investing strategy, indicated at the time that the only thing that would get McClendon to change the direction of the company was seeing a deep-pocketed raider like Icahn aligning his proverbial cannons on the hill overlooking McClendons fiefdom.

----------


## Pete

Here is the entirety of Icahn's letter to the Chesapeake board (underlined portions by Icahn, not me):

http://s3.documentcloud.org/document...d-20120525.pdf


CARL C. ICAHN
767 Fifth Avenue, 47th Floor
New York, New York 10153

May 25, 2012

Via Federal Express and Email

Board of Directors
Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118


Ladies and Gentlemen:
The past several weeks have proved a difficult time for shareholders of Chesapeake Energy. The basic function of a board is to oversee management and to hold it accountable. We believe the board has failed this duty in a dramatic fashion. Rather than act as a source of stability and provide assurance to shareholders, this board has led the company through a highly publicized spate of corporate governance breakdowns while amassing an astounding $16 billion funding gap, which we believe has contributed to the share price decline of over 55% from the 52-week high.

We are not alone in criticizing this board. Shareholders have filed lawsuits, withhold campaigns and have otherwise voiced disapproval and all three major proxy advisory firms (i.e., ISS, Glass, Lewis and Egan-Jones) have advised shareholders to withhold votes from directors at the 2012 annual meeting. Chesapeake shareholders will benefit neither from a constant stream of negative news reflecting upon the companies troubled past, nor from a half hearted attempt by the board to make the minimum possible number of changes to skate by for one more year. The board must not only find a way to eliminate the enormous funding gap, but also the more substantial creditability gap.

We recently had dinner with Aubrey McClendon to suggest a manner by which that credibility gap might be filled. The company has publicly identified several actions including reduced spending and asset sales which will relieve some of the funding gap, yet the board still seems to miss the point. We believe that a management team and a business plan without strong oversight and accountability is doomed to fail. Accordingly, at that dinner we asked Aubrey to consider direct shareholder representation on the board. The next day we were informed that the board refused to even consider this request prior to the selection of a chairman of their choosing. We believe that this response was completely disingenuous and illogical. Why is appointing a new chairman, sometime out in the future, an excuse for putting off considering whether to have shareholders, the true owners of the company, have immediate representation on this very flawed board in this very fluid situation?

The board has recently announced that it is going to select a new Chairman and separate the Chairmanship and CEO roles. While this is certainly a step in the right direction, appointing a new Chairman in the manner that Chesapeake is doing, does not exactly elevate corporate governance to the “gold standard” as the board would have shareholders believe, instead it is woefully inadequate in both process and substance. Having the current board select a new chairman without shareholder approval and without allowing for shareholder representation is akin to asking the fox, who has plundered the hen house, to choose another fox to assist it in standing guard over the remaining hens.

To engender any meaningful credibility among shareholders, corporate governance reforms cannot, in our view, be led by directors whose irresponsible actions have brought this company to the edge of the proverbial cliff. Accordingly, we propose that at least 4 of the current directors (other than Louis Simpson) should be immediately replaced by two persons designated by us and two persons designated by another large shareholder such as Southeastern Asset Management, the company’s largest shareholder. In our opinion, only when these changes are effectuated will the board be truly independent and more importantly will investors come to believe that promises made will be promises kept; when a capital plan is agreed upon it will be maintained, not diverged from as it has in the past.

We believe that shareholder representation on boards, even in a minority capacity, is an extremely powerful tool to instill accountability in a company. This has proven to be the case in numerous companies on which we had minority board representation, including Motorola, Biogen, Genzyme, and Hain Celestial to name a few. Moreover, as my past record has demonstrated, I work assiduously to increase the value of stocks in which my companies have invested, which has led to gains of billions of dollars for ALL shareholders, not just my firm. Over the last few years, our actions have led to an increase in aggregate market value of approximately $55 billion for shareholders at well over a dozen companies where we have played an activist role. These companies had a market value of under $20 billion when we first invested. We would like the opportunity to do the same at Chesapeake.

We believe that Chesapeake has collected some of the best oil and gas assets in the world. However, we believe that the low stock price today does not reflect the value of those assets; rather the stock price suffers because of the enormous risk associated with an ever changing business strategy, enormous
capital funding gap, poor governance, and unchecked risk taking. While the company has recently recognized that their strategy of exponential capital expenditure growth is not sustainable, they still seem unable to distinguish between having cash in the bank as opposed to the projected proceeds of a series of ever more complicated and risky on and off balance sheet financial transactions and the hope of higher commodity prices. Now is the time for Chesapeake to focus only on what is important. What is important is that this pernicious funding gap, which we believe this board has created, must be filled. The board must bite the bullet, come up with a realistic plan and stick to it. In our opinion, shareholder representation, especially on this board, is needed to make this happen. A new chairman alone, appointed by this board, will not accomplish this objective.

As I am sure you are aware, this is not our first investment in Chesapeake stock. In late 2010, we acquired a substantial position in the company and met with management at that time to discuss the maximization of shareholder value. In part, we believe, due to our presence, the company sold non-core assets, closed their funding gap and announced that they were through spending money on land. Shareholders rewarded the company for this newfound responsibility, and the stock rallied. However, without shareholder representatives on the board (a major concern for us at the time) the promises made in 2010 proved hollow, and the company quickly abandoned their new strategy and not only accelerated land acquisitions but also capital spending on non-core assets. Recognizing this fundamental problem with the board, we sold our position. That decision turned out to be particularly prescient. The company’s stock price has plummeted by nearly 60% since that time and the board has watched the current events unfold without, in our opinion, any attempts to demand accountability. Now more than ever, the company needs the stewardship of a strong board – a board that can instill confidence in the shareholder base and restore accountability and credibility. If our suggested changes are not made at the board level immediately, we fear the company will be severely hamstrung in its attempt to regain its footing. It seems to us that the board has been quick to insulate themselves from accountability to shareholders and has expressed no interest in demanding accountability from management. A new plan and good intentions are insufficient to close the gap between asset value and stock price. We must have a board whose primary concern is enhancing the value of shareholders, a board that has the strength to hold management accountable, and the willingness to be held accountable themselves. In our view, only a board that has these attributes can enhance the value of this company.

We, as one of your largest shareholders, wish only the best for this great company and do not wish to bring about any additional distractions, however, we believe that without a strong board to demand accountability there is a significant chance that the value destruction shareholders have seen in the past few weeks may become irreparable. We cannot stand idly by and allow this to happen. Therefore, if you continue to arbitrarily refuse the request we have made for shareholder representation, we, as activists, will immediately take whatever “actions” we feel are necessary to protect the value of this company. As you are well aware, this is an extremely time sensitive issue, especially in light of the fact that you have refused to postpone the meeting that is coming up shortly. Therefore, we hope and expect to hear from you in the next few days.

Very truly yours,
/ s /
Carl C. Icahn

----------


## blangtang

I wonder where they had dinner

----------


## SharkSandwich

> I wonder where they had dinner


I don't know if this was meant to be funny or not, but I laughed.

----------


## Pete

If it was in OKC (likely) you can bet on Deep Fork.

----------


## Maynard

Chesapeake Comments on Icahns 13D Filing       05/25 05:06 PM

--------------------------------------------------------------------------------

OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation today issued the following statement regarding the Schedule 13D filed late today by affiliates of Carl Icahn with the Securities and Exchange Commission disclosing ownership of approximately 7.56% of Chesapeakes common stock: 

We share Mr. Icahns belief that Chesapeake shares are substantially undervalued by the market today. The Board and senior management are executing a plan that we believe will deliver a higher stock price and better recognize the underlying value of the companys assets. The Board will carefully review Mr. Icahns letter. The Boards immediate priority is to name an independent Non-Executive Chairman and it is proceeding expeditiously toward that objective having consulted with shareholders. After an independent Chairman is named, the Boards Nominating Committee will consult with shareholders and carefully review Mr. Icahns request for Board representation. 

Chesapeake has built a premier collection of U.S. E&P assets and we are focused on developing the core plays in which we have a #1 or #2 position, continuing the transition from natural gas to liquids-focused production, reducing capital expenditures and paying down long-term debt. We believe successful execution of these initiatives will close the large gap between our current enterprise value and the total value of our premier assets.

----------


## Stan Silliman

> Chesapeake Comments on Icahns 13D Filing       05/25 05:06 PM
> 
> --------------------------------------------------------------------------------
> 
> OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation today issued the following statement regarding the Schedule 13D filed late today by affiliates of Carl Icahn with the Securities and Exchange Commission disclosing ownership of approximately 7.56% of Chesapeakes common stock: 
> 
> We share Mr. Icahns belief that Chesapeake shares are substantially undervalued by the market today. The Board and senior management are executing a plan that we believe will deliver a higher stock price and better recognize the underlying value of the companys assets. The Board will carefully review Mr. Icahns letter. The Boards immediate priority is to name an independent Non-Executive Chairman and it is proceeding expeditiously toward that objective having consulted with shareholders. After an independent Chairman is named, the Boards Nominating Committee will consult with shareholders and carefully review Mr. Icahns request for Board representation. 
> 
> Chesapeake has built a premier collection of U.S. E&P assets and we are focused on developing the core plays in which we have a #1 or #2 position, continuing the transition from natural gas to liquids-focused production, reducing capital expenditures and paying down long-term debt. We believe successful execution of these initiatives will close the large gap between our current enterprise value and the total value of our premier assets.


My understanding is CEC has more land than they can produce over the next decade and beyond. Besides laying off most of their landmen, sales of all their Permian Basin land will pull the company out of debt plus spike the stock price. I'm sure Icahn plans to expedite this strategy.

----------


## Pete

> The Board’s immediate priority is to name an independent Non-Executive Chairman and it is proceeding expeditiously toward that objective having consulted with shareholders. After an independent Chairman is named, the Board’s Nominating Committee will consult with shareholders and carefully review Mr. Icahn’s request for Board representation.


CHK is trying desperately to find a new chairman BEFORE there are changes to the board, which are sure to come at the shareholders meeting.

That is yet another huge red flag (we want to pick *our* guy) and one that Icahn & the major shareholders are trying desperately to stop.

----------


## Maynard

> My understanding is CEC has more land than they can produce over the next decade and beyond. Besides laying off most of their landmen, sales of all their Permian Basin land will pull the company out of debt plus spike the stock price. I'm sure Icahn plans to expedite this strategy.


CHK announced yesterday they're trying to divest their DJ basin assets.  




> Chesapeake Selling Acreage In Colorado/Wyoming's DJ Basin       05/24 12:54 PM
> 
> --------------------------------------------------------------------------------
> 
> --Chesapeake selling 503,863 net acres in Colorado and Wyoming amid bid to raise funds
> 
> --Assets had given disappointing results, according to company
> 
> --Properties could fetch up to $1 billion, analyst says 
> ...

----------


## soonerguru

> CHK announced yesterday they're trying to divest their DJ basin assets.


So these assets will fetch $1 billion? Isn't their debt in the $16 billion range?

----------


## Stan Silliman

> So these assets will fetch $1 billion? Isn't their debt in the $16 billion range?


Last financial report: 45.6 B assets; 29.3 B Liabilities w/ 13.1 B of that as LT Debt.

----------


## soonerguru

> Last financial report: 45.6 B assets; 29.3 B Liabilities w/ 13.1 B of that as LT Debt.


I believe they've borrowed another $4 billion since that last financial.

----------


## Spartan

> I wonder where they had dinner


If I were Aubrey I'd take him out to Flip's  :Stick Out Tongue:

----------


## SharkSandwich

UPDATE 1-Oil India eyes stakes in overseas assets
Mon May 28, 2012 2:53pm GMT  

NEW DELHI, May 28 (Reuters) - State-run Oil India is looking to buy stakes in U.S. gas driller Chesapeake Energy Corp.'s Mississippi Lime basin and ConocoPhillips' oil sand assets in Canada, its head of finance said on Monday.

The cash-rich Indian explorer, whose assets in India's north-east account for its entire crude oil production and the bulk of gas production, has been aggressively scouting to bolster its overseas assets portfolio.

Oil India has earmarked 60-70 billion rupees ($1.3 billion) for overseas acquisition, T.K. Ananth Kumar told reporters after announcing the company's quarterly results.

He said the company had identified the U.S., Canada, Australia and parts of Africa for acquisitions and hoped to seal a deal in the current fiscal year that began on April 1.

When asked if the opportunities included Chesapeake's Mississippi stake, to which the company had earlier been linked, he replied "yes".

Chesapeake has put several assets up for sale, as the second-largest U.S. natural gas producer scrambles to raise cash to close a $9 billion to $10 billion funding shortfall.

"Any decision (on buying a stake in Chesapeake's Mississippi asset) will be taken after technical, commercial and political due diligence," Oil India Chairman S. K. Srivastava said.

Chesapeake came under intense pressure from investors to improve its corporate governance after Reuters reported in April that its chief executive Aubrey McClendon had taken out more than $1 billion in loans using his personal stakes in thousands of company wells as collateral.


ASSETS ABROAD

India, the world's fourth-largest oil importer, imports about 80 percent of its crude needs, and has been scouting for oil and gas assets abroad to meet rising local demand and to feed its expanding refining capacity.

India's Reliance Industries and state-run GAIL have so far acquired significant shale gas assets in the U.S.

The government allowed Oil India to go global in late-2005 and since then it has acquired stakes in assets in Venezuela, Libya, Gabon, Iran, Egypt, Yemen, Nigeria and Sudan.

"For unconventional assets, we can spend $100 million-$200 million. We don't want to be operators as we don't have experience in that. We will go as joint venture partners for unconventional hydrocarbon assets," Kumar told reporters.

"For conventional, like Maurel et Prom's assets, we can spend up to $1.5 billion," he said.

The company is still in the race to buy a stake in the Gabon assets of France's Maurel et Prom, Kumar said. Oil India had earlier said it could partner with the African country for the assets, for which it had already done technical due diligence.

Earlier on Monday, Oil India posted a 21 percent decline in March quarter net profit to 4.45 billion rupees.

Separately, Kumar said the Indian government might sell some of its 78.4 percent stake in the company in the current fiscal year, part of the government's plans to raise a total of 300 billion rupees ($5.4 billion) through stake sales to plug its fiscal deficit.

----------


## Pete

Chesapeake's Hometown Woes
Oklahoma City Benefited From Aubrey McClendon's Boosterism and Largess, Which Now Is at Risk
Wall Street Journal

By MIGUEL BUSTILLO

OKLAHOMA CITY—Chesapeake Energy Corp.'s CHK +1.48% name seems to be everywhere in this sleepy state capital turned natural-gas dynamo, from the arena of the scorching-hot pro basketball team to the Olympic-caliber rowing complex in what had basically been a drainage ditch.

Chesapeake's flamboyant chief executive, Aubrey McClendon, has pushed to turn Oklahoma City into a metropolis, showering arts groups and schools with millions in donations and sparking a building boom with an ever-expanding corporate campus of Georgian-style buildings that would fit in at his alma mater, Duke University.

He even lured the first Whole Foods Market WFM +0.98% to town, boasting that the high-end grocer "validates the revitalization we have experienced in Oklahoma City the past 10 years." He personally owns 19% of the Oklahoma City Thunder—whose games have become the hottest ticket in town after the team made short work of the Los Angeles Lakers in the NBA playoffs.

So charities and civic leaders are fretting about potential consequences for the city now that Chesapeake under Mr. McClendon has run into financial straits, amid low gas prices and a web of loans that entangled him and his company in debt.

"Everything good that has happened in Oklahoma City in the past decade, he's had a hand in it," Leonard Sullivan, Oklahoma County's tax assessor, said of Mr. McClendon. "It makes us nervous to think he might have some problems, because if something happens to him it is going to affect a whole lot of folks."

Assessed property values in Oklahoma County, which includes Oklahoma City, have nearly doubled to $6 billion over the past decade, with a Chesapeake subsidiary now among the 10 biggest taxpayers.

Chesapeake representatives and Mr. McClendon declined to discuss his civic role.

Enlarge Image

Arena: Associated Press, McClendon: Reuters, Rowers: Miguel Bustillo/The Wall Street Journal
Chesapeake CEO Aubrey McClendon, above right, is part owner of the Oklahoma City Thunder basketball team, which plays at the Chesapeake Arena, top left. He also helped turn a ditch into a rowing center.

Battered by the 1995 terrorist bombing of the Alfred P. Murrah Federal Building, which killed 168 people, Oklahoma City has bounced back with a renaissance thanks to the growth of local natural-gas companies. One Chesapeake rival, Devon Energy Corp., DVN -0.68% recently opened the tallest skyscraper in the state.

Mayor Mick Cornett notes with pride that Oklahoma City's 4.4% unemployment rate is the lowest in the U.S. among metropolitan regions of more than a million people. Like many here, he is optimistic that Chesapeake's problems will fade as soon as the price of natural gas goes back up and the business of unlocking energy trapped in deep rock formations through hydraulic fracturing becomes more profitable.

"It's a commodity-based business and the price of the commodity is down," said Mr. Cornett, a former newscaster. "Those of us who have followed the company's history have seen them ride through periods like this."

But some locals fear Mr. McClendon has endangered livelihoods in his hometown through reckless financial dealings, after learning through news reports that he used his interest in company oil and gas wells as collateral to borrow as much as $1.4 billion from a private-equity group that was buying assets from Chesapeake.

Mr. McClendon agreed to step down as chairman earlier this month after revelations of the loans, which critics called a conflict of interest.

"It's embarrassing for a company like that, one of our own, to get into trouble like this," said Grover Ozmun as he left the Whole Foods store. "It's greed," added his wife, Sheral. The retired couple didn't know that Chesapeake owns the land on which the shopping center sits.

Across the street, the company's Silicon Valley-style campus embodies Mr. McClendon's drive to transform Oklahoma City. The campus, which holds more than 4,600 workers, has four restaurants, including one called Fuel where patrons order on touch-screen monitors; a 72,000-square-foot gym featuring basketball courts and a rock-climbing wall; and an on-site dermatologist who provides Botox treatments, though the company stressed that it doesn't subsidize that service.

Some Oklahoma City nonprofits recently held a news conference to support their benefactor as news of his troubles spread. One participant likened Mr. McClendon to George Bailey, the inspirational Jimmy Stewart character in the movie classic "It's a Wonderful Life."

Debby Hampton, the head of the United Way of Central Oklahoma, said Mr. McClendon started a culture of giving at his company that has led other executives to make generous donations and many younger workers to volunteer time tutoring students and helping communities recover from Oklahoma's frequent tornadoes. Of the chapter's record $22 million in donations last year, $5.5 million came from Chesapeake employees.

"We have had companies leave, and we weather those storms, but Chesapeake is our largest donor so we do worry," said Ms. Hampton, who acknowledged that the nonprofits conferred with Chesapeake before holding the news conference, calling it a "mutual idea."

Roy Williams, president of the Greater Oklahoma City Chamber of Commerce, cited the rowing district as an example of how Mr. McClendon has contributed ideas as well as cash. Civic leaders were struggling with what to do with a fetid leg of the Canadian River that had been rerouted to prevent flooding decades earlier by the U.S. Army Corps of Engineers.

The city developed a plan to build three dams and turn a seven-mile stretch into a waterfront district called the Oklahoma River. It's now a training facility for rowers and kayakers, and includes a $3.5 million community boathouse that Mr. McClendon helped pay for and a $7 million tower at the finish line donated by Chesapeake.

"You'd be naive to not be concerned about it," Mr. Williams said of Chesapeake's problems. "But we are used to ups and downs in that industry sector."

Write to Miguel Bustillo at miguel.bustillo@wsj.com

----------


## Pete

From the Journal Record:

----------


## Pete

CHK up to almost $17 today on the Icahn news.

----------


## Maynard

> CHK up to almost $17 today on the Icahn news.





 :Wink:

----------


## ou48A

CHK “green gasoline” 

This appears to be another high risk CHK venture.


http://www.forbes.com/sites/christop...gasoline-plan/

----------


## betts

The Wall Street Journal has a big article on him and what he's done for OKC today.

----------


## Pete

> The Wall Street Journal has a big article on him and what he's done for OKC today.


See Post #687 above.   :Smile:

----------


## Pete

Chesapeake May Need to Part With Prized Assets to Make Ends Meet
By Ryan Dezember
WSJ Blogs


At the start of the year Chesapeake Energy embarked on a mission to pare debt, plug a funding gap and hasten its move from gas fields to oil basins by selling up to $14 billion worth of assets.

Now it may have to settle for just plugging the funding gap.

The Oklahoma City energy producer must raise at least $7 billion through asset sales before the end of the year and another $2 billion next year to comply with credit-line covenants, Jefferies analyst Biju Perincheril wrote in a research note Tuesday. Those numbers assume Chesapeake won’t meet any of its debt-reduction targets and will have to sell some of its prized assets, oilfields in which it plans to ramp up drilling.

To plug its funding gap, the analyst expects the sale of Chesapeake’s Permian Basin fields in west Texas to bring in $5 billion and a joint venture it is shopping on its Mississippi Lime fields in Oklahoma and Kansas to raise $500 million in cash.

“Beyond these, there is not much visibility,” wrote Perincheril and Chesapeake is still more than $1 billion short of the amount he believes the company needs to raise. To come up with the remainder Perincheril thinks the company may be forced to part with some of its “prized assets” in undeveloped oil-shale fields in Ohio and south Texas.

Those are precisely the places where Chesapeake wants to drill. The company is trying to lessen its dependence on natural gas, which is trading near all-time lows. Those fields would provide Chesapeake with more oil to sell.

But in the end, Chesapeake may not have choice. Its other options for raising capital may not materialize.

Chesapeake plans to spin-off its oilfield services subsidiary, filing plans with the SEC to raise $862.5 million in an IPO. But the current “market environment” makes that deal “unlikely,” Perincheril said. The unit, Chesapeake Oilfield Services, derives nearly all its income from working for Chesapeake, which is cutting back on drilling amid its financial woes.

Raising cash by selling future oil and gas production up front “could be limited by the need to maintain certain” cash flow levels required by the company’s credit-line covenants, Perincheril wrote. And there are hitches involved in Chesapeake selling pipelines to its publicly traded subsidiary Chesapeake Midstream Partners, he said.

Chesapeake shares, boosted by activist investor Carl Icahn disclosing at 7.6% stake later Friday, recently traded 3.2% higher at $16.32.

----------


## OUGrad05

> My understanding is CEC has more land than they can produce over the next decade and beyond. Besides laying off most of their landmen, sales of all their Permian Basin land will pull the company out of debt plus spike the stock price. I'm sure Icahn plans to expedite this strategy.


What?  I don't even know where to start...

The company has 13 to 14 billion in debt.  The Permian will come nowhere near getting them out of debt.  It's estimated they'll get between 4 and 6 billion for their Permian assets.  Some estimates as low as 3.2B and others as high as 7B but most come in the 4 to 6 range.  They'll also have additional debt service that will come due next year due to production or cashflow reasons which could be anywhere from 1.6 to 4 billion additional dollars.  Additionally, much of CHK's liquid production comes from the Permian so dumping 35 to 40% of your liquids production/sales at this point may not help as much as many think.  I'm hoping the two articles I read on the Permian's share of their liquids was wrong but I've now read from two sources that it's a significant piece.  

They're also struggling in some other areas.  CHK will likely pull through this, their operating margins can carry them if they will just be responsible for a couple of years and lay down some rigs.  Running 60, 80 or 100 rigs in the current environment is not what they need to do.

----------


## Boomer3791

Today from Business Week, on the possibility of a CHK takeover;  http://www.businessweek.com/news/201...eal-m-and-a#p1

----------


## Teo9969

> Today from Business Week, on the possibility of a CHK takeover;  http://www.businessweek.com/news/201...eal-m-and-a#p1


From that article:




> An acquirer would have to take on Chesapeake’s seven joint ventures and $13.1 billion in debt (CHK), surmount the board’s takeover defenses and convince McClendon to sell. Chesapeake is protected by an Oklahoma law that prevents a shareholder from engaging in a “business combination” without approval by the board of directors or two-thirds of the other shareholders, according to company filings. The law makes an exception if the investor owns 85 percent of the company’s stock.


So I guess the question becomes, how easy/hard will it be to tip the board from not in favor of selling to in favor of selling? I think it would be incredibly hard to convince Aubrey to sell, and it also seems like it would be difficult to purchase 85% of the shares.

----------


## Theo Walcott

Unfortunately, Mr. McClendon doesn't have any leverage in this situation.  If a prospective buyer (CVX, XOM, APC) publicly comes forward with a buyout offer of equivalent value in the $35-50/share range, CHK will have no other option but to merge.  McClendon would have no credible basis to fight a takeover bid.  

We would have to hold out hope that the acquiring entity would either (a) move their corporate HQ to OKC, or (b) allow CHK's operations to continue out of OKC (like XOM did with XTO).  The next 2-3 months will be interesting indeed....

----------


## Teo9969

> Unfortunately, Mr. McClendon doesn't have any leverage in this situation.  If a prospective buyer (CVX, XOM, APC) publicly comes forward with a buyout offer of equivalent value in the $35-50/share range, CHK will have no other option but to merge.  McClendon would have no credible basis to fight a takeover bid.  
> 
> We would have to hold out hope that the acquiring entity would either (a) move their corporate HQ to OKC, or (b) *allow CHK's operations to continue out of OKC (like XOM did with XTO).*  The next 2-3 months will be interesting indeed....


That *may* be the best of all possibilities (understanding that a company big enough to buy CHK would never think about moving to OKC) . I'm not sure if it's likely...but I'd be interested to know what everyone around here's preference would be: Assuming Chesapeake stays here, would you prefer it to remain Chesapeake under Aubrey (or his successor) or have it be under the umbrella of a bigger company?

----------


## ou48A

I could see this helping NG prices and making CHK a bigger target for take over.



http://www.rigzone.com/news/article....=118251&hmpn=1

Exxon Mobil Corp. is studying the possibility of exporting natural gas from the U.S. Gulf Coast and Canada as new shale drilling has unlocked enough new natural-gas reserves to meet domestic demand for years to come and allow exports, Chief Executive Rex Tillerson said Wednesday.

Exports of natural gas will create jobs, increase tax revenues and help the U.S. trade balance, Tillerson said at the company's shareholder meeting in Dallas.

Exxon Mobil, the world's largest publicly traded oil company and the largest U.S. natural-gas producer, recently has said it was analyzing exports from domestically produced natural gas. Tillerson's remarks are the latest sign the company is following seriously the trend of smaller companies, such as Cheniere Energy Inc., which already have obtained necessary permits to export natural gas from the U.S.

----------


## SharkSandwich

Chesapeake looking to sell some East Texas acreage: adviser

NEW YORK | Wed May 30, 2012 12:58pm EDT
(Reuters) - Chesapeake Energy (CHK.N) is seeking to sell around 57,000 acres of leaseholdings in East Texas, as the company works to raise cash to meet an expected funding gap, according to a prospectus released by one of its advisers.

The company said the acreage is in Madison, Leon, Houston, Grimes and Robertson counties in Texas and would give buyers access to the Woodbine oil formation, the prospectus said. The prospectus was posted on the web site of Meagher Energy Advisors, an energy-focused asset acquisition and divestiture boutique firm that has sold assets for Chesapeake in the past.

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## Maynard

Chesapeake must sell $7 billion in assets-Moody's       05/31 04:12 PM

--------------------------------------------------------------------------------

HOUSTON, May 31 (Reuters) - Chesapeake Energy Corp, the U.S. oil and gas company facing a funding shortfall this year and next, must sell at least $7 billion in assets to avoid breaching a loan covenant, analysts at Moody's Investors Service said on Thursday. 

Decade-low natural gas prices and hefty spending have left Chesapeake to fill a shortfall that Moody's estimates at nearly $6 billion in 2013. The company is also facing corporate governance issues and some of its largest investors are calling for major changes. 

"Even $7 billion in asset sales could place Chesapeake's covenant compliance for its revolving credit facility in some doubt and the company would still face a significant funding gap in 2013," Moody's said in a note. 

The company would "gain far more covenant headroom" with the sale of an additional $10 billion in asset sales this year, the analysts said. 

Any sales total below $7 billion will likely lead to a credit rating downgrade from its current Ba2 rating, Moody's said. 

Earlier this month, Chesapeake secured a high-interest $4 billion term loan from its investment bankers, an amount that is expected to be repaid with the proceeds from planned asset sales of up to $11.5 billion. 

So far, Chesapeake has put its 1.5 million acres in the Permian Basin up for sale along with a half a million acres in Colorado and Wyoming. The company is also searching for a joint venture partner in the Mississippi Lime basin. 

This year, Chesapeake's cash flow shortfall is expected to be more than $10 billion, according to Moody's.

----------


## ou48A

Crude continues to fall @$83.36 . 

This is going to hurt CHK’s ability to improve their cash flow. 
This comes at the worst possible time for CHK.

----------


## icecold

Looks like CHK had some good news to report today.  

http://www.chk.com/News/Articles/Pages/1701619.aspx

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## Theo Walcott

> Looks like CHK had some good news to report today.  
> 
> http://www.chk.com/News/Articles/Pages/1701619.aspx


Even still, stock dropped about 7%.  Market cap is down to about 10.4B.  Considering that CHK has twice as much leasehold acreage as XOM and CVX, I'd say an acquisition is likely--even with the complicated financial structure.

Think about it:  For $25B, a cash-flush oil major can more than double their reserves while adding significant PUDs to their asset base.  XOM and/or CVX have the cashflow flexibility to flush the extant debt issues facing CHK.  Smart money doesn't want to see those assets go to Chapter 11, particularly because some of them are subject to financing obligations.

----------


## Pete

Also keep in mind that AKM and the CHK Board has very little stock, so if there is a buyout offer, they won't have much power to stop it.

Their weary shareholders will most likely leap at a decent offer given the woeful stock performance over the last few years and the obvious lack of confidence in Chesapeake leadership.


If CHK ends up sold, is largely dismantled or simply collapses, Aubrey McLendon could turn into quite a pariah around OKC.

----------


## ou48A

> If CHK ends up sold, is largely dismantled or simply collapses, *Aubrey McLendon could turn into quite a pariah around OKC*.


In certain circles that may well be true…… but In My Very Humble Opinion as long as there is no criminal activity found AKM will retain enough personal wealth and have enough backing to restart something resembling an energy company.

----------


## adaniel

> Even still, stock dropped about 7%


In their defense, it was a terrible day for stocks overall, particularly in the energy sector, given the fact that oil prices plunged $3.30 today. Don't quote me on this, but a lot of these unconventional oil plays (Permian, Mississippian, etc.) that are supposed to save CHK need a price point of high $70s-low $80s to break even.  

Ironically there are signs that natural gas consumption is surging.

----------


## blangtang

I know everyone is sick of hearing about this, but I have another wall of text to post! 

Just a reminder, this is all speculation at this point!

-----------
"...While a buyer would have to cope with seven joint ventures and $13.1 billion of debt,* Exxon Mobil Corp. and Chevron Corp*. may see a chance to scoop up the largest holder of  onshore drilling leases before gas prices rebound, said SunTrust Robinson Humphrey Inc.* Royal Dutch Shell Plc* may also be interested, said Huntington Asset Advisors Inc.

*Exxon and Chevron* “desperately need” to boost production and *may look to acquire Chesapeake*, said SunTrust’s Dingmann. *Each has about $19 billion in cash* and short-term investments. Phil Adams, a debt analyst at Gimme Credit LLC, said Exxon tops his list of likely acquirers because it’s the largest potential suitor and has the highest corporate credit ratings. *Chevron is also capable of paying cash* without damaging its rating, he said.

Shell may also be interested in buying Chesapeake to reduce its exposure to regions with higher political risks, said Huntington’s Sorrentino.

Sorrentino said a *buyer could pay about $20 a share*, while SunTrust’s Dingmann estimates Chesapeake could fetch a *takeover price in the “mid to high $20” range*, or as much as a 77 percent premium to the closing price of $16.35 yesterday...."

----------


## Teo9969

> I know everyone is sick of hearing about this, but I have another wall of text to post! 
> 
> Just a reminder, this is all speculation at this point!
> 
> -----------
> "...While a buyer would have to cope with seven joint ventures and $13.1 billion of debt,* Exxon Mobil Corp. and Chevron Corp*. may see a chance to scoop up the largest holder of  onshore drilling leases before gas prices rebound, said SunTrust Robinson Humphrey Inc.* Royal Dutch Shell Plc* may also be interested, said Huntington Asset Advisors Inc.
> 
> *Exxon and Chevron* “desperately need” to boost production and *may look to acquire Chesapeake*, said SunTrust’s Dingmann. *Each has about $19 billion in cash* and short-term investments. Phil Adams, a debt analyst at Gimme Credit LLC, said Exxon tops his list of likely acquirers because it’s the largest potential suitor and has the highest corporate credit ratings. *Chevron is also capable of paying cash* without damaging its rating, he said.
> 
> ...



No way that Chesapeake gets bought out under $25/share, and probably $30/share is more reasonable.

----------


## soonerguru

> In certain circles that may well be true but In My Very Humble Opinion as long as there is no criminal activity found AKM will retain enough personal wealth and have enough backing to restart something resembling an energy company.


Would you invest in that guy? He will have burned a lot of bridges.

----------


## Maynard

Chesapeake Energy Agrees to Change Board, Adding Icahn Representatives       06/04 07:40 AM

--------------------------------------------------------------------------------

06/04/2012 -- Chesapeake Energy disclosed this morning that extensive discussions with its two largest shareholders, Southeastern Asset Management and Carl C. Icahn and his affiliated entities, who own, respectively, approximately 13.6% and 7.6% of the company's common stock, Chesapeake has agreed to a plan to reconstitute its Board of Directors by adding four new independent directors to replace four existing independent directors who will resign from the Board upon the appointment of the new directors.

Three of the new independent directors will be proposed by Southeastern and the fourth independent director will be Mr. Icahn or a person designated by Icahn, with Icahn making that determination prior to the reconstitution of the Board.

In addition, a fifth existing independent director is retiring at the 2012 Annual Meeting of Shareholders and will be replaced subsequently by a new independent Non-Executive Chairman through a selection process that is nearing completion. The new independent Non-Executive Chairman, who will have no previous substantive relationship with Chesapeake, will be confirmed by the reconstituted Board and will be acceptable to Southeastern and Mr. Icahn. Aubrey K. McClendon will relinquish the position of Chairman when the new Chairman is appointed and will continue as Chief Executive Officer and a director. Chesapeake will announce the new Board composition, including the independent Non-Executive Chairman, on or prior to June 22. The size of the Board will remain at nine directors.

----------


## Pete

Wow, so Chesapeake really changed their tune, no doubt in an attempt to get things under control before their shareholders meeting in about a week.

After Icahn's letter, they were initially defiant saying that after they appointed a new chairman, they would consider his requests.  Obviously, they were persuaded to make change sooner rather than later.

So, of the nine CHK board members five will be completely new and there will also be a new chairman.

It will be interesting to see which five are leaving.

----------


## Boomer3791

In this article from Reuter's, they discuss who they think the four (not five) board members who will resign will be. 

_Four current Chesapeake directors will resign after the new directors are appointed. The company did not specify which board members would step down.

It is likely that Lou Simpson will remain on the board because he was named to it by Hawkins.

Charles Maxwell, an oil analyst at Weeden & Co, had planned to retire this year.

Of the remaining directors, former U.S. Senator Don Nickles, former Union Pacific Corp CEO Richard Davidson, Oklahoma State University President V. Burns Hargis, and former Oklahoma Governor Frank Keating are among the longest serving board members and therefore are likely to bear the brunt of any resignations, said Mark Hanson, an analyst with Morningstar._

----------


## soonerguru

> In this article from Reuter's, they discuss who they think the four (not five) board members who will resign will be. 
> 
> _Four current Chesapeake directors will resign after the new directors are appointed. The company did not specify which board members would step down.
> 
> It is likely that Lou Simpson will remain on the board because he was named to it by Hawkins.
> 
> Charles Maxwell, an oil analyst at Weeden & Co, had planned to retire this year.
> 
> Of the remaining directors, former U.S. Senator Don Nickles, former Union Pacific Corp CEO Richard Davidson, Oklahoma State University President V. Burns Hargis, and former Oklahoma Governor Frank Keating are among the longest serving board members and therefore are likely to bear the brunt of any resignations, said Mark Hanson, an analyst with Morningstar._


It makes sense that the politicos would want to go.

----------


## Pete

Let's summarize the Board:

New Chairman TBD
1. Aubrey McClendon (will stay as a member, not chairman)
2. Charles Maxwell - retiring
3. Don Nickels - likely gone
4. Frank Keating - likely gone
5. Burns Hargis - likely gone
6. Richard Davidson - likely gone
7. Lou Simpson - probably safe
8. Pete Miller (CHK has paid his company more the $353 million)
9. Kathleen Eisbrenner - probably safe


So, in addition to McClendon, it looks like Simpson and Eisbrenner will stay but at least 6 spots will change, and Pete Miller might not be able to weather the storm as well.

----------


## Teo9969

Thank God for the Thunder...otherwise this would whole snafu would be even more heart-breaking.

----------


## Pete

One scary thing about this big board change is that most of them will represent the biggest stockholders and will probably not be from Oklahoma.

At least the existing group has strong local ties and aren't beholding to a handful of investors who simply want to make money.  I doubt any of these new directors will care if the company is sold off, thus creating a huge economic and physical hole in the middle of OKC.

These shareholders have already gone on record as saying a complete sale should be considered and from their perspective, it might be the fastest way to make some good money.

----------


## Maynard

More assets on the auction block...






Chesapeake looks to sell some Ohio acreage-adviser       06/04 02:49 PM

--------------------------------------------------------------------------------

June 4 - Chesapeake Energy Corp. is looking to sell about 337,000 acres of its holdings in Ohio, as it works to raise money to meet an expected cash shortfall, according to a prospectus released by one of its advisers. 

The holdings on the block include some in the Utica shale. The prospectus was posted on the website of Meagher Energy Advisors, an energy-focused asset acquisition and divestiture boutique firm that has sold assets for Chesapeake in the past.

----------


## onthestrip

WSJ had an article in todays paper on the risky move by Aubrey and other execs to sell their hedging contracts late last year that has cost them $600-800million because of nat gas prices plummeting that last 6 months.

And the fact that the board will soon be made up of guys picked by outsiders is very worrisome. Icahn and Southeastern Asset Management will be worried mostly about profits and stock price, not the OKC community. Im hearing that at the very least you will see layoffs and a halt on construction projects around the campus.

----------


## Pete

> Im hearing that at the very least you will see layoffs and a halt on construction projects around the campus.


At the very least, I believe this signals the end of the Chesapeake gravy train.

No more wild real estate deals, elaborate spending or paying people way over market in salary and perks.


Of course it couldn't last and now I just hope they can remain relatively in tact and still employ at least a few thousand people in OKC when the dust settles.

----------


## soonerguru

> At the very least, I believe this signals the end of the Chesapeake gravy train.
> 
> No more wild real estate deals, elaborate spending or paying people way over market in salary and perks.
> 
> 
> Of course it couldn't last and now I just hope they can remain relatively in tact and still employ at least a few thousand people in OKC when the dust settles.


As i said before, I will be shocked if CHK is not acquired. It's very disheartening and scary, and if it happens, Aubrey will have himself to blame for this fiasco. Too bad he doesn't run his business like Larry Nichols. The contrast between the two companies couldn't be more stark.

----------


## ou48A

> . Icahn and Southeastern Asset Management *will be worried mostly about profits and stock price*


*As they should be.*!

It’s their first obligation and had CHK & AKM been doing this all along CHK and OKC WOULD NOT be in the predicament that they now find them self’s!

If the stock holders are well taken care of they will take good care of the community!

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## dankrutka

Hubris.

----------


## MikeOKC

I had to come back to OKCTalk to make this post. As many of you know, I have been warning about CHK and Aubrey McClendon since 2008. I made so many posts that Pete felt the need to make a thread to address "Chesapeake Business Practices." So, one year ago this thread was created.

Over the course of the last three years, I have posted all the warning signs regarding Aubrey Kerr McClendon's poor management and CHK's poor corporate governance. During that time I was ridiculed, called a "conspiracy theorist," told that I was embarrassing myself (by posting my own knowledge and every national news article about these concerns). Most of these articles were never known by people in this city because, with few exceptions, the media here in OKC blacked-out/censored/pick your term any negative news involving McClendon and CHK. So, I posted here at OKCTalk - where I was a happy member.

*I have not posted on this forum since April - nearly two months ago.* I left because of a disagreement with admin allowing a post to stay up that called me an offensive name and it was allowed to stay. I felt it was a hint to leave - so I did. I posted about many topics here besides CHK; I especially love the nostalgia and OKC history threads - but *I felt that my determination to get the message out about CHK poisoned too many wells (pardon the pun)*.

Here....just a sampling from other fellow posters....




> *CHK and McClendon are both great and getting better every day .... did/do you read the annual report? ...   ISS is a joke ... clearly you have something personal against AM and or CHK*





> I'm trying to see the whole picture here: Aubrey took CHK from nothing to billions, and while he did it mostly with OPM, he and Katie have a ton of skin in the game. Both are heavily invested (time & money) in Oklahoma City business, education, philanthropy, the arts and culture (just look at Bill Gumerson's contributed piece in today's DO praising Aubrey's leadership in bringing the ProCure Proton Therapy Center to OKC). Yes, CHK could be more transparent, use better compensation practices, etc., but if we're going to make this all about tearing down Aubrey McClendon, don't forget that there's a lot of him worthy of being held up.


(Lots of people just not wanting to see how serious things were because....the Thunder, CHK Boathouse, Whole Foods, the mighty Chesapeake.)




> *So, exactly why is it so important that you publish any negative information or article about CHK?  There's a clear trend here.  Head in the sand?  Over what?  Unless you work there you've got no horse in the race so what does it matter?  What is it that you are trying to achieve?  CHK does an enormous amount of good in this city and employs thousands of people.*  CHK will have a hard enough time trying to remain independent as time goes on.  As big as it is, if Exxon-Mobil or BP or someone decided they wanted to absorb CHK, they could do it easily.  Then OK would ahve about a zillion square feet of really nice EMPTY office space up on western.





> Why you are expecting some groundswell of investors action for this. Even giving you every points you make the company has higher percent returns on investment over the last twenty years than most stocks. Plus outside of start-ups,  *forced changes in CEOs most of the time do not increase shareholder value until many years out* (assuming the new CEO can show a dramatic improvement) and most of the time leads to something between no improvement but more often years of lost value, with the exception of when their are far more people than currently would want him out than words in the annual report. Do you have someone in mind that will assure investors that they will do a better job?





> So what was he paid in 2010?  And you lost me on your source from sfgate.  sfgate is about as liberal leaning as a conservative paper, which blows their credibility.  *You've spent post after post going after a production company who over-compsensated their CEO two years ago.  Again, you are not wrong in voicing your concerns, but it DOES seem that you are singling out CHK.  If you're an industry insider like myself, my resources contradict what is floating around in the papers.*  Yes, CHK took a black mark, but when NG prices plummeted, the had to do damage control.





> *Dude did aubrey steal your wife/gf or something*





> As long as my stock continues to appreciate I am happy.  *I do not give a tinkers hoot as long as my investment continues to on average rise.  A few dips in the road are okay but in the end it is all about profit.*





> And you are a not a perfect match but *you find excessive time to berate the subject.  That tells an observant person how important you find slamming an OK company...*





> Mike I can see you are passionate about CHK.  I am curious as to why this company interests you so much to the exclusion of others.  I have never seen you berate Devon or any other corporate entity.  Does that mean they are the perfect no bad company?  How about Hobby Lobby any thoughts there? * Generally when I see the type of energy you are expending I immediately conclude "axe to grind" in the majority of cases I am correct or having felt "wronged" by the target entity...If you are really so concerned about OKC then why not the attention to detail on other companies?*


(By the way, that last one above is just unbelievable to not see the difference between the damages a ruined CHK could do VS another OKC company. There's an irony with this poster, but I'll leave it at that.)




> *you don't like CHK or Aubrey   we get it*





> *AM is a risky CEO and the market is in bad shape for sure but he has been there before and it would be hard to believe they have not planned for poor market situations, especially after 2009. I work in the industry and have seen CHK acquiring large acreage positions in several emerging horizontal oil plays that we are chasing.* The leases are much cheaper than those in the shale gas plays and CHK has the ability to drill them quicker and cheaper than many competitors due to owning their own large drilling fleet. *In addition chk and most other companies have prepared for low gas price by hedging their gas. While their stock is taking a hit due to sub $2.00 mmbtu natural gas prices, they've locked it in and are marketing it at likely above $5 per mmbtu. Journalists can say what they want about chk but they will likely be fine in the long run.* 
> 
> And no mike, I don't work for CHK. *Your self proclaimed industry watch dog title and obsessiveness just annoy me.*


(Yeah....I imagine.)




> *The lady[sic] doth protest too much, methinks.*





> *there is no evidence that CHK is built on a house of cards*





> *Mike, shut up and take a breath. Jesus. You've shown too much bias to warrant credibility.*





> T*he problem is, Mike, that you come across as one of those breathless hyperexcited reporters for a 24 hours news channel, all the while proclaiming that you wish you didn't have to do it. It is clear you have more of an agenda than reporting the news that's fit to print.* Nothing said here is going to change the business practices of Chesapeake. We're a message board. I rarely read this thread for the same reason I don't watch 24 hour news channels.





> You still sound like an over *obsessive idiot.*


When so many questioned my motives, I would explain that my concern was ONLY about Oklahoma City and the damage this one man and a dirty Board of Directors could do to us. A few clips of what I wrote about motives:

"Warning people in Oklahoma City about Chesapeake has to be done here, and the national financial press, because no local news outlet will dare touch anything negative about this company. It's the same old story: Power. Influence. Money. Make no mistake, I do not want CHK to fail. Period. That would be catastrophic for this city. It is because of my love for our city that I bother posting here about Aubrey Kerr McClendon. All the good he's done (and he's done some) will come unraveled in a heartbeat if CHK - the public corporation - hits rough times with a merger/acquisition...or worse. This is about Aubrey's mismanagement of Chesapeake, his unethical (if not illegal) behavior, hubris and arrogance. CHK needs new leadership and Aubrey can go play with his shopping centers, basketball team, and other (sometimes) personal business. It's about the good of the company - and Oklahoma City."

"*When will the people of Oklahoma City wake-up and realize that we have corporate Masters of Deception operating over at 63rd & Western? It's so embarrassing. God, how I wish their name wasn't attached to the old Ford Center. People see that emblazoned in lights, and those who follow business must cringe to see that sordid name of Chesapeake Energy Corporation.* Yet, people around here? We rarely hear any of this news. I'm hoping the new owners of The Oklahoman will open up and allow a little of the truth about these outlaws to be heard in their hometown. *In the end, it's our city they are sullying and putting at risk.*
I think as far as CHK is concerned, they failed to make necessary changes that many of us screamed out for. They finally were exposed by the light-of-day from big national media investigations. Was it too late? Maybe. There is much more to come out and an acquisition, after that, is fairly likely to be approved. The board is changing. Aubrey has realized he's been caught. I once said I hope it doesn't take Aubrey in an orange jumpsuit for Oklahoma City to realize how much he put this city at risk.

Aubrey's done many "good" things here in Oklahoma City. But we all could do "good things" if we had the access to, _and used_,* other people's money*. That is essentially what he did. Is there any question now? If some still aren't persuaded, sit tight. My concern about the color of a certain institutions apparel may well come to pass. Will I be happy? Absolutely not. I only wanted to see changes that could put Chesapeake on the straight and narrow before it got this far and AKM continued to act the poster boy for rogue CEOs. 

*More than anything, I blame the media for covering up for the Kerr/McClendon family for years - way before and up to Aubrey and CHK.* 

I received a couple of emails asking me to post something like this and consider explaining my disappearance from OKCTalk. The above says it all I guess. 

I said on a couple of occasions (once three years ago) that I hope I never have to say, "I told you so." Considering what all has transpired in the last few weeks and months, I'll let you decide. I still have hope that all of this drastic change (under fire) will save CHK's potential damage to Oklahoma City. I'm not betting on it though.

All the best to everyone.

----------


## OPINIONATED

Using OPM is fine. Those people are allowing the use of their money so they have faith in Mr. McClendon. If people had the same faith in you they would allow you to use their money also. Mr. McClendon had nothing to do with the decline of the price of Natural Gas. The only mistake Mr. McClendon made was having to much faith in Natural Gas and he spend to much money on Natural Gas leases. If he would have diversified some of that money into oil leases we wouldn't even be talking about this problem. Aubrey McClendon is a very successful businessman and will always be successful with or with these investors. If I were Aubrey McClendon I would take my part of my ball and go home and use it to start another successful company. McClendon will always have the use of OPM because those people have faith in him as a businessman.

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## bretthexum

I love "I told you so" posts.  Good job MikeOKC.  There were a lot of personal attacks on you for stating the truth.

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## Pete

> I left because of a disagreement with admin allowing a post to stay up that called me an offensive name and it was allowed to stay. I felt it was a hint to leave - so I did.


Just so you know, I have absolutely no idea what you are talking about here.

I would appreciate a PM to clarify, as my previous PM's to you about why you went AWOL have gone unanswered.

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## ou48A

> The only mistake Mr. McClendon made was having to much faith in Natural Gas and he spend to much money on Natural Gas leases. If he would have diversified some of that money into oil leases we wouldn't even be talking about this problem.


That’s far from CHK’s / AMK only major mistake. 
And CHK did sell major Bakken crude oil holdings to CLR.

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## soonerguru

A lot of people here owe Mike an apology. Big time. Wow. It is funny / disturbing to read those diatribes and attacks. Classic "kill the messenger" stuff and a boatload of denial. No one likes to face uncomfortable truths -- like the strong possibility we're about to lose one of our largest employers (that has been running a corporate stimulus program in Northwest OKC for years). Ugly and frightening. Mike deserves better than what he received here from a lot of posters.

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## Midtowner

Mike's posts were a big reason I've never purchased CHK stock.  I don't recall having anything negative to say, but that doesn't mean I didn't put my foot in my mouth at some point in the last 30 pages.

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## ou48A

CHK mode of operating has been on the edge for many years and that includes several years before Mike’s post.
 Conservative money has always pretty much stayed away from CHK and sought less risky investments.

I didn’t stay away from CHK because of Mike’s posting but for those of you who did you owe him big thanks.

I will give Mike great credit for making this board more aware of the CHK & AMK problem.
He deserves credit for his tenacity. It’s not always easy to go against popular opinions on a message board particularly when so many others do not have a great understand this industry and of its cycles.

Ironically CHK is now a better investment value… but do your own due diligence and as always understand the inherent risk involved with any equity investment.

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## Pete

> Using OPM is fine. Those people are allowing the use of their money so they have faith in Mr. McClendon. If people had the same faith in you they would allow you to use their money also. Mr. McClendon had nothing to do with the decline of the price of Natural Gas. The only mistake Mr. McClendon made was having to much faith in Natural Gas and he spend to much money on Natural Gas leases. If he would have diversified some of that money into oil leases we wouldn't even be talking about this problem. Aubrey McClendon is a very successful businessman and will always be successful with or with these investors. If I were Aubrey McClendon I would take my part of my ball and go home and use it to start another successful company. McClendon will always have the use of OPM because those people have faith in him as a businessman.


Very good points.

Aubrey McClendon has the classic aggressive entrepreneur personality:  Go big, take big risks, often reap big rewards, sometimes fail in spectacular fashion, then do it all over again.

I'm not sure he's the best person to run the huge corporation that Chesapeake has become, as that requires a very different approach and skill set.

But I'm sure that even if CHK crashes and burns, he'll be back and will probably earn and lose many more fortunes in his lifetime.

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## OPINIONATED

> Very good points.
> 
> Aubrey McClendon has the classic aggressive entrepreneur personality:  Go big, take big risks, often reap big rewards, sometimes fail in spectacular fashion, then do it all over again.
> 
> I'm not sure he's the best person to run the huge corporation that Chesapeake has become, as that requires a very different approach and skill set.
> 
> But I'm sure that even if CHK crashes and burns, he'll be back and will probably earn and lose many more fortunes in his lifetime.


It isn't like McClendon was wasting company money. He was acquiring and holding natural gas leases for the future. Turns out that was a mistake because of the decline in natural gas prices. If he were out wasting company money or OPM for self purposes I could see people coming down on the guy but he made a business error by spending to much money buying these natural gas leases. He is now trying to correct it by drilling in the Hogshooter Formation in the Texas panhandle and they did hit a promising well that produced over 7300 barrels the first 8 days. Raising funds on promising wells like that will be easy for Aubrey. The only thing that could interfere with that would be if the price of oil declines like the price of natural gas did. If that were to happen the oil and gas business would die anyway like it did in 1982 and none of the oil and gas companies would survive it.

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## Pete

I think many people would argue that AKM has wasted company money on lots of things completely unrelated to the oil & gas business.

But those issues have been well-covered in this thread.

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## ou48A

> It isn't like McClendon was wasting company money. He was acquiring and holding natural gas leases for the future. Turns out that was a mistake because of the decline in natural gas prices. If he were out wasting company money or OPM for self purposes I could see people coming down on the guy but he made a business error by spending to much money buying these natural gas leases. He is now trying to correct it by drilling in the Hogshooter Formation in the Texas panhandle and they did hit a promising well that produced over 7300 barrels the first 8 days. Raising funds on promising wells like that will be easy for Aubrey. The only thing that could interfere with that would be if the price of oil declines like the price of natural gas did. If that were to happen the oil and gas business would die anyway like it did in 1982 and none of the oil and gas companies would survive it.


Plenty of well managed oil and NG companies survived the 1980’s crash. In general it was the poorly managed company’s did not.

 While CHK did hit a great well or 2 in the Hogshooter and while they do have great prospects their and elsewhere this is not nearly on the scale that it would take to correct the mismanagement problems of CHK any time soon.
CHK has wasted money.

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## ou48A

> I think many people would argue that AKM has wasted company money on lots of things completely unrelated to the oil & gas business.
> 
> But those issues have been well-covered in this thread.


Many have long believed that AKM & CHK have over paid for many of its oil & gas holdings and undersold some of its assets. 
I not sure how well that  has been covered in this thread?

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## OPINIONATED

> I think many people would argue that AKM has wasted company money on lots of things completely unrelated to the oil & gas business.
> 
> But those issues have been well-covered in this thread.


When I talk about wasted money I am talking about McClendon wasting company money on himself. I am sure that CHK is far more than an oil and gas company. If McClendon is wasting share holder money the perfect people are involved to bring it out. The SEC.

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## OPINIONATED

> Many have long believed that AKM & CHK have over paid for many of its oil & gas holdings and undersold some of its assets. 
> I not sure how well that  has been covered in this thread?


It is for certain that they paid to much for those Natural Gas leases but were they over paying when they made the purchase? That is the question. If they undersold assets because of the price of Natural Gas then it was a smart business move. Hindsight is twenty twenty for most of us but doesn't help the risk takers. They take the risk way before they know the outcome.

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## OPINIONATED

> Plenty of well managed oil and NG companies survived the 1980’s crash. In general it was the poorly managed company’s did not.
> 
>  While CHK did hit a great well or 2 in the Hogshooter and while they do have great prospects their and elsewhere this is not nearly on the scale that it would take to correct the mismanagement problems of CHK any time soon.
> CHK has wasted money.


I was involved in that crash and only the big boys survived. The crash brought down just about every service company in the country. Those service companies were getting a nickle on the dollar for what was owed to them in bankruptcy courts.

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## OPINIONATED

I also know an elderly gentleman that was worth around 900 million back in 1981. He owned several businesses across the country and probably owned half of the property around OKC at different times.By 1983 he was broke and it had nothing to do with his management skills. It all had to do with the price of oil.

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## Maynard

Chesapeake CEO McClendon hires ex-SEC lawyer




> WASHINGTON | Tue Jun 5, 2012 4:53pm EDT
> 
> (Reuters) - The embattled chief executive of Chesapeake Energy Corp. has hired a top defense lawyer to represent him in a securities regulatory inquiry into $1.3 billion in personal loans, three people familiar with the situation said.
> 
> CEO Aubrey McClendon has retained Marvin Pickholz, a partner with Duane Morris and a former assistant director of enforcement with the U.S. Securities and Exchange Commission. He is counseling McClendon in connection with the SEC inquiry into loans he obtained from an investment firm doing business with the natural gas company.
> 
> The SEC is looking into whether the loans posed a conflict of interest or should have been disclosed to shareholders.
> 
> The loans from investment funds managed by EIG Global Energy Partners enabled McClendon to participate in a special perk which awarded him as much as a 2.5 percent interest in every well drilled by Oklahoma City-based Chesapeake each year.
> ...

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## Maynard

Chesapeake in talks on $4 bln pipeline sale-Bloomberg       06/05 07:49 PM

--------------------------------------------------------------------------------

June 5 (Reuters) - Chesapeake Energy Corp. is in advanced talks to sell almost all of its pipeline assets for more than $4 billion to Global Infrastructure Partners, Bloomberg reported, citing sources with knowledge of the matter. 

The second-largest U.S. natural gas producer is discussing selling all of its interests in Chesapeake Midstream Partners LP (ticker: CHKM) as well as other pipeline assets, Bloomberg reported. 

The talks could result in a deal within days although there was a risk negotiations could also fall apart, the report quoted the sources as saying. 

Chesapeake could not be reached for comment outside of U.S. business hours. 

A spokesman for Global Infrastructure Partners declined to comment on the report.

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## soonerguru

This story is quickly pivoting into one in which the core motivation is saving McClendon's and the board's rear ends legally. Not a promising development if you were hoping to hear a positive "here's what we're going to do to save Chesapeake" story.

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## Spartan

I am a big believer in collecting your "I told ya so's" when you stick your arse out on the line like MikeOKC did (even though I don't do it enough personally). This is all bad stuff that he was right about, and I'm sure he wishes he weren't right, but boy was he right.

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## BoulderSooner

> I also know an elderly gentleman that was worth around 900 million back in 1981. He owned several businesses across the country and probably owned half of the property around OKC at different times.By 1983 he was broke and it had nothing to do with his management skills. It all had to do with the price of oil.


sorry but if you "know" a guy that was worth 900 mil in 81 and "broke" in 83 ........ it has every thing to do with his management skills ...   he is not very bright

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## OPINIONATED

> sorry but if you "know" a guy that was worth 900 mil in 81 and "broke" in 83 ........ it has every thing to do with his management skills ...   he is not very bright



You don't know what you are talking about. This is a man who refused to file bankruptcy. They call it morals. Something most Republicans don't have. You don't know this man but I do. If you don't understand what happened in the early eighties then you don't have a dog in the fight. I assume that you are just a kid. The owner of the company I worked for was worth around 100 million and these oil companies owed him a fortune and they filed on him and he had to go to bankruptcy court to hope for a nickle on the dollar. It had nothing to do with his management skills. When you grow up you might understand what happened. Lenders are doing the same thing right now. They are loaning money on possible reserves and possible production on the high prices of oil. 1982 could happen again overnight if the price of oil hits bottom again.

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## Teo9969

> You don't know what you are talking about. This is a man who refused to file bankruptcy. They call it morals. Something most Republicans don't have. You don't know this man but I do. If you don't understand what happened in the early eighties then you don't have a dog in the fight. I assume that you are just a kid. The owner of the company I worked for was worth around 100 million and these oil companies owed him a fortune and they filed on him and he had to go to bankruptcy court to hope for a nickle on the dollar. It had nothing to do with his management skills. When you grow up you might understand what happened. Lenders are doing the same thing right now. They are loaning money on possible reserves and possible production on the high prices of oil. 1982 could happen again overnight if the price of oil hits bottom again.


Boulder is not exactly a kid...

You said the guy was "broke". If by broke you mean he literally had nothing, then yes, that guys has ZERO management skills. If by broke you mean instead of being worth $900M he was only worth $5M, then I would recommend a term other than "broke".

If one cannot obtain and shield <1% of one's total net-worth, then I would have to agree with Boulder...that person just isn't very bright. There are no ifs, ands, buts, or circumstances can change that fact.

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## OPINIONATED

> Boulder is not exactly a kid...
> 
> You said the guy was "broke". If by broke you mean he literally had nothing, then yes, that guys has ZERO management skills. If by broke you mean instead of being worth $900M he was only worth $5M, then I would recommend a term other than "broke".
> 
> If one cannot obtain and shield <1% of one's total net-worth, then I would have to agree with Boulder...that person just isn't very bright. There are no ifs, ands, buts, or circumstances can change that fact.



It is obvious that neither of you understand what happened in 1982. That is okay because most people don't understand it. This very wealthy man decided to pay back the investors instead of filing for bankruptcy. Bad decision?? Yes. Moral decision? Yes. The were his friends. Most Republicans don't understand moral decisions.

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## Pete

We're way off topic here and please let's leave politics out of this.


Let's get back to discussing Chesapeake.

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## knightrider

> Chesapeake in talks on $4 bln pipeline sale-Bloomberg       06/05 07:49 PM
> 
> --------------------------------------------------------------------------------
> 
> June 5 (Reuters) - Chesapeake Energy Corp. is in advanced talks to sell almost all of its pipeline assets for more than $4 billion to Global Infrastructure Partners, Bloomberg reported, citing sources with knowledge of the matter. 
> 
> The second-largest U.S. natural gas producer is discussing selling all of its interests in Chesapeake Midstream Partners LP (ticker: CHKM) as well as other pipeline assets, Bloomberg reported. 
> 
> The talks could result in a deal within days although there was a risk negotiations could also fall apart, the report quoted the sources as saying. 
> ...


This is a huge deal!  This is a fairly large segment of the Chesapeake business structure.  If this sale occurs there could be a lot of jobs lost if Global Infrastructure Partners decides to bring the jobs to their corporate headquarters.

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## knightrider

With that said Global Infrastructure Partners is a private equity firm so likely no jobs will be lost.

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## OPINIONATED

I agree Pete but when you look at what happened back in the early eighties and what is happening to Chesapeake now you have to wonder how stable oil and gas is in this country. I think as long as oil stays above 80 dollars a barrel these oil companies will be fine but if it starts falling below that 80 dollar mark it could be a huge problem for all oil companies. The lenders are still loaning money on possible production and reserves and a lot of those loans were on 100 dollar a barrel oil. It is almost the same track Penn Square was going down.

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## Pete

> I agree Pete but when you look at what happened back in the early eighties and what is happening to Chesapeake now you have to wonder how stable oil and gas is in this country. I think as long as oil stays above 80 dollars a barrel these oil companies will be fine but if it starts falling below that 80 dollar mark it could be a huge problem for all oil companies. The lenders are still loaning money on possible production and reserves and a lot of those loans were on 100 dollar a barrel oil. It is almost the same track Penn Square was going down.


I was a commercial real estate broker in OKC when this all hit the fan in the 80's and those memories are still burned into my brain.

I remember a bumper sticker that said something like, "Please God, give me $40 a barrel oil and this time I promise not to blow it!"

Then of course, you get all these people running around like high prices will never end.

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## OPINIONATED

> I was a commercial real estate broker in OKC when this all hit the fan in the 80's and those memories are still burned into my brain.
> 
> I remember a bumper sticker that said something like, "Please God, give me $40 a barrel oil and this time I promise not to blow it!"
> 
> Then of course, you get all these people running around like high prices will never end.


Isn't that the truth. I heard another one. Things you couldn't get rid of in Oklahoma. Aids, herpes and a house.

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## Pete

My family owned rental property in the 80's and after some very long struggles, ended up giving a good chunk of it back to the bank.

I don't think many people can comprehend how bad things were back then in OKC, and not just with the economy.  Downtown was dead and depressing and nothing else was really happening whatsoever.  I've always loved Oklahoma City but when I look back on those times, I have to admit it was a pretty dire place.

So much so I left my beloved hometown in 1989, something I never thought I would do.


Makes all the good things happening now just that much more satisfying for having lived through the dark days.

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## OPINIONATED

I left in 1990 and moved to Denver and started a new career. I was in the auto business and in 1992 business started booming in that area. Probably the best career move I have ever made. Before I moved my mortgage was in big trouble and a rich farmer (natural gas) bought my home in Oklahoma and I left with an extra $9000.00 in my pocket. There is a God.

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## Spartan

> My family owned rental property in the 80's and after some very long struggles, ended up giving a good chunk of it back to the bank.
> 
> I don't think many people can comprehend how bad things were back then in OKC, and not just with the economy.  Downtown was dead and depressing and nothing else was really happening whatsoever.  I've always loved Oklahoma City but when I look back on those times, I have to admit it was a pretty dire place.
> 
> So much so I left my beloved hometown in 1989, something I never thought I would do.
> 
> 
> Makes all the good things happening now just that much more satisfying for having lived through the dark days.


This is precisely why I'm always crusading for OKC to make the most of these good times, because I am absolutely convinced that the hard times will be back again because we have failed to diversify our economy. Our leaders have known that we need to diversify but they're too drunk on high oil prices right now to make decisions to reposition Oklahoma's economy for long-term prosperity, so the best we can hope is for decisions that build the best built environment NOW for the long term because there probably won't be much building in a few years, or even if we go into a double dip recession and the commercial mortgage-backed lending pulls a Punxsutawney Phil immediately after returning.

Even if oil stays around $80/barrel, CHK is in a world of hurt and could slip a lot more, we just lost Tronox today, AF is fleeing the inner city, and Tinker AFB could see massive cuts very soon. So even if we have a miracle and high oil prices are sustained, it is still very likely that we will be in a world of hurt if we don't diversify and do it soon. 

However diversification absolutely won't happen. The legislature had kept higher ed's budget neutral after massive slashes recently, and even worse, the EDGE initiative was defunded by this year's round of budget cuts during what may be the only year of prosperity and growth for a while with the double dip on the way. We literally sacrificed a successful economic development initiative that produced tech start ups with growth potential so that we could have a marginal state income tax cut. Un-freaking-believable.

The prognosis is that just as Aubrey had a limited window to build up the Nichols Hills area, which may have closed, I think OKC in general has a limited window that may be closing as far as the current real estate boom goes. Considering that, it is absolutely maddening that we are probably only taking 50% advantage in terms of building a sustainable built environment that can last us for a while.

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## OPINIONATED

From 1985-1995 Oklahoma did diversify into other businesses but did get back into the drilling of natural gas soon afterwards and the reason everyone goes to oil and gas is because of the amounts of money that can be made..

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## ou48A

> I was involved in that crash and only the big boys survived. The crash brought down just about every service company in the country. Those service companies were getting a nickle on the dollar for what was owed to them in bankruptcy courts.


There are many different types of energy and service companies in the energy business and no not all of the big boys survived. Many where bought out. I worked for a company that was owned by 4 different very large corporations in the span of about 4 years.
The management who best understood the boom bust cycle that is so typical of the industry are usually the companys that best survived. That remains true today.

I have known the family of a Kay county OK base well service company since the mid 60s who survived and thrived today. I was fortunate to get my first boom bust cycle lesson as a 5th grader by the company founder at a drilling rig site. He always said that his back ground in farming as a kid dealing with commodities and its ups and downs helped him understand to never be overextended. Given their many millions of net worth he and his entire family continue to live very modestly.

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## ou48A

> I now you have to wonder how stable oil and gas is in this country. .


Oil and gas is not stable and it never will be.
And the better we all understand that the better off we will all be!

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## blangtang

this is not that big of news.  the meeting shall go on...

Whoa! what the heck happened to this thread, lol!

-----
(Reuters) - A federal judge said Chesapeake Energy Corp need not delay its scheduled annual meeting on Friday to allow shareholders to further investigate the financial dealings of the natural gas company's chief executive, Aubrey McClendon.

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## blangtang

I've heard way to refer to cities that are based on oil and gas (could be any one industry i imagine) : before the boom, during the boom, and after the bust.

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## ou48A

> It is obvious that neither of you understand what happened in 1982. That is okay because most people don't understand it. This very wealthy man decided to pay back the investors instead of filing for bankruptcy. Bad decision?? Yes. Moral decision? Yes. The were his friends. Most Republicans don't understand moral decisions.


Moral decision?

Since the mid 60’s I have known the family who had own a Kay county OK Bank since before state hood.
The bank failed in the early 90’s. The banks owners took their own personal family money (said to be millions) and 100% covered all losses with interest that were not covered by FDIC. This family and their morals of personal responsibility and there promotion of self-prosperity were a major reason why I became a republican many years before the bank failed. 
They also had early dealings with CHK.

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## Spartan

> I've heard way to refer to cities that are based on oil and gas (could be any one industry i imagine) : before the boom, *during the boom*, and after the bust.


Where we have been for the last 3 years.

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## Pete

Their stockholder's meeting this Friday should be very interesting.

It's been somewhat diffused by the emergence of Icahn and the impending board changes.  Also, the stock has taken a nice jump over the last week, so that will probably ease some tensions.

But now that oil is dropping, that could really mess up their plans to shift away from nat gas.

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## Maynard

Not news to OKC...

Chesapeake Developed Shopping Centers as Gas Prices Fell





> By David Wethe on June 06, 2012 
> 
> Chesapeake Energy Corp. (CHK), under fire from investor Carl Icahn for focusing on “non-core assets,” has amassed more than $300 million of real estate in its home- town Oklahoma City area, including shopping centers. 
> 
> The exact size of Chesapeake Land Development Co.’s holdings, valued according to county tax records, is unclear from public filings. The empire, which has built at least two retail developments from scratch, has also included a church, houses and a grocery store. 
> 
> The real estate subsidiary is “absolutely” an example of costs that Chesapeake will have to rein in, said Fadel Gheit, an analyst at Oppenheimer & Co. 
> 
> Chesapeake’s home-town development projects illustrate how it can be difficult to distinguish between the personal interests of Chief Executive Officer Aubrey McClendon, who once said he might have been a developer in another life, and those of the company he leads. According to county real estate records, Chesapeake is the landlord for the upscale restaurant Deep Fork Grill, of which McClendon owns 49.7 percent. 
> ...

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## Pete

^

This is from one of the reporters I have spoken to extensively but I specifically asked not to be mentioned in that article.

There is a much bigger story to tell on this topic that requires a ton more research and detail.

For example, he mentions $300 million in real estate, but that is just the assessed value, not what they've paid.  That number is very close to a billion and still growing.

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## Spartan

The problem isn't at all the retail development activities, which you can argue help CHK attract top-notch talent to come to OKC and work for them. The problem is the far-off buildings that they've paid an arm and a leg for, like the Atrium Towers and the OGE/BCBS bldgs.. or basically anytime you see that pewter gray.

It's ridiculous to purchase these buildings for three times their value and THEN to see the multi-million dollar building permits for remodeling that always follows.

----------


## OPINIONATED

> Their stockholder's meeting this Friday should be very interesting.
> 
> It's been somewhat diffused by the emergence of Icahn and the impending board changes.  Also, the stock has taken a nice jump over the last week, so that will probably ease some tensions.
> 
> But now that oil is dropping, that could really mess up their plans to shift away from nat gas.


As long as oil stays around that 80 dollar mark it will be okay but if it starts slipping below 80 dollars it could hit the fan again here in Oklahoma.

----------


## OPINIONATED

> Oil and gas is not stable and it never will be.
> And the better we all understand that the better off we will all be!


But when the time is right investors can make enough money to take care of them for a lifetime and do that very quickly. The investors that took the path to oil over the last three years have made fortunes and so far they are still building wealth. You are correct. Oil and gas will never be stable for the long run but people who react to the short run can make a killing and right now the people involved in oil (finding oil) are making that killing.

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## Maynard

Chesapeake CEO spent on jets; leveraged NBA team       06/07 06:51 AM

--------------------------------------------------------------------------------

NEW YORK (MarketWatch) -- Chesapeake Energy Corp. Chief Executive Aubrey McClendon and his family made flights to Amsterdam and Paris that cost $108,000; and in another instance nine female friends of McClendon's wife flew to Bermuda without any family members aboard at a cost of $23,000, according to a report from Reuters on Thursday that cited internal company documents. McClendon owns a 19% stake in the Oklahoma City Thunder and has mortaged his future proceeds from the NBA (SL/nba) team to secure two bank loans, according to the report. The report comes a day ahead of Chesepeake's annual meeting. McClendon has come under fire for using his ownership stakes in Chesapeake's wells as collateral for personal loans.

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## OPINIONATED

> Chesapeake CEO spent on jets; leveraged NBA team       06/07 06:51 AM
> 
> --------------------------------------------------------------------------------
> 
> NEW YORK (MarketWatch) -- Chesapeake Energy Corp. Chief Executive Aubrey McClendon and his family made flights to Amsterdam and Paris that cost $108,000; and in another instance nine female friends of McClendon's wife flew to Bermuda without any family members aboard at a cost of $23,000, according to a report from Reuters on Thursday that cited internal company documents. McClendon owns a 19% stake in the Oklahoma City Thunder and has mortaged his future proceeds from the NBA (SL/nba) team to secure two bank loans, according to the report. The report comes a day ahead of Chesepeake's annual meeting. McClendon has come under fire for using his ownership stakes in Chesapeake's wells as collateral for personal loans.



What it doesn't say in that article is that McClendon used company funds for those trips. As far as leveraging his personal assets? He does own those assets.

----------


## Pete

He did use company funds for those trips.

This is a very long article and is the most in-depth analysis of how McClendon uses Chesapeake resources for himself, friends and family:


Special Report: The lavish and leveraged life of Aubrey McClendon

(Reuters) - In an annex at the headquarters of Chesapeake Energy Corp, a unit informally known as AKM Operations manages a top company priority: the personal business of its namesake, Chief Executive Aubrey K. McClendon.

According to internal documents reviewed by Reuters, the unit's accountants, engineers and supervisors handled about $3 million of personal work for McClendon in 2010 alone. Among other tasks, the unit's controller once helped coordinate the repair of a McClendon house that was damaged by hailstones.

Fourteen miles south, at Will Rogers World Airport, Chesapeake leases a fleet of planes that shuttle executives to oil and gas fields -- and the McClendon family to holiday destinations. On one trip, the clan took flights to Amsterdam and Paris that cost $108,000; McClendon counted the trip as a business expense. In another case, Chesapeake logs show, nine female friends of McClendon's wife flew to Bermuda in 2010 without any McClendons aboard. The cost: $23,000.

Closer to home, McClendon pursues another of his passions: the Oklahoma City Thunder, the NBA franchise in which he owns a 19 percent stake. As with other assets, McClendon has melded his Thunder interest with Chesapeake business. The energy company signed a $36 million sponsorship deal, and it pays up to $4 million annually to brand the stadium Chesapeake Energy Arena.

What hasn't been previously disclosed is that McClendon mortgaged his future proceeds from the team to secure two bank loans.

The AKM unit, the jet flights and the Thunder relationship are part of the lavish but leveraged lifestyle that McClendon has built through Chesapeake, America's second-largest natural gas producer.

From the 111-acre corporate campus that he shaped with a meticulous eye for detail, McClendon has intertwined his personal financial interests with those of the publicly traded corporation he runs to a far greater degree than shareholders may realize, according to interviews, public records and hundreds of pages of internal Chesapeake documents reviewed by Reuters.

McClendon, 52, has put longtime friends on the Chesapeake board and showered them with compensation. Restaurants he has co-owned occupy buildings owned by the energy company. A Chesapeake executive has handled the CEO's personal land and oil- and gas-well transactions.

Few outsiders are privy to the sophisticated universe of services that Chesapeake provides McClendon. The existence and scope of AKM Operations, for instance, hasn't been previously reported.

"I have to be wary when I see this type of pattern of disregarding shareholders' best interests," said David Dreman, chairman of Dreman Value Management LLP, which owns about 1 million Chesapeake shares. "I think McClendon should go."

Beyond the mixing of personal and professional, another theme emerges from interviews and records: McClendon's seemingly insatiable desire to own more and more -- of everything.

Said a contemporary who knows McClendon well, "If you're competitive like Aubrey, you just always want to own more."

For Chesapeake, McClendon has overseen a spree of more than 100 real estate purchases in Oklahoma City in recent years worth more than $240 million, property records show. On land steps from the corporate campus, he directed his natural gas company to develop a luxury shopping center. Now, he's planning to open a Chesapeake-owned grocery store.

For himself, McClendon bought his neighbor's house near Oklahoma City and then the one behind that. He acquired a mansion on "billionaire's row" in Bermuda and later added a larger estate. He bought properties in Minnesota and Maui and near Vail, Colorado. He filled cellars in three states with trophy wines, and purchased 16 antique boats valued at $9 million.

Then McClendon mortgaged much of it -- and bought more.

'MEDIA FIRESTORM'

Normally, McClendon loves publicity. When Forbes put his face on the cover last fall and declared him "America's Most Reckless Billionaire," Chesapeake posted the story on its website.

But these are not normal times for McClendon. In the wake of Reuters reports that raised questions about his mingling of personal and corporate interests, the board stripped him of his chairmanship. The company faces IRS and Securities and Exchange Commission inquiries, more than a dozen shareholder lawsuits, and demands for change from its largest investors. Meantime, the board is investigating ties between McClendon's personal financial transactions and Chesapeake's.

Bowing to the pressure, Chesapeake said this week that four current board members will be replaced with new directors chosen by two top investors, activist Carl C. Icahn and Southeastern Asset Management. Along with a new independent chairman expected to be named later this month, the reconfigured board will effectively be controlled by shareholders -- a shift expected to serve as a check on McClendon.

Citing the lawsuits, McClendon declined to be interviewed for this story. In mid-May, however, he spoke to several hundred Chesapeake employees about the crisis.

"I encourage everybody to inhale," McClendon said at one point, according to a partial recording of the meeting reviewed by Reuters. "I'm fine. You're fine. And we're in the middle of a pretty unprecedented media firestorm today. I don't exactly know the origins of it and I don't exactly know when it ends, but I know that it will end, and we will emerge stronger. We will emerge more focused, and we will change in some ways that we probably need to change in."

In recent weeks, Reuters has reported that McClendon used his stakes in company wells to arrange $1.55 billion in financing from a major financier of Chesapeake and others; that a Chesapeake board member lent money to McClendon; that he sold his share of at least two large energy plays at the same time Chesapeake divested its interest; and that he operated a private $200 million hedge fund from Chesapeake offices.

"You can pick up the paper every day and read something negative about me or about the company," McClendon told his employees during the May meeting. "I would not have wished the past month on my worst enemy."

'MY WAY'

McClendon's fate will have implications well beyond Chesapeake. He has been one of the most influential CEOs of his generation, credited and sometimes cursed for championing the drilling technique known as hydraulic fracturing, or fracking. The controversial method has led to a vast boom in U.S. natural-gas production.

That boom has reduced American reliance on foreign energy and enriched his company and his hometown. Using his own cash and Chesapeake's, McClendon has helped rebrand Oklahoma City through philanthropy and real estate development. Once largely defined by a tragedy -- the domestic terrorist bombing of the Alfred P. Murrah Federal Building in 1995 -- the state capital is now emerging as a center of sports and culture.

In no small part, that revitalization was fueled by McClendon's vision and his commitment to the community and to Chesapeake. Subordinates say McClendon has four children -- Will, Callie, Jack and Chesapeake. They are only partly joking.

McClendon routinely works through weekends, and employees often wake to emails he has sent between midnight and dawn. He expects instant answers.

"He will ask me a question and push back when I hesitate," said McClendon's longtime architect, Rand Elliott. "He'll say, ‘Rand, what if we paint it blue?' And I'll say, ‘Let me think about it.' He'll insist, ‘No, I want you to give me an answer right now.' I asked him once, ‘Aubrey, why do you need to know now? How is it you can make decisions so quickly?' He said, ‘I make hundreds of decisions every day. I've gotten pretty good at it. And I think I hit 90 percent of them right.'"

McClendon is often portrayed as a visionary -- a Mellon or Rockefeller of his time: Chesapeake's geologists helped identify North American basins that may hold a hundred-year supply of natural gas. Yet those hefty reserves have pushed natural gas prices to among the lowest levels in a decade.

The CEO takes the long view, projecting optimism and self-confidence. In his most recent annual statement to shareholders, McClendon used the word "bold" 27 times to describe his stewardship of Chesapeake: "We made the bold decision..." "This is clearly a bold plan..." "We accelerated the next bold move..."

He's also a micro-manager -- not necessarily meddlesome, employees and business associates say, but obsessed. No aspect of a project is too granular. He helped pick the kind of peanuts served at a restaurant he owns. He inserts commas into press releases and measures the distance between Redbud trees near his office.

"I'll say, ‘I'd like all the tulips to be red,'" architect Rand recalled. "He'll say, ‘No, no, they've got to be multicolored.'"

Chesapeake is now a Fortune 500 company with 13,400 employees. It has grown so big and McClendon has sold so much stock -- dumping $569 million during a personal financial crisis in 2008 -- that he now owns less than 1 percent of the company.

Yet in many ways he still runs Chesapeake the way he did when he co-founded it with 10 employees in 1989. He meets every new Oklahoma City employee, in groups of 30 or 40, during an hours-long session. He takes out a large advertisement in the local paper that includes the pictures of the new hires.

McClendon also closely monitors their work, internal records show. Every six months he spends the bulk of a week in meetings to personally consider proposed bonus payments to hundreds of employees. The documents show the CEO gets briefed on matters as obscure as whether to discipline a mechanic in Texas who chronically complains to colleagues about his pay.

To McClendon, "every detail matters," said his minister, the Reverend Patrick Bright. Leaving church one Sunday, McClendon spotted a low-hanging tree branch that posed a traffic hazard. "Before I finished saying goodbye to everyone, I had an email from Aubrey," the minister recalled. "It was a picture of the branch sent from his phone."

Friends and colleagues say land is another preoccupation.

Under McClendon's direction, Chesapeake engaged in what the company described as a "land grab" to dominate shale plays around the country. According to internal emails and former executives, Chesapeake began paying above-market prices to squeeze out competitors. At times, former employees said, McClendon was too quick to approve deals.

"He is very easy to pitch because his general inclination is to say ‘yes,'" said one former employee. "It was really surprising. There weren't a lot of questions."

Last fall, McClendon held forth on his business philosophy during a forum on "creativity and conscious capitalism."

"I've always been comfortable thinking things through and doing it, more or less, my way," McClendon said. "You can be as creative as you want, but if you're … unwilling to work on the details, to see those put into action, then creativity is just dreams, or worse, hallucinations."

The tycoon added a wry joke. "There are some areas in our business where creativity is not particularly welcome -- for instance, if you're an accountant."

TOM SAWYER

With his warm face, rimless glasses and distinctive white mane, the athletic McClendon is sometimes mistaken for former NFL quarterback Archie Manning, the father of football superstars Peyton and Eli Manning.

Like the Manning brothers, McClendon comes from a family of achievers. He is a great nephew of former Oklahoma Governor Robert Kerr, co-founder of U.S. oil-and-gas pioneer Kerr-McGee Corp. His wife, Katie, is a Whirlpool heiress, and her relative, Kate Upton, is a Sports Illustrated swimsuit cover model.

"To say that he grew up with a silver spoon is wrong," said Chesapeake senior vice president Thomas S. Price Jr., a confidant. "The implication is that he pulled the lever on the slot machine in life and ding-ding, got lucky -- and nothing could be further from the truth."

McClendon worked hard for everything he has accomplished, friends say, and his competitive drive emerged at an early age.

He received his first business lesson as a teenager, mowing neighborhood lawns in suburban Oklahoma City, the friends say. McClendon competed against a boy named Shannon Self, and one day noticed that Self's younger brother was cutting some of Self's lawns. McClendon discovered that his competitor had sub-contracted the work to his brother. Self was mowing more lawns and making more money than McClendon with less effort.

"He calls it his 'painting the fence' story, the scene where Tom Sawyer gets his friends to whitewash the fence," said a friend.

The episode served as an early example of McClendon's penchant for collecting smart and loyal friends and keeping them close. Self became a founding Chesapeake board member and remains a McClendon legal adviser.

A review of proxy statements shows that from 1995 through 2005, while Self served as both a Chesapeake board member and a partner shareholder in successive law firms, those firms billed Chesapeake for $6.3 million in legal work. Self retired from the board in 2005 with 232,972 Chesapeake shares then worth $4.8 million and another 288,750 stock options.

Self wasn't the only board member to profit handsomely while supervising McClendon. Until just a few weeks ago, when pay and perks were curtailed in response to public scrutiny, the Chesapeake board was one of the most generously paid in the U.S. oil and gas industry, according to a review of proxy statements.

From 2009 through 2011, Chesapeake paid $13.3 million in total compensation to 10 non-executive board members. By comparison, Exxon Mobil, the world's third-most-profitable company in 2011, paid 13 non-executive board members $9.9 million during the same period.

*Though Self left the board in 2005, McClendon's friend continued to exercise a perk bestowed on board members -- flying on Chesapeake-leased aircraft. In 2009, logs show, Self flew with his family from Oklahoma City to the Grand Caymans. In total, Self and family members logged $150,000 worth of personal flights on Chesapeake planes in 2010, records show.*

Self did not respond to requests for comment.

Other Chesapeake board members were such frequent fliers in 2010 that some logged far more personal flights than business flights on company-leased jets, internal documents show.

Corporate plane use for business and personal flights is considered a prime perk for American executives and board members. It is legal if properly disclosed, though personal trips can be subject to income tax.

Chesapeake discloses such travel but only for board members and a few top executives. It does not detail how many flights each individual took, or where and with whom the individual traveled. Reuters reviewed internal company logs, which list specific flights and include dates, airports and passenger lists.

*Board member Merrill "Pete" Miller, for example, the chief executive of National Oilwell Varco and Chesapeake's lead independent director, took $160,000 in free personal flights -- twice as much as he spent on business travel.

Former Oklahoma governor and current board member Frank Keating spent $57,000 in business flights, mostly to shuttle between Oklahoma and Washington, and $175,000 worth of personal flights. A round-trip flight with 10 friends to Alaska cost Chesapeake shareholders $71,000.*

Miller did not respond to requests for comment. Keating referred questions to Chesapeake, which did not respond.

WEEKENDS IN BERMUDA

Even the board's most frequent fliers cannot rival McClendon's use of jets that the company leased. His contract permits him to take unlimited business or personal flights for free (though he must pay taxes for certain personal flights). Friends and family, the contract says, also fly for free.

On June 15, 2010, a Gulfstream 550 jet leased by Chesapeake departed Oklahoma City bound for Amsterdam with three passengers: McClendon and his two sons, Jack, now 26, and Will, 19.

*McClendon gave a speech to a natural-gas conference shortly after arriving, then took the next two weeks off for a family vacation. According to logs reviewed by Reuters, the trio was joined by McClendon's wife, Katie, and together the four flew back from Paris. The charter flights cost $108,000 and were billed as "business," the logs show.

The flights were among 155 business charters McClendon logged in 2010 at a cost of $2.25 million. He brought family members along for at least 17 of those flights, billed as business expenses and valued at more than $370,000.*

*Chesapeake executives, board members and their families also take what the company characterizes as "personal" flights. In 2010 the McClendons took at least 75 personal flights on Chesapeake-leased aircraft. The cost: an estimated $830,000 to $875,000. Although his contract affords him unlimited use of the jets for himself, his friends and his family, McClendon reimbursed the company $375,000 for personal flights that year, according to a proxy.*

The McClendons took personal trips to Mexico, the Cayman Islands and New York. Bermuda, where the McClendons own vacation properties, was also a favored destination. One Friday in fall 2010, McClendon, his wife and a son flew to the island and flew back to Oklahoma City by Monday. Total cost: $34,000. The following weekend, his wife and daughter jetted there. Total cost: $27,000.

Personal use of corporate jets has abated since the SEC imposed stricter reporting rules in 2006. Travel by relatives in particular has declined, said Paul Hodgson, senior research associate at GMI Ratings, a corporate-governance ratings firm, "because the fierce light of disclosure is on them." Chesapeake's use of the perk appears relatively heavy, some experts said.

The jet travel is an indicator of wider troubles at the company, said John Liu, the comptroller for New York City, which holds 1.9 million shares of Chesapeake stock.

*"It's becoming clear that the excessive perks and problematic related-party deals that the company discloses, which have long caused concerns among investors, are only the tip of the iceberg," Liu said. "But, at this point, it's no longer shocking given the company's pattern of behavior."*

AKM OPERATIONS

McClendon's personal business affairs are tracked in the low-slung building on the fringe of Chesapeake's corporate campus, where at least six company employees work.

This is AKM Operations.

Chesapeake regularly discloses that McClendon receives personal accounting and engineering support from company employees; his contract allows him to use company facilities for his "personal businesses, investments and activities." But the scope and sophistication of the support, including AKM Operations, is not broken out in public disclosures.

*In 2010, Chesapeake employees spent more than 15,000 hours working on McClendon's personal projects, according to internal records reviewed by Reuters. The cost: about $3 million.*

In 2011 the documents projected that Chesapeake employees would do about $3.2 million in work for McClendon.

The company keeps detailed records because McClendon's contract calls for him to provide "a partial reimbursement" of the salaries, benefits and indirect costs of the Chesapeake employees who are "primarily designated to" work on his personal businesses. He does not reimburse the company for "secretarial or general administrative support," according to his contract.

The agreement also calls for Chesapeake to pay a portion of the accounting and engineering work as part of McClendon's annual compensation. In 2008 he received $708,339 in both accounting and engineering support. In 2009 it totaled $685,669, according to the proxies.

*In 2010 the company covered $250,000. Given that the accountants and engineers provided an estimated $3 million worth of personal work to the CEO, McClendon would have owed Chesapeake about $2.7 million for services that year. One Chesapeake document reviewed by Reuters showed McClendon reimbursed the company for the difference.*

People familiar with the process said the arrangement could amount to a 12-month loan because McClendon does not need to reimburse the company until the end of the year.

Most of the accounting work is performed by the special AKM unit. Consider the job held by Bryan Ott, an accountant who earned $200,000 at Chesapeake last year. His job title is "Controller, AKM Business Operations," but Ott does much more than manage McClendon's money.

When McClendon put a vast Oklahoma ranch up for auction, he had Ott handle the matter. When hail damaged a local home McClendon was buying, Ott coordinated the repair so the sale could be completed. Ott also is the registered website administrator for several McClendon personal projects, including one for a massive Lake Michigan resort that has drawn the ire of many townsfolk, and another for a McClendon holding company, Arcadia Resources.

Arcadia Resources also acts as a Chesapeake contractor. An Arcadia consultant, Scott Mueller, supervises Ott and at least five other Chesapeake employees working full-time for AKM Operations. Mueller reports directly to McClendon.

Until last year, Chesapeake employee John Garrison was the highest-paid person working with AKM Operations. He earned $800,000 in salary and bonuses, plus another $1 million in equity compensation.

Garrison played a variety of roles. He served as treasurer of the McClendon Family Foundation, a 501c3 charity. He also helped McClendon run the $200 million hedge fund from Chesapeake offices, a fund whose existence was disclosed by Reuters on May 2. Garrison retired late last year and is now a contractor for the AKM unit. His current compensation could not be learned.

The AKM unit is supplemented by scores of Chesapeake engineers who, among other duties, help calculate McClendon's reserve holdings in a special incentive program that gives him a chance to invest in every well the company drills. In 2010 at least 60 engineers spent on average six days each on McClendon-related projects, the records show. Some engineers spent mere hours; one logged more than 100 eight-hour days.

"Even if it's true that the executives are reimbursing for using company employees, having this kind of relationship with the company is treating it as a personal fiefdom," said Hodgson of GMI Ratings.

WINE AND BURGERS

Separating McClendon's business interests in Oklahoma City from Chesapeake's isn't easy.

For example, McClendon holds an interest in a local restaurant, Metro Wine Bar & Bistro, which occupies space owned by a Chesapeake subsidiary.

Across the street from the corporate campus, McClendon co-owns Irma's Burger Shack, often filled with Chesapeake employees during the lunch hour. According to a proxy, another restaurant McClendon co-owns, Deep Fork, catered Chesapeake events in 2007 and 2008 at a cost of $390,000.

As a co-owner of the Thunder basketball team, McClendon sits in the front row at games. As Chesapeake CEO he presides over a company that signed a $36 million, 12-year sponsorship deal with the team. This year the company pledged to buy $3 million worth of tickets, and many were distributed to employees and Chesapeake business associates.

*Although McClendon's net worth is pegged by Forbes at $1.1 billion, he has mortgaged much of what he owns: the restaurants, the wine, the boats, the homes, proceeds from three accounts at Goldman Sachs, his stake in private companies and his stake in thousands of Chesapeake wells. The well financing from one backer alone, EIG Global Energy Partners, totals $1.3 billion, according to a person familiar with the deals.*

McClendon has even mortgaged part of his stake in his beloved Thunder.

He holds 19 percent of a team valued at $350 million. But twice, McClendon has pledged his share of future proceeds from the Thunder as collateral for loans, from Bank of America in 2009 and Wells Fargo in 2010, according to records reviewed by Reuters. Neither loan has been previously disclosed.

Further particulars of the Thunder loans -- the amount McClendon borrowed, whether they have been repaid or whether the NBA or his Thunder partners were notified -- could not be determined.

Neither of the banks, nor McClendon and his spokesman, would elaborate on the Thunder loans.

THE MCCLENDON GARGOYLES

McClendon is generous with his money. He has donated roughly $15 million to Duke University, his and his wife's alma mater, and $12.5 million to the University of Oklahoma, his parents' alma mater. At Oklahoma, the McClendon Center for Intercollegiate Athletics is adjacent to the football stadium, and the McClendon Honors College is named after McClendon's parents.

At Duke, attended by all three McClendon children, a prominent dorm and visitors' center carry the family name. The chapel organ is named in honor of Katie McClendon.

So prolific were McClendon donations to Duke that the university once honored the couple by commissioning gargoyles in their likenesses, hanging them above an arch on the dorm, McClendon Tower. According to the artist, Katie McClendon found them too ostentatious; they were later removed.

Beginning about six or seven years ago, McClendon, through Chesapeake, helped lead a concerted effort to remake Oklahoma City. The company started buying land around its campus, including half of the neighborhood across the street. Chesapeake kept mum about its plans. Many outsiders expected more office buildings; they were wrong.

In late 2008, McClendon strolled into Balliets, the closest thing in Oklahoma City to Neiman Marcus. He approached the co-owner, Bob Benham.

"Aubrey came in with a picture of a dress that he had torn out of The New York Times magazine," Benham recalled, "and he wanted to see if he could get it for his wife."

Benham promised to try. "Then Aubrey spent the next 40 minutes asking me about my background and strategies for the store," the owner remembered. "It struck me as odd, because here's a guy running a huge energy company. Why would he be interested?"

Benham found the dress in Japan -- a Salvatore Ferragamo -- and had it shipped to Katie McClendon within 48 hours. McClendon, it turns out, had been testing him, Benham said.

A few months later, a Chesapeake executive approached Benham and said, "Aubrey wants you to anchor Classen Curve," a shopping center that McClendon envisioned, located steps from the Chesapeake campus.

A chic and sleek shopping venue, Classen Curve is owned by Chesapeake. It now includes stores with names such as On a Whim, Green Goodies and Uptown Kids. The gastro sports pub Republic serves smoked-salmon sliders. Matthew Kenney OKC offers gourmet raw vegan meals. Even the dumpsters are classy, camouflaged by high-end brick and steel.

"Aubrey saw it as a quality of life issue," Benham said. "These things seem peripheral to Chesapeake but really aren't. You have to have the amenities to attract people."

McClendon calls the amenities "the jewels" -- and on campus they include a 72,000-square-foot fitness center, Olympic-sized swimming pool and health center that offers teeth whitening and Botox injections.

*The Classen Curve project is not disclosed in any shareholder filings*. Business does not appear brisk; parking lots were largely empty on recent weekdays and many of the shops were vacant.

Benham said Chesapeake is choosy. "They could fill the place up tomorrow," he said, "but they want a certain type of tenant."

LAND, LAND, LAND

Chesapeake's expansion in Oklahoma City stretches far beyond Classen Curve.

Since 2004 the company has purchased at least 108 local properties for at least $240 million, according to a Reuters analysis of Oklahoma land records. More than half were purchased at prices well above the assessed market value. The 108 tracts and buildings were valued by the Oklahoma County Assessor's Office at a total market value of $146 million at the time of the purchases. In Oklahoma City, "market value" is based on recent sales data, said Larry Stein, the county's chief deputy assessor.

*Chesapeake paid $38 million for an office building valued at $27 million and $10 million for a church valued at $1.4 million. In 2006 it paid $16 million for Nichols Hills Plaza, a 50-year-old shopping center that was valued at $6.3 million. The company plans a major renovation, said Nichols Hills Mayor Sody Clements.

"We don't have the money to do it and he does," the mayor said, interchanging, as many locals do, McClendon for Chesapeake. "He raises the bar on everything."*

From fashion shops to food, McClendon's vision is reshaping the area near Chesapeake and Nichols Hills. When he became frustrated that Oklahoma City lacked a Whole Foods Market, he persuaded the popular organic chain to bring one to his hometown -- and then leased it space on land owned by Chesapeake, across the street from his office.

*At Nichols Hills Plaza, the energy company is planning to go into the grocery business itself, internal records show. Chesapeake plans to reopen the shuttered Nichols Hills Market and recently put two grocery store managers on its payroll. Their combined salaries exceed $200,000.*

"I think in another life he would have been a city planner or architect," said the former employee, who worked closely with McClendon for years. "It's like playing with Legos for him, envisioning something in his mind, seeing it laid out. He wants to reshape things."

MANY HOMES

Even at rest, McClendon remains competitive.

His wine collection, stored in cellars across three states and the Caribbean, exceeded 2,000 bottles, according to a 2009 inventory. It included a six-liter bottle of 1945 Mouton Rothschild, valued at about $100,000.

"This is not a particularly connoisseur-y cellar," said Benjamin Wallace, the best-selling author of "The Billionaire's Vinegar," who reviewed McClendon's wine roster. "It's pretty much exclusively big-name trophy vintages. Just eye-balling it, it's got to be worth millions."

McClendon also owns a $12 million collection of antique maps that fill the walls of Chesapeake buildings.

"His collection of Oklahoma maps and nearby states would be the envy of the Library of Congress," said Graham Arader, the broker who helped him acquire it. McClendon once angered some shareholders by selling the maps to Chesapeake to meet a margin call; he subsequently agreed to buy them back.

In 2005, McClendon set his sights on Bermuda's so-called billionaire's row, a neighborhood that included the vacation homes of Michael Bloomberg, Ross Perot and former Italian Prime Minister Silvio Berlusconi.

First, he bought an $8.6 million home and spent $12 million to renovate it. Next he bought the grandest property there for $20.8 million: an 8-acre tract once owned by industrialist Henry Clay Frick's descendants. McClendon gave the Frick site a makeover and sold it for a small profit. Last year his wife bought an $11 million house there, perched over a spectacular cliff.

In his Oklahoma neighborhood, McClendon and his wife live in a $4 million, 9,000-square-foot stone mansion in Nichols Hills, the tony enclave surrounded by Oklahoma City just a four-minute commute from the Chesapeake campus.

He also owns the house next door, purchased for $2.3 million, and the one behind that, which cost $700,000, records show. For a time, McClendon also owned yet another neighboring house.

'COMMIT TO THE LORD'

McClendon, an Episcopalian, sometimes invokes religious themes at work. Each day he helps select a quotation that is emailed to employees. Some are from the Bible.

A May 2 email quotes Proverbs 16:3: "Commit to the Lord whatever you do, and your plans will succeed."

Chesapeake also has three "corporate chaplains" on staff. According to a 2011 job posting, the chaplains provide confidential career, marriage, parenting and substance-abuse counseling as well as "spiritual consultation."

The chaplain positions are among Chesapeake jobs that reflect McClendon's passions. A keen student of history, he has a company historian on staff.

A proponent of good health for his employees, he also hired the 2006 winner of the World's Strongest Man contest, Phil Pfister, in part to promote exercise. On his website, Pfister says he's a man to whom "flipping cars, pulling two 18-wheelers or ‘toting tonnage' comes naturally."

The historian and the World's Strongest Man, who each earn more than $100,000, have other duties at Chesapeake. The strongman, for example, promotes Chesapeake's development efforts in important drilling regions.

ROWING ALONG

McClendon has poured Chesapeake resources into another love: rowing.

In a remarkable feat, Oklahoma City transformed its dry and weed-choked riverbed -- "nothing more than a big ditch," says Mayor Mick Cornett -- into an Olympic-class rowing venue.

Chesapeake built two of the venue's signature attractions, the sleek $3 million Chesapeake Boathouse and glass-sheathed $7 million Chesapeake Finish Line Tower.

*McClendon also put 10 Olympic hopefuls on the Chesapeake payroll.

They earn modest salaries -- $30,000 to $40,000, plus benefits -- and are assigned to departments such as finance and community relations. Even so, according to Chesapeake documents, each of the 10 is officially classified the same way: "Rower."

Some of the rowers McClendon hired have also flown with him aboard a Chesapeake-leased jet.*

On December 12, 2010 -- a Sunday -- the CEO took five rowers on a one-day trip to San Diego, the flight logs show. McClendon brought a son along, too.

Total round-trip cost to shareholders: $34,000.

(Additional reporting by Robin Respaut, Jennifer Ablan and Joshua Schneyer in New York and Alexander Cohen in Washington; editing by Blake Morrison, Michael Williams and Prudence Crowther)

----------


## OPINIONATED

The SEC will come down on him like a ton of bricks using company funds for personal use but leveraging his own assets is okay.

----------


## Pete

This is the front-page, featured story on the Reuters website.

I'm sure they wanted to get this out before Friday's shareholder's meeting.


It paints a picture of a CEO who sees what has become a very large public company as his own private enterprise.

I'm sure the new board will take a very hard look and we all know there is much more that is not in the public record.

----------


## ou48A

I have known people who have flown on some of those personal trips and who have been to Aubrey McClendon home for personal events. I find this all very sad. IMHO the McClendon’s are very nice people who are very well intended but are clearly over extended and to an extent mismanaged. 

As I mention previously Chesapeake paid above-market prices to leases land for drilling. This was a poor decision by management. Others have pointed out they obviously over paid for property in the OKC area.

"I have to be wary when I see this type of pattern of disregarding shareholders' best interests," said David Dreman, chairman of Dreman Value Management" 
“It's becoming clear that the excessive perks and problematic related-party deals that the company discloses, which have long caused concerns among investors, are only the tip of the iceberg," Liu said.
When you have seen and read about this type of wasteful and lavish life style before during past booms you have got to know that something isn’t right and it’s not likely to end very well.
You also have got to know that what you see on the surface is really is only the tip of the iceberg?
For me CHK has never been hard to stay away from as an investment or for employment, but I wish them well.

----------


## ou48A

> The SEC will come down on him like a ton of bricks using company funds for personal use but leveraging his own assets is okay.


Lets not forget the McClendon - Tom Ward hedge fund that has raised questions of trading on insider information?

----------


## Pete

I've never thought Aubrey was a bad guy and I know he does care a great deal about OKC and has done a tremendous amount for the community.

But he is in his position to serve the shareholders; that's the way it works when you take a company public.  They give you tons of money and your job is to make them profits.

I certainly understand why shareholders are furious.  In many ways, he has totally betrayed their trust.

----------


## soonerguru

I have to say I got a little sickened when I saw him on TV last night whooping it up at the Thunder game like nothing was going on. I realize he's an owner, and you would expect an owner to sit on the front row, I just don't want to see his presence taint the Thunder organization.

----------


## Spartan

Aubrey is not a bad guy. I hope he is ok.

----------


## onthestrip

That long Reuters article shows everything that is wrong with Aubrey and chpk. The irresponsible use of employees for his personal affairs and abuse of company jets must be pretty sickening to employees and shareholders. 

Also sitting court side last night was Keating, Hargis and Nickles. They might have been enjoying their last bit of perks before they are off the chpk board.

----------


## Maynard

Chesapeake Energy is Selling Oil, Gas Acres In Michigan




> By Ben Lefebvre - June 07, 2012
> 
> Chesapeake Energy Corp. (CHK) is selling 450,000 net acres in oil-and-gas fields in north-central Michigan, the third parcel of land the cash-strapped company has put up for sale in just over a week, an advisory firm said Thursday.
> 
> The Oklahoma City natural-gas company is trying to raise money to rein in an estimated $10 billion cash shortfall brought on as natural-gas prices have tumbled. Last week, Chesapeake put up for sale oil-and-gas acreage in Ohio and eastern Texas; the company also has been trying to sell land in the oil-rich Permian Basin in west Texas and Mississippi Lime basin in Kansas and Oklahoma.
> 
> The latest parcel includes land in the Collingwood and A-1 formations that offer the potential for production of oil and natural-gas liquids, according to the prospectus offered by Meagher Energy.
> 
> Chesapeake, the country's second-largest natural-gas producer after Exxon Mobil Corp. (XOM), is trying to focus production on oil and natural-gas liquids as natural-gas prices fell to a decade low of $1.90 a million British thermal units in late April. It also is trying to cut its long-term debt to around $9.5 billion from more than $13 billion in the first quarter.
> ...

----------


## MIKELS129

I wonder what value will be left after all these sales. 
Maybe that IS the plan, CHK will have no real value for an acquisition minded energy company and CHK will have to rebuild value. Aubrey is the only one to do that. Either way the local spending spree will probably be curtailed.

----------


## Maynard

> He did use company funds for those trips.
> 
> This is a very long article and is the most in-depth analysis of how McClendon uses Chesapeake resources for himself, friends and family:
> 
> 
> Special Report: The lavish and leveraged life of Aubrey McClendon
> ---
> ---
> ---
> ...



Chesapeake shareholder Dreman wants McClendon out       06/08 09:35 AM

--------------------------------------------------------------------------------

David Dreman, chairman of Dreman Value Management LLP, which owns about 1 million shares in embattled natural gas producer Chesapeake Energy Corp (CHK:$17.76,00$-0.09,00-0.50%) , told CNBC on Friday that Chesapeake Chief Executive Officer Aubrey McClendon should either resign or be fired by the company's new board. 

"When you see all the things that Aubrey McClendon has done in the past years in increasing numbers, I don't think as talented as he is he should be a member of Chesapeake anymore. I think he should be - either resign or be fired by the reconstructed board." 

He also said: "I wouldn't buy any more stock at this point."

----------


## Maynard

Chesapeake Energy Corporation Announces Preliminary Voting Results from Annual Shareholder Meeting       06/08 10:33 AM

--------------------------------------------------------------------------------

OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation announced preliminary voting results from its Annual Meeting of Shareholders held today at the company’s Oklahoma City headquarters. The voting results are as follows: 

*Item 1: Election of Directors:* 

Directors V. Burns Hargis and Richard K. Davidson were re-elected to the Board of Directors. However, since Messrs. Hargis and Davidson received the support of approximately 26% and 27%, respectively, of the votes cast, they have tendered their resignations as required by the Company’s new majority voting bylaw. The Board will review the resignations in due course. 

*Item 2: Proposal to amend bylaws to implement majority voting in director elections:* 

The proposal received the support of 97% of the votes cast but received only 64% of the shares outstanding, which was less than the two-thirds required for shareholder approval of a bylaw amendment. However, today the Board adopted the majority voting bylaw presented to the shareholders, even though it did not receive the requisite vote for shareholder approval, and made majority voting effective immediately. 

*Item 3: Shareholder advisory vote to approve named executive officer compensation: 
*
The proposal did not pass, receiving the support of 20% of the votes cast. 

*Item 4: Proposal to amend long term incentive plan: 
*
The proposal passed, receiving the support of 86% of the votes cast. 

*Item 5: Proposal to approve annual incentive plan:* 

The proposal did not pass, receiving the support of 31% of the votes cast. 

*Item 6: Ratification of independent registered public accounting firm:* 

The proposal passed, receiving the support of 93% of the votes cast. 

*Item 7: Shareholder proposal relating to re-incorporation in Delaware:* 

The proposal passed, receiving the support of 53% of the votes cast. 

*Item 8: Shareholder proposal relating to political lobbying expenditures:* 

The proposal did not pass, receiving the support of 36% of the votes cast. 

*Item 9: Shareholder proposal relating to the supermajority voting standard:* 

The proposal passed, receiving the support of 86% of the votes cast. 

*Item 10: Shareholder proposal relating to proxy access:* 

The proposal passed, receiving the support of 60% of the votes cast. 

Regarding today’s voting results, the Company commented, “Chesapeake appreciates shareholder feedback and will act appropriately with regard to the matters voted on today. Chesapeake has recently taken important actions to enhance corporate governance and increase management oversight by, among other things, reconstituting the Board of Directors. As previously announced, Chesapeake will add a new independent Non-Executive Chairman and four new independent directors proposed by shareholders to its nine-member Board within the next two weeks. Chesapeake will also take the necessary actions so that shareholders will have the opportunity to elect the entire Board of Directors at the 2013 Annual Meeting of Shareholders.” 

The preliminary results were tabulated by the Company’s independent Inspector of Elections, and final results will be disclosed upon certification by the Inspector.

----------


## Pete

See my best interpretation in purple below:

*Item 1: Election of Directors:* 

Directors V. Burns Hargis and Richard K. Davidson were re-elected to the Board of Directors. However, since Messrs. Hargis and Davidson received the support of approximately 26% and 27%, respectively, of the votes cast, they have tendered their resignations as required by the Companys new majority voting bylaw. The Board will review the resignations in due course. 

Remember that as recently as the last shareholder meeting where there was a pretty big outcry to not re-elect two directors, they still received over 90% of the vote.  So receiving 26-27% shows how upset shareholders are.

*Item 2: Proposal to amend bylaws to implement majority voting in director elections:* 

The proposal received the support of 97% of the votes cast but received only 64% of the shares outstanding, which was less than the two-thirds required for shareholder approval of a bylaw amendment. However, today the Board adopted the majority voting bylaw presented to the shareholders, even though it did not receive the requisite vote for shareholder approval, and made majority voting effective immediately. 

Previously directors ran unopposed and did not even need a majority for them to be re-elected; just more votes than nobody.  This is a change to that policy.

*Item 3: Shareholder advisory vote to approve named executive officer compensation: 
*
The proposal did not pass, receiving the support of 20% of the votes cast. 

Even last year, this was overwhelmingly approved, as it's pretty S.O.P.  Again, shows what the shareholders think of the current management and board who proposed the compensation plan.

*Item 4: Proposal to amend long term incentive plan: 
*
The proposal passed, receiving the support of 86% of the votes cast. 

I believe this has to do with tying pay to performance, rather than just awarding massive bonus and stock options when the company is losing billions.

*Item 5: Proposal to approve annual incentive plan:* 

The proposal did not pass, receiving the support of 31% of the votes cast. 

Part of the same issue mentioned in Item 4.

*Item 6: Ratification of independent registered public accounting firm:* 

The proposal passed, receiving the support of 93% of the votes cast. 

They will be bringing in new outside auditors.

*Item 7: Shareholder proposal relating to re-incorporation in Delaware:* 

The proposal passed, receiving the support of 53% of the votes cast. 

CHK is currently registered in Oklahoma and falls under the state statute that not all board members can come up for reelection at the same time.  The Delaware laws do not have this restriction and many of the shareholders want the option of being able to deal with the board as a group rather than a couple at a time.  Less important now that CHK has volunteered to replace about 5 board members.

*Item 8: Shareholder proposal relating to political lobbying expenditures:* 

The proposal did not pass, receiving the support of 36% of the votes cast. 

Not sure about this one but shows the shareholders are not very trusting of anything put forth by the current board.

*Item 9: Shareholder proposal relating to the supermajority voting standard:* 

The proposal passed, receiving the support of 86% of the votes cast. 

More board election reform.

*Item 10: Shareholder proposal relating to proxy access:* 

The proposal passed, receiving the support of 60% of the votes cast.

Not sure about this one.

----------


## Maynard

> Top Chesapeake holder says will be more active       05/02 01:50 PM
> 
> --------------------------------------------------------------------------------
> 
> Southeastern Asset Management, the largest shareholder in Chesapeake Energy Corp, said on Wednesday it is converting its passive ownership in Chesapeake to an active stake and intends to have discussions with Chesapeake's management, board and third parties. 
> 
> Southeastern made the disclosure in a U.S. Securities and Exchange Commission filing (13D) in which it reported that it has a 13.6 percent stake (89,854,868 shares) in Chesapeake.




13D filing from Hawkins today -- ownership is up slightly from 13.6% to 13.9%:






> SECURITIES AND EXCHANGE COMMISSION
>                             Washington, D.C.  20549
> 
>                                   SCHEDULE 13D
>                     Under the Securities Exchange Act of 1934
> 
>                                  Amendment No. 2
> 
>                          Chesapeake Energy Corporation
> ...

----------


## soonerguru

Thanks for the interpretations, Pete. It seems the company is on the path to being sold. If Chesapeake leadership would have taken bold action when this PR crisis surfaced, it could have defused so much of this shareholder outrage. But they didn't, and now they are seemingly locked into a reactionary position, ceding control of the company to many diffuse external influences. Aubrey should have stepped down, but his hubris won't allow it, and now whatever happens is what will be.

----------


## Spartan

Wait, hold the phone. CHK is now incorporated in Delaware instead of Oklahoma? I don't care about different corporate law, that is the most frightening thing I've seen in this whole mess.

----------


## ljbab728

> Wait, hold the phone. CHK is now incorporated in Delaware instead of Oklahoma? I don't care about different corporate law, that is the most frightening thing I've seen in this whole mess.


Calm down, Spartan.  It hasn't happened.  That was a nonbinding vote with that suggestion.

----------


## ou48A

There are many companies who are incorporated in Delaware but maintain only a very small presents in Delaware. This is done because of their state laws that I do not know very much about. They typicaly still keep the great bulk of their employees elsewhere.

----------


## ljbab728

http://newsok.com/security-tight-for...rticle/3682696

----------


## Midtowner

> There are many companies who are incorporated in Delaware but maintain only a very small presents in Delaware. This is done because of their state laws that I do not know very much about. They typicaly still keep the great bulk of their employees elsewhere.


Right, a lot of companies who do business out of state or internationally like Delaware law because when you're dealing with NYC or Boston law firms more than law firms in your own state, they're going to have more familiarity with Delaware law.  Delaware law is also written extremely business-friendly and has probably the most expert judges in the area of corporate law.

That said, Oklahoma's corporate laws are extremely favorable as well.  In some cases moreso, so it's a tough decision to incorporate in Delaware.  Certainly if they were selling off, the buyers would want Delaware law.  

Oklahoma missed a golden opportunity back in 2007 when it failed a bill which passed the house and later went on to die would have set up special business courts to handle disputes between businesses.  They would have been based in OKC and Tulsa.  It would have been a good thing.  No one wants to try an intellectual property law or shareholder dispute in Pushmataha County's District Court (I'm not picking on Pushmataha, just throwing out a random extremely rural county name).

----------


## Maynard

> Right, a lot of companies who do business out of state or internationally like Delaware law because when you're dealing with NYC or Boston law firms more than law firms in your own state, they're going to have more familiarity with Delaware law.  Delaware law is also written extremely business-friendly and has probably the most expert judges in the area of corporate law.
> 
> That said, Oklahoma's corporate laws are extremely favorable as well.  In some cases moreso, so it's a tough decision to incorporate in Delaware.  Certainly if they were selling off, the buyers would want Delaware law.  
> 
> Oklahoma missed a golden opportunity back in 2007 when it failed a bill which passed the house and later went on to die would have set up special business courts to handle disputes between businesses.  They would have been based in OKC and Tulsa.  It would have been a good thing.  No one wants to try an intellectual property law or shareholder dispute in Pushmataha County's District Court (I'm not picking on Pushmataha, just throwing out a random extremely rural county name).


"BYLAWS 

OF 

DEVON ENERGY CORPORATION 

(Adopted June 6, 2012) 

ARTICLE I 

OFFICES 

Section 1. Registered Office. The registered office of Devon Energy Corporation (the Corporation) shall be in the City of Wilmington, County of New Castle, State of Delaware. 

Section 2. Principal Office. The principal place of business of Devon Energy Corporation shall be in Oklahoma City, Oklahoma. 

Section 3. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine. "

----------


## ljbab728

> "BYLAWS 
> 
> OF 
> 
> DEVON ENERGY CORPORATION 
> 
> (Adopted June 6, 2012) 
> 
> ARTICLE I 
> ...


That's interesting but where is that from?  This is from a later date.

http://www.tulsaworld.com/business/a...1_CUTLIN160400




> "Something is out of balance here at Chesapeake," said shareholder Gerald Armstrong of Denver, whose proposal to reincorporate the company in Delaware passed with the support of 53 percent of the votes cast. Armstrong said the move would bring greater accountability to the company but that Chesapeake had resisted it. *The proposal is nonbinding*.

----------


## Maynard

> That's interesting but where is that from?  
> ---
> ---


From DVN's most recent 8K filing:




> AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF Devon Energy Corporation
> 
> (As amended as of June*6, 2012)
> (Originally incorporated under the name "Devon Delaware Corporation" on May*18, 1999)
> 
> Devon Energy Corporation, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
> A. The name of the corporation is Devon Energy Corporation. The corporation was originally incorporated under the name Devon Delaware Corporation and the original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on May*18, 1999.
> 
> B. This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of the General Corporation Law of the State of Delaware by the Board of Directors and the stockholders of the corporation.
> ...

----------


## Swake2

Many if not most large US corporations are incorporated in Delaware, almost none even have a single employee there.

----------


## ljbab728

> From DVN's most recent 8K filing:


So if they were already incorporated in Delaware what would be the point of a later vote at the meeting to do that?

----------


## RadicalModerate

All the best to you, too, MikeOKC. (Ref.Post#725)
(and thank you for the summary, above (Post #725), bringing those of us who were afraid that, somehow, The CHK Thing, was pretty much a rerun of The Penn Square Bank Debacle up to speed.)

Frankly, as I observed the growth of the "CHK Campus", the thought crossed my mind that this was being built by someone who was denied the opportunity to play "Monopoly" enough as a child.  Or at least never got good enough at the game to place those red hotels all over the board.

As far as "blaming the media" goes . . .
Does anyone still actually read newspapers?

----------


## dankrutka

> Does anyone still actually read newspapers?


Yes, but they read them online.

----------


## RadicalModerate

Touch.  =)

(but, technically, what does "paper" have to do with this?
wouldn't it be more like newspixels?)

----------


## Teo9969

Briefly talked to a guy that works at Chesapeake over the weekend...He says that everything over there is fine and that things are hunky-dory and that we shouldn't believe any of the media presented to us.

I do think the answer is somewhere in the middle, but I think it's closer to the media side than it is the side that things are going to be rosy for years to come. It seems many of their employees are unaware of basic principles being disregarded by CHK which universally govern all companies. The cash-strapped reality and the reality that energy in general is not very profitable at the moment is something CHK can't just ignore.

The whole conversation left me more unnerved than it did reassure me, and I hope like hell that there is no egg on this guy and others' faces when it's all said and done.

----------


## soonerguru

> Briefly talked to a guy that works at Chesapeake over the weekend...He says that everything over there is fine and that things are hunky-dory and that we shouldn't believe any of the media presented to us.
> 
> I do think the answer is somewhere in the middle, but I think it's closer to the media side than it is the side that things are going to be rosy for years to come. It seems many of their employees are unaware of basic principles being disregarded by CHK which universally govern all companies. The cash-strapped reality and the reality that energy in general is not very profitable at the moment is something CHK can't just ignore.
> 
> The whole conversation left me more unnerved than it did reassure me, and I hope like hell that there is no egg on this guy and others' faces when it's all said and done.


Yes. The cult member's plaint, "The media's against us!" is surely a sign that things are worse than he thinks.

----------


## kevinpate

Just curious .. did the guy happen to have the facial expression of that couple in the Vonage TV ad when they tell the new neighbor  .. We ALLLLL Bun-dle
.

----------


## RadicalModerate

^ LOL!!!

It's all about The Power of Positive Thinking because we create our own realities by our thoughts.
(Yeah. Right.)

----------


## Maynard

> As long as oil stays around that 80 dollar mark it will be okay but if it starts slipping below 80 dollars it could hit the fan again here in Oklahoma.


Raymond James Sees More Oil-Patch Gloom Coming       06/18 09:12 AM

--------------------------------------------------------------------------------

9:12 CDT - Raymond James gets bearish for now on the oil patch as it cuts its 2013 oil-price forecasts to $65/barrel for West Texas intermediate and $80 for Brent. It downgrades 24 oil-and-gas producers and 10 oil-services companies while cutting profit estimates through next year and expecting the number of US land rigs in use then to fall from 2012. "The downside risk we saw in oil prices has started sooner than we expected", Raymond James crows. But we're not done, it contends, "as our oil model points to a severely oversupplied global oil market. While lower demand is part of the story, robust production growth in the US is the monster lurking in the shadows. We expect this bogeyman to fully show himself before the end of this year."

----------


## onthestrip

> Briefly talked to a guy that works at Chesapeake over the weekend...He says that everything over there is fine and that things are hunky-dory and that we shouldn't believe any of the media presented to us.
> 
> I do think the answer is somewhere in the middle, but I think it's closer to the media side than it is the side that things are going to be rosy for years to come. It seems many of their employees are unaware of basic principles being disregarded by CHK which universally govern all companies. The cash-strapped reality and the reality that energy in general is not very profitable at the moment is something CHK can't just ignore.
> 
> The whole conversation left me more unnerved than it did reassure me, and I hope like hell that there is no egg on this guy and others' faces when it's all said and done.


I know a few that are like this. They are fed reassurances constantly in employee emails from Aubrey. And if they are still getting a check, have access to a cool fitness center/convenient child care/good cafeterias/fun company parties etc then it is all good to them.

I love how it is passed off as a media assault when all they are doing is reporting facts. I dont know how an employee could have read that latest Rueters article detailing all the excessive company jet use by Aubrey, his family and friends and not be upset. I bet CHPK has spent upwards of $25 million on jet use in some years.

----------


## ou48A

> I know a few that are like this. They are fed reassurances constantly in employee emails from Aubrey. And if they are still getting a check, have access to a cool fitness center/convenient child care/good cafeterias/fun company parties etc then it is all good to them.
> 
> I love how it is passed off as a media assault when all they are doing is reporting facts. I dont know how an employee could have read that latest Rueters article detailing all *the excessive company jet use by Aubrey, his family and friends and not be upset.* I bet CHPK has spent upwards of $25 million on jet use in some years.


The “excessive company jet use by Aubrey, his family and friends” has been known about by many in the company / community for several years.

----------


## ou48A

> Raymond James Sees More Oil-Patch Gloom Coming       06/18 09:12 AM
> 
> --------------------------------------------------------------------------------
> 
> 9:12 CDT - Raymond James gets bearish for now on the oil patch as it cuts its 2013 oil-price forecasts to $65/barrel for West Texas intermediate and $80 for Brent. It downgrades 24 oil-and-gas producers and 10 oil-services companies while cutting profit estimates through next year and expecting the number of US land rigs in use then to fall from 2012. "The downside risk we saw in oil prices has started sooner than we expected", Raymond James crows. But we're not done, it contends, "as our oil model points to a severely oversupplied global oil market. While lower demand is part of the story, robust production growth in the US is the monster lurking in the shadows. We expect this bogeyman to fully show himself before the end of this year."



I have learn to like the Raymond James energy analyst.

----------


## BoulderSooner

> I know a few that are like this. They are fed reassurances constantly in employee emails from Aubrey. And if they are still getting a check, have access to a cool fitness center/convenient child care/good cafeterias/fun company parties etc then it is all good to them.
> 
> I love how it is passed off as a media assault when all they are doing is reporting facts. I dont know how an employee could have read that latest Rueters article detailing all the excessive company jet use by Aubrey, his family and friends and not be upset. I bet CHPK has spent upwards of $25 million on jet use in some years.


his jet use is allowed under his contract ..and has been disclosed each and every year

----------


## ou48A

> his jet use is allowed under his contract ..and has been disclosed each and every year


Wasn’t the major issue that this part of his contract had not been disclosed to shareholders?

----------


## jn1780

> I know a few that are like this. They are fed reassurances constantly in employee emails from Aubrey. And if they are still getting a check, have access to a cool fitness center/convenient child care/good cafeterias/fun company parties etc then it is all good to them.
> 
> I love how it is passed off as a media assault when all they are doing is reporting facts. I dont know how an employee could have read that latest Rueters article detailing all the excessive company jet use by Aubrey, his family and friends and not be upset. I bet CHPK has spent upwards of $25 million on jet use in some years.


Its like everything else in this world. People don't care unless the honey pot runs dry then of course its too late to complain.

----------


## RadicalModerate

Wouldn't the use of a Non-Corporate jet have been even more expensive?
And less convenient?  No?

He was just saving the company money and increasing his peace of mind at the same time.

How could anyone fault the man for that?

----------


## Maynard

Vincent Intrieri, Sr. Managing. Director for Carl Icahn, to join Chesapeake Board; new Chairman, add'l directors named by Friday, per CNBC       06/18 03:12 PM

----------


## Snowman

> I know a few that are like this. They are fed reassurances constantly in employee emails from Aubrey. And if they are still getting a check, have access to a cool fitness center/convenient child care/good cafeterias/fun company parties etc then it is all good to them.
> 
> I love how it is passed off as a media assault when all they are doing is reporting facts. I dont know how an employee could have read that latest Rueters article detailing all the excessive company jet use by Aubrey, his family and friends and not be upset. I bet CHPK has spent upwards of $25 million on jet use in some years.


It will be the minority of people that believe that all is well but may not be enough for a large portion to start job hunting yet.

----------


## onthestrip

> The “excessive company jet use by Aubrey, his family and friends” has been known about by many in the company / community for several years.


Quite certain this wasnt widely known, even so its no excuse.




> his jet use is allowed under his contract ..and has been disclosed each and every year


So it said in his contract that he could let his wife's friends take a trip on the company jet to Bermuda? And it said he could charter a G550 to Amsterdam and around Europe for 2 weeks with his family? I didnt know. In that case it sounds perfectly acceptable and totally necessary for company operations.... Boulder you seem to be quite the Aubrey apologist.




> Wouldn't the use of a Non-Corporate jet have been even more expensive?
> And less convenient?  No?
> 
> He was just saving the company money and increasing his peace of mind at the same time.
> 
> How could anyone fault the man for that?


Surely this is sarcasm, right? Chartering a G550 for 3 people to Europe is probably 10x more expensive than 3 first class seats on commercial.

----------


## ou48A

> Quite certain this wasnt widely known, even so its no excuse.


I have known about it since December 2000……. apparently you are very,VERY out of the loop.



AKM still must file a 1099 on this…… or did you not know that? 
AKM was not doing anything wrong on this, at least according to what we hear about his contract.

----------


## MikeOKC

Sometimes, it's hard to stay away.

You're both right! Yes, it's been widely known and yes, much of it _is_ in his contract. But who wrote the contract? Make no mistake, it was written by Aubrey Kerr McClendon and his own legal team to take care of the personal interests of AKM - not the shareholders. This is one of the biggest tragedies of this whole thing! The fact is the board has been paid *huge* sums of money to sit on the Chesapeake board of directors and_ rubber stamp_ the decisions of Aubrey McClendon. The Chesapeake scheme with these perks (and other things that are still to come) *is the very definition* of quid pro quo (which is simply Latin meaning 'this for that').

All of the CHK entanglements based on quid pro quo, as almost a part of their secretive corporate culture, is the biggest reason I honestly believe this ends with severe legal consequences for McClendon and others.

----------


## MikeOKC

Double post. Sorry. Mods - could you please delete?

----------


## soonerguru

> Wouldn't the use of a Non-Corporate jet have been even more expensive?
> And less convenient?  No?
> 
> He was just saving the company money and increasing his peace of mind at the same time.
> 
> How could anyone fault the man for that?


I think you're being sarcastic here, but just in case, no. His wife's friends could have purchased round trip first class tickets for much cheaper than using the company jet to Bermuda.

----------


## RadicalModerate

i _was_ being sarcastic . . . yet, if you think about it, and in all fairness to the man, it doesn't cost anymore to fly his wife and her friends to Bermuda than his wife alone. and being "The Decider" on something like this is one of the very few, meager, perks of his challenging job at the helm of CHK. (sarcasm. =)

----------


## catch22

The company they use airplanes from is called netjets. It's a fractional ownership operating company. You basically part-own the airplane on a monthly fixed cost and NetJets will provide the crew, catering, fuel, etc. It would be comparable to a membership at the gym or country club. Chesapeake has a contract with them, it costs Chesapeake the same amount of money per month to use one of the jets once a week as it does 15 times a month. Just like your gym membership costs the same if you go every night or if you go once a week. So, in reality this is costing the company no more money than they would have spent either way. And, really we are talking small numbers of spending, it's the outrageous huge expenses that should be the concern, not the private jet usage which is mere pennies compared to other expenses unrelated to the core business. (I.E. Real estate)

----------


## Pete

> And, really we are talking small numbers of spending, it's the outrageous huge expenses that should be the concern, not the private jet usage which is mere pennies compared to other expenses unrelated to the core business.


True, but it's all part of a very consistent and much bigger pattern.

The jet issue is just one where outside journalists could gain a window into the way CHK operates.  There is much, much more that only insiders would know about.


it will be very interesting to see what happens when the new Chairman is appointed and the other directors join the board.  I'm sure they'll want to take a very hard look at the spending, as it's one thing to have it happen in the past and quite another for it to continue on your watch.  They are going to be under tremendous scrutiny.

I would expect they will uncover quite a bit and make some substantial changes in terms of policies and spending guidelines, but I would also anticipate very little of that being made public.  I'm sure it will be discussed in broad strokes in order to satisfy shareholders and possible investors that positive change is happening.  I doubt we'll never know some of the more extreme details.

That is, until somebody writes a book about all of this, which most certainly will happen at some point.

----------


## onthestrip

> The company they use airplanes from is called netjets. It's a fractional ownership operating company. You basically part-own the airplane on a monthly fixed cost and NetJets will provide the crew, catering, fuel, etc. It would be comparable to a membership at the gym or country club. Chesapeake has a contract with them, it costs Chesapeake the same amount of money per month to use one of the jets once a week as it does 15 times a month. Just like your gym membership costs the same if you go every night or if you go once a week. So, in reality this is costing the company no more money than they would have spent either way. And, really we are talking small numbers of spending, it's the outrageous huge expenses that should be the concern, not the private jet usage which is mere pennies compared to other expenses unrelated to the core business. (I.E. Real estate)


You dont have unlimited flying hours if you are member of net jets. There may be an unlimited package but it will cost a ton I imagine. But most membership plans have limits of usage.
Also, the Amsterdam trip with his sons, Aubrey chartered basically the best private jet out there for over $100,000. Sorry if I think that is excessive and totally unnecessary.

----------


## RadicalModerate

Maybe with all the talk of "hubris" and alleged misuse of airplane privileges, a good title for the upcoming book might be, "Oklahoma Icarus" . . . (although that may be just a tad obscure and the "flying" part is only a sidebar).

----------


## adaniel

And so it begins (although I believe these cuts have been planned for a while)....

Chesapeake to lay off 70 in Barnett Shale

----------


## Just the facts

> So if they were already incorporated in Delaware what would be the point of a later vote at the meeting to do that?


The Bylaws above are from Devon Energy - not Chesapeake.

----------


## Maynard

More suits...



Zamansky & Associates LLC Announces the Filing of a Chesapeake Energy Corporation Employees’ ERISA Class Action Lawsuit       06/19 04:54 PM

--------------------------------------------------------------------------------

NEW YORK--(BUSINESS WIRE)-- Zamansky & Associates, LLC announces the filing today of a class action lawsuit under the Employee Retirement Income Security Act (“ERISA”) on behalf of all employee and former employee participants in the Chesapeake Energy Corporation’s Savings and Incentive Stock Bonus Plan (“Plan”). The lawsuit was filed in the United States District Court for the Western District of Oklahoma and covers all current and former employees of Chesapeake Energy Corporation (“Chesapeake” or the “Company”) who purchased or held Company stock in the Plan from July 31, 2008 to the present. 

Since April 2012, Chesapeake has been the subject of a dozen lawsuits, alleging securities fraud, corporate waste and breach of fiduciary duties owed to shareholders. The lawsuits arise out of revelations about CEO Aubrey McClendon, his perks and compensation, and certain business strategies he pursued to his own benefit and the detriment of the Company. McClendon took $1.1 billion in loans against personal stakes in the Company’s oil and gas wells he obtained under the Founder’s Well Participation Program (“FWPP”). To bail himself out of financial problems, and maximize his own gains, McClendon pursued an aggressive expansion strategy for Chesapeake and piled on enormous debt through off-balance sheet arrangements that were not disclosed on the Company’s balance sheet. He also borrowed from firms that also transacted business with Chesapeake, creating huge conflicts of interest. McClendon additionally ran a lucrative business on the side: a $200 million hedge fund that traded in the same commodities that Chesapeake produces from the Company’s offices. 

ERISA is a federal law that sets minimum standards for pension plans set up by private businesses, and protects people who participate in employee benefit plans. The class action lawsuit alleges that the Plan’s fiduciaries i) failed to manage and administer the assets with the care, skill, prudence, and diligence of a prudent person, ii) failed to disclose material information to the Plan’s participants, iii) and engaged in activities inconsistent with, and detrimental to, the Plan and its participants. 

If you are a current or former participant in any of Chesapeake’s retirement or stock plans, and wish to be included in this ERISA class action, please contact: 

Jacob H. Zamansky
Zamansky & Associates, LLC
50 Broadway, 32nd Floor
New York, New York 10004
(212) 742-1414
jake@zamansky.com
www.zamansky.com

----------


## RadicalModerate

I could be wrong here and I sincerely hope that I am . . . But it seems to me that when The Intrieri (Ichan), Zamansky (and Soprano) Gang come a-ridin' into town, The Local Hero and his posse could be in a tight spot.  Sort of like when that guy who founded Marland Oil and built that big house in Ponca City that he never actually got to live in and had to settle for being Governor of Oklahoma instead of continuing to buck The Standard Getty Gang on the East Coast. Except that was then and this is now.

Thank goodness we still have Irwin . . . or is that Irvin? Irving?. . . Box and that Well Known Defense Attorney from Stillwater to stand in the gap.

Is there any truth to the rumor that ERISA was intentionally--if subliminally--named after the Goddess of Conflict (Eris)?
Prob'ly not.  =)

----------


## Maynard

Market Chatter: Sinopec Mulling Multi-Billion Dollar Bid for Chesapeake Energy Assets: Financial Times       06/20 10:04 AM

--------------------------------------------------------------------------------

(MidnightTrader) -- Sinopec, the Chinese oil and natural-gas company, is weighing spending billions of dollars for Chesapeake Energy Corp. assets, the Financial Times reported.

Fu Chengyu, chairman of Sinopec, was in Oklahoma this week as the company performs a due diligence review of Chesapeake assets, the newspaper said today, citing unidentified people familiar with the move.

CHK shares are up 1.7% to $19.03 in morning trade.

----------


## Maynard

Chesapeake Energy Corporation Announces Reconstituted Board --  06/21 08:01 AM

Archie W. Dunham, Former Chairman of ConocoPhillips, Named Independent Non-Executive Chairman  

Four Other New Independent Directors Also Join Board: Bob G. Alexander, R. Brad Martin, Frederic M. Poses and Vincent J. Intrieri

--------------------------------------------------------------------------------

OKLAHOMA CITY--(BUSINESS WIRE)-- Chesapeake Energy Corporation today announced the appointment of five new independent directors to its reconstituted nine-member Board of Directors. 

Archie W. Dunham, former Chairman of ConocoPhillips and former Chief Executive Officer of Conoco, has been appointed by the Board as Chesapeake’s new independent Non-Executive Chairman. Mr. Dunham has had no previous relationship with Chesapeake. Aubrey K. McClendon has relinquished the position of Chairman but remains a Director and will continue to serve as Chesapeake’s Chief Executive Officer and as President. 

Chesapeake’s Board also appointed four other new independent directors: three proposed by Southeastern Asset Management (SAM), its largest shareholder with a 13.9% ownership stake, and one proposed by Carl C. Icahn, its second largest shareholder with a 7.6% stake. The new directors proposed by SAM are Bob G. Alexander, R. Brad Martin and Frederic M. Poses. The new director proposed by Mr. Icahn is Vincent J. Intrieri. 

These five new directors replace Richard K. Davidson, Kathleen M. Eisbrenner, Frank Keating and Don Nickles who have resigned and Charles T. Maxwell who retired at the annual meeting on June 8, 2012. Following the annual meeting, Mr. Davidson and V. Burns Hargis submitted their resignations when they did not receive support of a majority of the shares voted. The Board accepted Mr. Davidson’s resignation, but given Mr. Hargis’ current role as Chairman of the Audit Committee, and reflecting input from SAM and Mr. Icahn, the Board has declined to accept his resignation, at this time, to permit completion of the previously announced review of the financing arrangements between Mr. McClendon (and the entities through which he participates in the Founder Well Participation Program) and any third party that has had or may have a relationship with the company in any capacity. Mr. Hargis will continue to lead the review, but is not expected to remain Chairman of the Audit Committee. Upon completion of the review, the Board will revisit his resignation. 

The other directors remaining on the Chesapeake Board are Mr. McClendon, Louis A. Simpson, who was proposed by SAM in 2011 and will now become Chairman of the Nominating and Governance Committee, and Merrill A. (“Pete”) Miller who was serving as Lead Independent Director. With the appointment of an independent Non-Executive Chairman, the role of Lead Independent Director has been eliminated and Mr. Miller will become Chairman of the Compensation Committee. Final Board Committee assignments will be made by the reconstituted Board. As previously announced, the Board will also take the necessary actions to enable shareholders to elect the entire Board of Directors at the 2013 annual meeting of shareholders. 

Pete Miller said, “On behalf of the Board, I would like to thank Dick, Kathleen, Frank and Don for their substantial contributions to Chesapeake. I also want to welcome Archie Dunham as Non-Executive Chairman. During the search process, it became readily apparent to the entire Board, and to SAM and the other shareholders with whom we consulted, that Archie is the right leader for this Board based on his deep knowledge of the energy industry, experience as an outside director of major natural resources companies and, most importantly, his reputation for integrity, independence, strong leadership and a focus on shareholder value. We look forward to working with Archie and our four other new Board members, all of whom have the right blend of broad experience and sound judgment to guide Chesapeake and provide strong accountability going forward.” 

Archie W. Dunham said, “I am honored to join the Chesapeake Board in the new role of independent Non-Executive Chairman and I am excited about the exceptional opportunities ahead for this high-potential company. Under Aubrey’s leadership, Chesapeake has built an extraordinary portfolio of natural gas and oil assets in creating one of the world’s leading energy companies. As I evaluated this opportunity, I was attracted by the clear mandate to provide strong oversight while working closely with the company’s exceptional management team, talented employees, and reconstituted Board in a situation where we have the opportunity to create substantial value for all shareholders in the years ahead.” 

Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, said, “I am pleased to welcome Archie Dunham to Chesapeake’s Board and look forward to working with him, our continuing Board members and our new Board members, Bob Alexander, Brad Martin, Fred Poses and Vince Intrieri, in our common mission to deliver to our shareholders the substantial net asset value we have created in the past seven years as Chesapeake has helped lead the unconventional resource revolution in the energy industry. Archie is extraordinarily well regarded both inside and outside of the industry, and we are confident he is the right person to lead our Board as we complete the transition from the asset identification and capture phase of Chesapeake’s history to now harvesting those assets. I also want to express my deep appreciation to Dick, Kathleen, Frank and Don for their professionalism and dedication while serving on our Board - they have made substantial contributions to Chesapeake’s development and we will miss them.” 

O. Mason Hawkins, Chairman and Chief Executive Officer of Southeastern Asset Management, the Company’s largest shareholder, said, “Chesapeake has the assets and the opportunity to become the U.S.'s pre-eminent, low cost energy producer and to significantly grow its value per share. We believe this board will prudently guide, assist and complement management's efforts to capture its potential.” 

Carl C. Icahn, Chesapeake’s second largest shareholder, said, “We believe Chesapeake is now heading in the right direction. With the Board providing strong oversight, the management team will be sharply focused on realizing the value of its assets and the company will be well positioned to create substantial value for shareholders going forward.” 

Biographies of New Directors

Archie W. Dunham, 73, is the retired Chairman of ConocoPhillips. He was Chairman, President and Chief Executive Officer of Conoco Inc. from 1999-2002, after being elected President and CEO in 1996. He became Chairman of ConocoPhillips Company in 2002. He was instrumental in orchestrating Conoco’s IPO separation from DuPont in 1998, the largest in US history, and in negotiating the merger of equals between Conoco Inc. and Phillips Petroleum Company in 2002. Mr. Dunham currently serves on the Board of Directors of Union Pacific Corp and Louisiana-Pacific Corp, where he is the Chair of the Finance and Audit Committees. He is also a member of Deutsche Bank’s Americas Advisory Board. Previously, Mr. Dunham served on the boards of DuPont, Conoco, ConocoPhillips, Phelps Dodge and Pride International where he chaired essentially all the major board Committees. He has continuously served on major corporate boards for nearly 30 years. Mr. Dunham currently serves on the Commission on National Energy Policy and is a Board member of the CEO Forum. He is the past Chairman of the National Association of Manufacturers, the United States Energy Association and the National Petroleum Council. In 2005, he was appointed by President Bush to the President’s Commission on White House Fellowships. In 2002, he was appointed by President Bush to the President’s Commission on Critical Infrastructure. He served in the US Marine Corps from 1960-64 and currently serves as a member of the Marine Corps Heritage Foundation. Mr. Dunham holds a Bachelor’s degree in geological engineering and a Master’s degree in Business Administration from the University of Oklahoma. 

Bob G.Alexander, 78, is the founder of Alexander Energy Corporation and served as its Chairman and Chief Executive Officer from 1980 until its sale to National Energy Group in 1996, at which time he became a Director of National Energy Group. He later served as Chairman and Chief Executive Officer of National Energy Group from 1998 until its sale in 2006 to SandRidge Energy. Earlier in his career, Mr. Alexander was Vice President and General Manager of the Northern Division of Reserve Oil, Inc. and President of Basin Drilling Corp., subsidiaries of Reserve Oil and Gas Company. He currently serves on the Board of Directors of Transatlantic Petroleum Corporation and CVR Energy, Inc. Mr. Alexander received a Bachelor of Science degree in Geological Engineering from the University of Oklahoma. 

Vincent J. Intrieri, 55, has been employed by Icahn related entities since October 1998 in various investment related capacities. Since January 1, 2008, he has served as Senior Managing Director of Icahn Capital L.P., the entity through which Carl C. Icahn manages investment funds, and since October 1, 2011, he has served as Senior Vice President of Icahn Enterprises G.P. Inc., the general partner of Icahn Enterprises L.P. He has been a director of Icahn Enterprises G.P. Inc. since 2006. In addition, since November 2004, he has been a Senior Managing Director of Icahn Onshore LP, the general partner of Icahn Partners, and Icahn Offshore, the general partner of Icahn Master, Icahn Master II and Icahn Master III, entities through which Mr. Icahn invests in securities. He is currently the chairman of CVR Energy, Inc., and also serves on the boards of Federal−Mogul Corporation, and Dynegy Inc. He is also chairman of the board and a director of PSC Metals, Inc., (a privately held, non-listed company). He is a former director of Motorola Solutions, Inc., Lear Corporation, WCI Communities, Inc., WestPoint International, Inc., National Energy Group, Inc., XO Holdings LLC, American Railcar Industries, Inc. and Viskase Companies, Inc. Mr. Intrieri received his Bachelor’s degree in Accounting from The Pennsylvania State University and was a certified public accountant. 

R. Brad Martin, 60, is former Chairman and Chief Executive Officer of Saks Incorporated, a position he held from 1989 to 2007. Mr. Martin currently serves on the Boards of Directors of FedEx Corporation, First Horizon National Corporation and Dillard’s Inc, where he is Chairman of the Audit Committee. He is a former Director of lululemon athletica, Gaylord Entertainment, Inc. and Ruby Tuesday, Inc. Mr. Martin received his Bachelor of Science in Political Science from the University of Memphis and an MBA from Vanderbilt University. 

Frederic M. Poses, 69, is the Chief Executive Officer of Ascend Performance Materials, a private company. Previously, he was Chairman and Chief Executive Officer of Trane Inc. (formerly American Standard Companies, Inc.) from 1999 until its acquisition by Ingersoll Rand in 2008. He previously spent 30 years at AlliedSignal, Inc. and predecessor companies from 1969 to 1999, most recently as President and Chief Operating Officer. He is Non-Executive Chairman of the Board of Directors of TE Connectivity Ltd. and a Director of Raytheon Company. He is a former director of Centex Corporation and WABCO Holdings Inc. Mr. Poses received his Bachelor's degree in Business Administration from New York University.

----------


## Pete

Wowee.  What a huge shakeup.


The scary part is now the shareholders pretty much have a majority on the board, so if there is a decent offer for the entire company they could just decide to take the money and run.

Also, it will be very, very interesting to see how McClendon adjusts to his new role and overlords.

----------


## Pete

> Carl C. Icahn, Chesapeake’s second largest shareholder, said, “We believe Chesapeake is now heading in the right direction. With the Board providing strong oversight, *the management team will be sharply focused* on realizing the value of its assets and the company will be well positioned to create substantial value for shareholders going forward.”


The irony is that every time one of the board members flies into town, they will see two Pop's locations at the airport and then will be literally surrounded by dozens of side-projects of both the company and McClendon while at their campus.

----------


## BoulderSooner

> The irony is that every time one of the board members flies into town, they will see two Pop's locations at the airport and then will be literally surrounded by dozens of side-projects of both the company and McClendon while at their campus.


doubt the board ever flies into will rogers

----------


## Maynard

All's not yet well at Chesapeake Energy
Commentary: Ugly energy market dwarfs CEO antics       06/21 02:48 PM

--------------------------------------------------------------------------------

(Marketwatch) - Chesapeake Energy Corp.'s boardroom is now packed with new faces and Carl Icahn, the outside agitator behind it, is reassuring shareholders the company is under control. That's not the same as saying it's out of danger. It's not.

Chesapeake introduced its new board members Thursday. Former ConocoPhillips boss and industry old-timer Archie Dunham has been appointed chairman, filling the seat CEO and company co-founder Aubrey McClendon was forced to vacate in a shareholder rebellion prompted by his flagrant disregard for some basic rules of corporate governance.


Dunham is joined by four new directors, one nominated by Icahn, Chesapeake's second-largest shareholder, and three more chosen by Southeastern Asset Management, its biggest shareholder.

"We believe Chesapeake is now headed in the right direction," Icahn said in a statement accompanying the announcement. Among the first orders of business: completing an audit of company-backed personal loans to McClendon.

Great. But reining in McClendon is not going to solve Chesapeake's problems. Bigger issues remain.

The company, up against a capital shortfall of about $10 billion, is in the midst of a massive asset sale. The goal is to sell about $14 billion in production properties, most of it natural gas. But the boom in domestic shale gas production has flooded the market, driving gas prices this spring to a 10-year low. This is probably the worst time to be selling natural gas assets in a generation.

Chesapeake knows that, which is why it's been scrambling to rebalance its production portfolio more heavily in favor of oil.

But look at oil prices. July crude futures fell below $79 a barrel in New York Thursday for the first time in nine months.

With the global economy going nowhere fast, energy traders are pricing in stark market realities faster than their counterparts in the equities market, and their near-term view on energy demand is overwhelmingly bearish.

That's not helping Chesapeake Energy, whose share price fell another 4% Thursday to $18.13.

So while Icahn has reason to feel good about installing outside directors to supervise the company, an ever-uglier energy market is making McClendon's executive indiscretions look like the least of Chesapeake's problems.

If energy prices continue to deteriorate, no one is going to be interested in buying some of Chesapeake's assets. They'll be looking instead at buying the whole company.

----------


## 1972ford

cheasapeak will always have a buyer for their assets in China. China would jump at the chance to buy out cheasapeake in whole but it would never get past talks due US wanting to keep cheasapeake a US or european industry

----------


## Maynard

Special Report: Chesapeake and rival plotted to suppress land prices -- June 25, 2012



> (Reuters) - Under the direction of CEO Aubrey McClendon, Chesapeake Energy Corp. plotted with its top competitor to suppress land prices in one of America's most promising oil and gas plays, a Reuters investigation has found.
> 
> In emails between Chesapeake and Encana Corp, Canada's largest natural gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners here.
> 
> In one email, dated June 16, 2010, McClendon told a Chesapeake deputy that it was time "to smoke a peace pipe" with Encana "if we are bidding each other up." The Chesapeake vice president responded that he had contacted Encana "to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim." McClendon replied: "Thanks."
> 
> That exchange - and at least a dozen other emails reviewed by Reuters - could provide evidence that the two companies violated federal and state laws by seeking to keep land prices down, antitrust lawyers said.
> 
> "The famous phrase is a smoking gun.' That's a smoking H-bomb," said Harry First, a former antitrust lawyer for the Department of Justice. "When the talk is explicitly about getting together to avoid bidding each other up, it's a red flag for collusion, bid-rigging, market allocation."
> ...

----------


## blangtang

CHK got beat with the ugly stick again today. ugh

----------


## Pete

I really don't see how Aubrey survives all this; this latest revelation may be the last straw.

Plus, his forte is in acquisition and growth...  Now that they are selling rather than buying, they'll need him less than ever.

I bet he doesn't make it past the first of the year.

----------


## soonerguru

> I really don't see how Aubrey survives all this; this latest revelation may be the last straw.
> 
> Plus, his forte is in acquisition and growth...  Now that they are selling rather than buying, they'll need him less than ever.
> 
> I bet he doesn't make it past the first of the year.


I don't see how you could possibly be wrong in your assessment. But then, this is Chesapeake we're talking about, and they obviously will let Aubrey do whatever the F he wants, so there's that. If this were any normal company we were talking about, AKM would most assuredly be on his way out.

----------


## Spartan

The problem with CHK is that they have no understanding of consequences and they seriously never thought anyone was looking in their books. This is looking worse and worse, and I hate to see what revelation comes out next time. What are we averaging, a scandal every month for 2012?  :Whisper:

----------


## MustangGT

Aubrey may or may not survive long term.  In all probability CHK will.

----------


## OKCTalker

From today's Daily Oklahoman and an interview with new Chairman Archie Dunham: 

Dunham said the board's review also will include comparing Chesapeake's spending and staffing levels to competitors like Anadarko Petroleum Corp., Devon Energy Corp. and other industry peers. 

"To me the best way to look at your cost structure is to benchmark your organization with your competition," Dunham said. "When you're benchmarking against your very best competition and your cost structure is out of line, you have to ask yourself why. There's usually not an excuse. So then you have a tough job of cutting costs. Unlike the federal government, which never reduces staff, public companies have to reduce staff, have to cut costs, have to sell assets during different times in the history of the company in order to remain viable," he said. 

APC: $30.0B market cap/4,800 employees = $6,250k/employee (7.2x CHK)
DVN: $22.0B market cap/5,200 employees = $4,231k/employee (4.9x CHK)
CHK: $10.9B market cap/12,600 employees = $865k/employee

----------


## Swake2

> From today's Daily Oklahoman and an interview with new Chairman Archie Dunham: 
> 
> Dunham said the board's review also will include comparing Chesapeake's spending and staffing levels to competitors like Anadarko Petroleum Corp., Devon Energy Corp. and other industry peers. 
> 
> "To me the best way to look at your cost structure is to benchmark your organization with your competition," Dunham said. "When you're benchmarking against your very best competition and your cost structure is out of line, you have to ask yourself why. There's usually not an excuse. So then you have a tough job of cutting costs. Unlike the federal government, which never reduces staff, public companies have to reduce staff, have to cut costs, have to sell assets during different times in the history of the company in order to remain viable," he said. 
> 
> APC: $30.0B market cap/4,800 employees = $6,250k/employee (7.2x CHK)
> DVN: $22.0B market cap/5,200 employees = $4,231k/employee (4.9x CHK)
> CHK: $10.9B market cap/12,600 employees = $865k/employee


They will likely not look at cap but at revenue and ebitda for this calculation.

Using your employee totals CHK has 3.16 ebitda on 11.6 in revenue for an average of $251k/$921k per employee.

Devon earns 9.4 ebitda on 11.4 in revenue for averages of $1,808k/$2,192k and Apache earns 12.89 on 16.9 in revenue for averages of $2,685k/$3,521k

Doesn’t look good.

----------


## Teo9969

> They will likely not look at cap but at revenue and ebitda for this calculation.


From Marketwatch:

APC: $2.93M revenue/employee
DVN: $2.24M revenue/employee
CHK: $900k revenue/employee

My god you could cut CHK's employee base in half and they'd still have more employees and substantially less revenue per.

----------


## Teo9969

Natural Gas has quietly climbed back to $2.90

While that's nowhere near where CHK needs it to be...it's got to be hopeful to see that number approach $3 for the first time since Christmas.

----------


## soonerguru

Interesting Bloomberg piece with some historical background on CHK:

*McClendon Eating Healthy No Help in Bet Undermining Chesapeake Energy*

Aubrey McClendon tried to eat healthy on the morning of Jan. 10, 2007. No home fries, he told the waitress at the International House of Pancakes in Oklahoma City. Order the special with grits, she suggested. He’d save 25 cents. Across from him sat Ronnie Irani, a local petroleum engineer. Irani says he was trying to convince McClendon, the chief executive officer of Chesapeake Energy Corp., (CHK) to join him in staking a claim to more than 5 billion barrels of oil trapped beneath Wyoming’s Powder River Basin.

“I had to go to somebody who could move fast and think big,” Irani says. “He was a perfect choice.”
Irani had just founded his own firm after 26 years working for other people. The Mumbai-born oilman says he needed a partner to keep competitors from muscling him aside. McClendon, whose voracious appetite for natural gas acreage had made him an industry legend, knew how to seize control of new energy prospects. He was Irani’s first pick.

In Irani’s maps, McClendon saw the chance to join the pantheon of 19th-century oil titans, such as John D. Rockefeller and Ludvig and Robert Nobel, the Swedish brothers who once dominated Russia’s oil industry.

‘Sweep of History’
“When you look at the sweep of history in this industry, those who move first to lock in big new acreage positions when technology changes emerge as the winners,” McClendon says.

Within weeks, Irani, 55, and McClendon, 52, had penned a preliminary agreement to buy 1 million acres (405,000 hectares) of oil leases in eastern Wyoming. They planned to move in quietly, before their competitors noticed.

McClendon won the land grab, and his ambitious bid to dominate the American oil rush may cost him his job and his company. The secret deal McClendon struck with Irani helped kick off a five-year buying binge that spanned the U.S. and pushed Oklahoma City-based Chesapeake’s debt to a crippling $12.6 billion. The company has put as much as $20.5 billion in assets on the auction block to fill a gaping cash shortfall.

As Chesapeake careens toward financial ruin, corporate governance scandals have shattered investor confidence in McClendon’s leadership. In April, the board said it was reviewing McClendon’s personal ventures with Chesapeake financiers.
*
READ MORE*

http://www.bloomberg.com/news/2012-0...hesapeake.html

----------


## MikeOKC

This is one of those things nobody paid attention to at the time because the focus was on McClendon and his own problems. "The email" as it's known to those who have known for years that Aubrey was a crook of the highest order (and that's not easy in the world of business), is finally being given the notice it deserves by the folks at Bloomberg. It shows that Chesapeake's "good to employees" only went so far. A lot of good people lost a lot of money by trusting AKM in "the email" of October 10, 2008. It's a good piece in that it also shows how out-of-touch Aubrey was, or the other option, what a pathological liar he is - take your pick.

*Chesapeake Energy Corp. (CHK) Chief Executive Officer Aubrey McClendon disavowed any role in the plunge in the company’s stock price in October 2008 after he had sold more than 31 million shares to meet margin calls.

McClendon e-mailed employees on Oct. 10, 2008, urging them “just to ignore” the decline in Chesapeake’s shares, which he attributed to fallout from the global financial collapse triggered by Lehman Brothers Holdings Inc.’s bankruptcy 26 days earlier. Eighteen minutes before sending the message, the company issued a statement through Business Wire that the CEO involuntarily sold “substantially all” of his Chesapeake shares over the previous three days to satisfy margin calls.*
http://www.bloomberg.com/news/2012-0...ld-shares.html
Rest assured, there's much more to come as journalists - _and the federal government_ - continue to unscramble the puzzle known as "bookkeeping" at CHK. Secrecy and paranoia is/was prevalent among AKM and others at the top - for a reason. They had a lot to hide.

----------


## Easy180

Oh Mike quit exaggerating...Wait...We have moved way past that point now lol

----------


## Oil Capital

> This is one of those things nobody paid attention to at the time because the focus was on McClendon and his own problems. "The email" as it's known to those who have known for years that Aubrey was a crook of the highest order (and that's not easy in the world of business), is finally being given the notice it deserves by the folks at Bloomberg. It shows that Chesapeake's "good to employees" only went so far. A lot of good people lost a lot of money by trusting AKM in "the email" of October 10, 2008. It's a good piece in that it also shows how out-of-touch Aubrey was, or the other option, what a pathological liar he is - take your pick.
> 
> *Chesapeake Energy Corp. (CHK) Chief Executive Officer Aubrey McClendon disavowed any role in the plunge in the companys stock price in October 2008 after he had sold more than 31 million shares to meet margin calls.
> 
> McClendon e-mailed employees on Oct. 10, 2008, urging them just to ignore the decline in Chesapeakes shares, which he attributed to fallout from the global financial collapse triggered by Lehman Brothers Holdings Inc.s bankruptcy 26 days earlier. Eighteen minutes before sending the message, the company issued a statement through Business Wire that the CEO involuntarily sold substantially all of his Chesapeake shares over the previous three days to satisfy margin calls.*
> http://www.bloomberg.com/news/2012-0...ld-shares.html
> Rest assured, there's much more to come as journalists - _and the federal government_ - continue to unscramble the puzzle known as "bookkeeping" at CHK. Secrecy and paranoia is/was prevalent among AKM and others at the top - for a reason. They had a lot to hide.


I am no defender of McClendon or Chesapeake... not by a long shot.  But it's a bit of a stretch to blame huge employee losses on that October 10, 2008 email.  At the time the email was sent, Chesapeake's stock had already lost 80% of its value.  On October 10, 2008, it closed at $15.75.  There have been very few days since that time on which the stock sold for less than that price.  Even today, it closed at $17.93.  It's going to be pretty hard to get damages for losses caused by that email.

Further, it is hardly out of touch or pathologically dishonest to say that the stock price decline was caused by the world market turmoil.  Devon had just dropped more than 50% (and continued dropping for total losses of 66% by the time they bottomed out.)   Aubrey sold his shares at $16.52 (after the vast majority of the decline... indeed, as you well know, the decline is what triggered and required Aubrey's sale.  There is no case to be made that Aubrey's stock sale caused the 80% drop in the stock price or any noticeable part of it.

----------


## soonerguru

> I am no defender of McClendon or Chesapeake... not by a long shot.  But it's a bit of a stretch to blame huge employee losses on that October 10, 2008 email.  At the time the email was sent, Chesapeake's stock had already lost 80% of its value.  On October 10, 2008, it closed at $15.75.  There have been very few days since that time on which the stock sold for less than that price.  Even today, it closed at $17.93.  It's going to be pretty hard to get damages for losses caused by that email.
> 
> Further, it is hardly out of touch or pathologically dishonest to say that the stock price decline was caused by the world market turmoil.  Devon had just dropped more than 50% (and continued dropping for total losses of 66% by the time they bottomed out.)   Aubrey sold his shares at $16.52 (after the vast majority of the decline... indeed, as you well know, the decline is what triggered and required Aubrey's sale.  There is no case to be made that Aubrey's stock sale caused the 80% drop in the stock price or any noticeable part of it.


True that the stock sale didn't necessarily cause the slide, but the email does reveal AKM to be a slimy reptile -- but we already knew that.

----------


## Spartan

The question isn't whether Aubrey lied or is pathological, the question is how many thousand jobs will be laid off at CHK now out of a total 5,000 at the OKC hq.. 1,000? 2,000? I get the impression Dunham is talking large numbers, especially as they want to get employees in line with a market cap or revenue ratio comparable to Devon or Apache.

I think we can all safely say that CHK was for years ran like a family business for the benefit of a few people as well as paying as many employees as much as possible for as long as they could keep is going, and whatever natural gas deals it made along the way, that's just gravy..

----------


## soonerguru

> The question isn't whether Aubrey lied or is pathological, the question is how many thousand jobs will be laid off at CHK now out of a total 5,000 at the OKC hq.. 1,000? 2,000? I get the impression Dunham is talking large numbers, especially as they want to get employees in line with a market cap or revenue ratio comparable to Devon or Apache.
> 
> I think we can all safely say that CHK was for years ran like a family business for the benefit of a few people as well as paying as many employees as much as possible for as long as they could keep is going, and whatever natural gas deals it made along the way, that's just gravy..


Yes. In all likelihood you're right. That's why they should never have gone public. They could keep the gravy train running forever -- and they wouldn't have had as much cash to burn and rack up their debt. It's ridiculous how many companies go public that don't seem to understand what being a publicly traded company is all about.

----------


## Just the facts

> It's ridiculous how many companies go public that don't seem to understand what being a publicly traded company is all about.


I often scratch my head at that as well.  I equate it to people who win millions in the lottery and are broke 5 years later.  For most companies going public just seems like a bad idea.

----------


## Pete

Exclusive: Justice Dept. probes Chesapeake over possible collusion
By Diane Bartz and Brian Grow

WASHINGTON (Reuters) - The U.S. Justice Department is probing Chesapeake Energy Corp and Encana Corp for possible collusion after a Reuters investigation showed that top executives of the two rivals plotted in 2010 to avoid bidding against each other in Michigan land deals, a source close to the probe said.

The Reuters report uncovered emails showing that the two natural gas companies repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan and in nine prospective deals with private land owners in the state.

Communications between the companies occurred in 2010, when Michigan's Collingwood shale formation was considered one of the nation's most promising new oil and gas plays, and Chesapeake and Encana were among the largest bidders for land leases there.

The source, who was not authorized to speak publicly, said the Justice Department probe could last for months, if not longer.

A Justice Department spokesman declined to comment.

Jim Gipson, a spokesman for Chesapeake, said the company declined to comment. A spokesman for Encana did not immediately respond to requests for comment.

The federal government's probe adds more scrutiny to the two energy companies.

Last week, the antitrust division of Michigan Attorney General Bill Schuette's office and Michigan's Department of Natural Resources, which oversees state land auctions, also opened investigations into the allegations in the Reuters report, according to three sources familiar with the matter.

"Our commitment is to ensure the integrity of the auction process and to receiving fair market value for public land," said Michigan DNR spokesman Ed Golder. Joy Yearout, a spokeswoman for the attorney general's office, declined to comment.

Both Chesapeake and Encana, Canada's largest natural gas company, said they had discussed forming a joint venture in Michigan in 2010, but ultimately decided against it.

In one email, Chesapeake Chief Executive Officer Aubrey McClendon told one of his deputies on June 16, 2010, that it was time "to smoke a peace pipe" with Encana "if we are bidding each other up."

The Chesapeake vice president responded that he had contacted Encana "to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim." McClendon replied: "Thanks."

Some of the emails were between McClendon and Encana USA President Jeff Wojahn.

Encana has pledged quick action, opening an internal investigation led by David O'Brien, chairman of the company's board of directors.

News of the discussions between Encana and Chesapeake, the second-largest natural gas producer in the United States, comes at a time when McClendon is already under fire.

The company's board stripped him of his chairmanship after Reuters reported that he took out more than $1.3 billion in personal loans from a firm that also finances Chesapeake. The Internal Revenue Service and the U.S. Securities and Exchange Commission have launched inquiries into Chesapeake.

(Reporting By Diane Bartz and Brian Grow; Additional reporting by Joshua Schneyer; Editing by Martin Howell and Lisa Von Ahn)

----------


## mugofbeer

I doubt there will be a need to lay too many off.  If they just stop hiring, attrition and hiring by the other local O & G's will likely do the trick.

----------


## dankrutka

> I doubt there will be a need to lay too many off.  If they just stop hiring, attrition and hiring by the other local O & G's will likely do the trick.


The new chairmen already indicated their employee numbers should be in line with the quantity at competitors, which implied they'd be cutting around half their employees. Just saying.

----------


## mugofbeer

their employees are in many different locations.  I doubt they'll lay people off locally when they are still building on the campus.  They'll contract from the distance and work back to the city as much as they can

----------


## jn1780

> their employees are in many different locations.  I doubt they'll lay people off locally when they are still *building on the campus*.  They'll contract from the distance and work back to the city as much as they can


Thats not saying much, their campus is an inefficient mess. They can fire a bunch of employees and they would still have a few corporate buildings outside of their main campus. We'll see how many new construction projects they start once the buildings underconstruction now are completed.

----------


## OKCTalker

I don't think that Archie Dunham cares anything about maintaining appearances by finishing buildings on campus that will never house employees (the smart choice would be to finish the skin and secure them from the elements, making them OKC's first see-through buildings in almost 30 years). He knew that the company was in a fight for its survival before he was approached to be the chairman. He wouldn't have taken the job if he wasn't prepared to make hard choices and win - why risk putting a huge failure at the end of an otherwise-distinguished, lengthy career? Besides, he's already telegraphed his intentions (read post 844) which quotes from an interview he gave to the DO. And although I agree with Swake2 that EBITDA is important, CHK isn't cash flowing. They're selling assets to cover operating losses. They are fighting to stay alive. 

But amid the gloom remember this: Responsible, seasoned leaders are running the company, and a chairman credited with turning around Conoco.

----------


## pw405

whew, really glad I didn't accept that contractor position there.

----------


## MikeOKC

> I don't think that Archie Dunham cares anything about maintaining appearances by finishing buildings on campus that will never house employees (the smart choice would be to finish the skin and secure them from the elements, making them OKC's first see-through buildings in almost 30 years). He knew that the company was in a fight for its survival before he was approached to be the chairman. He wouldn't have taken the job if he wasn't prepared to make hard choices and win - why risk putting a huge failure at the end of an otherwise-distinguished, lengthy career? Besides, he's already telegraphed his intentions (read post 844) which quotes from an interview he gave to the DO. And although I agree with Swake2 that EBITDA is important, CHK isn't cash flowing. They're selling assets to cover operating losses. They are fighting to stay alive. 
> 
> But amid the gloom remember this: Responsible, seasoned leaders are running the company, and a chairman credited with turning around Conoco.


I encourage everyone to pay attention to the above. OKCTalker is absolutely right. Big changes are coming that may - or may not - save CHK, but Archie Dunham is a pro who knows what he's doing. He's not the "kid in a candy store" (with a credit card) like the current (as of now) CEO. I wish all this could have happened much sooner to save Chesapeake, but I agree with OKCTalker in that it's not going down without a fight. Shareholders - and Oklahoma City - deserved an Archie Dunham running CHK ever since it went public.

----------


## soonerguru

I don't see how Aubrey will avoid some type of legal comeuppance over all of this. Too much smoke to be no fire. Too many agencies after him with subpoena power. Too many rookie mistakes. The house of Chesapeake seems like a house of cards.

----------


## MikeOKC

> I don't see how Aubrey will avoid some type of legal comeuppance over all of this. Too much smoke to be no fire. Too many agencies after him with subpoena power. Too many rookie mistakes. The house of Chesapeake seems like a house of cards.


I think Aubrey is so out of the picture that he's relevant only to those who will pile on the indictments. It may take a year or two, but Aubrey and several others now realize this is a scandal books and movies are made from. I'll add something to what OKCTalker said (and these are my words, not his)...watch what Dunham _does_ in the next few weeks and months,_ not what he says_. It's tricky over there right now.

----------


## dankrutka

> I don't think that Archie Dunham cares anything about maintaining appearances by finishing buildings on campus that will never house employees (the smart choice would be to finish the skin and secure them from the elements, making them OKC's first see-through buildings in almost 30 years).


I really don't know much about these kinds of things, but I would think that finishing the buildings under construction (while halting all future plans) would make sense. You can always sell/rent these buildings, and it doesn't give such a negative impression of the company, which is important to keep as positive as possible. Just stopping everything right away sounds very panicky, and this construction probably makes up such a small part of their overall finances... But I could be completely wrong.

----------


## Teo9969

Folks, Aubrey is still the CEO. I understand Dunham has power (assuming that the majority of the board also aligns their interest with his), but Aubrey is still steering the ship. There are still many decisions Aubrey can make that don't even need board approval. Sure, that may change in the coming months, but at the moment, it seems as though some of you think Aubrey has already been fired.

And yes those buildings are peanuts compared to the real money CHK needs to come up with.

----------


## OKCTalker

> Folks, Aubrey is still the CEO. I understand Dunham has power (assuming that the majority of the board also aligns their interest with his), but Aubrey is still steering the ship. There are still many decisions Aubrey can make that don't even need board approval. Sure, that may change in the coming months, but at the moment, it seems as though some of you think Aubrey has already been fired.


CHK's corporate structure has been atypical until very recently, which many claim to have been the problem. Aubrey ran the company without transparency, accountability or limits. Things are different now, and a typical corporate structure is in place. The owners have chosen their board and chairman, and the board has affirmed its CEO. The CEO is under investigation on several fronts, not the least of which are investigations by the SEC and Michigan Attorney General regarding price fixing and collusion. 

Aubrey is neither "steering the ship" nor making decisions of consequence at CHK right now.

----------


## BoulderSooner

> CHK's corporate structure has been atypical until very recently, which many claim to have been the problem. Aubrey ran the company without transparency, accountability or limits. Things are different now, and a typical corporate structure is in place. The owners have chosen their board and chairman, and the board has affirmed its CEO. The CEO is under investigation on several fronts, not the least of which are investigations by the SEC and Michigan Attorney General regarding price fixing and collusion. 
> 
> Aubrey is neither "steering the ship" nor making decisions of consequence at CHK right now.


are you in the board room??   where you before???         AM is still running the ship at CHK

----------


## Pete

Just last week, there was a $2 million building permit to renovate some space at the CHK-owned Central Park buildings.  Construction continues on several large-scale campus projects and has not slowed down.  They are also doing some major surgery on Nichols Hills Plaza and have hired two company employees for the specific purpose of running the new NH Market.  Plans have been approved for the expansion of Classen Curve and the new project at NW 50th & Western.  All this since Icahn came to town and the board shake-up.

But I bet this will be pretty much the end of their spending spree.  All the projects underway will get finished and that will probably be that for a while.

Remember, they still own a bunch of office buildings that are completely detached from their main campus, so if they get to the point of having too much space, they can easily sell (at a significant loss, no doubt) or lease the excess.


Here's what they have under construction:

Buildings 14 & 15; the two largest office structures on their campus and both will be finished within a year.
Garages 3 & 5; two huge parking structures similar to the two they already have
Building 1; the last piece of the "core campus" puzzle, right in the middle
RTC Lab:  massive structure for testing
Health Clinic:  renovation of an acquired building in the middle of all the other construction
Data Center & Central Plant: far NE end of their main campus
On-going renovation of the Atrium Towers, Caliber Center, Harvey Parkway and Central Park buildings.

----------


## OKCTalker

Southeastern Asset Management and Carl Icahn are the two largest shareholders of the company, and they've chosen their representatives on the board. Icahn said yesterday that the previous Chesapeake board failed to "hold the management accountable," but that "the shareholders, basically I think, pretty much control this company now." 

If Aubrey were still running things, then everything we've seen over the past two months has been a charade: His resignation as chairman, the board shuffle, the agreement by Dunham to try and turn the company around, and all that he's said about his (Dunham's) role.

----------


## ChargerAg

> Just last week, there was a $2 million building permit to renovate some space at the CHK-owned Central Park buildings.  Construction continues on several large-scale campus projects and has not slowed down.  They are also doing some major surgery on Nichols Hills Plaza and have hired two company employees for the specific purpose of running the new NH Market.  Plans have been approved for the expansion of Classen Curve and the new project at NW 50th & Western.  All this since Icahn came to town and the board shake-up.
> 
> But I bet this will be pretty much the end of their spending spree.  All the projects underway will get finished and that will probably be that for a while.
> 
> Remember, they still own a bunch of office buildings that are completely detached from their main campus, so if they get to the point of having too much space, they can easily sell (at a significant loss, no doubt) or lease the excess.
> 
> 
> Here's what they have under construction:
> 
> ...




What kind of testing are they supposed to do at RTC.   Watching the building get built it really doesn't make sense.   

Its kind of funny because while they have allot going on they haven't really started any major campus projects in a while.   I wonder what will become of the land they own on campus that is nothing right now.

----------


## BoulderSooner

> Southeastern Asset Management and Carl Icahn are the two largest shareholders of the company, and they've chosen their representatives on the board. Icahn said yesterday that the previous Chesapeake board failed to "hold the management accountable," but that "the shareholders, basically I think, pretty much control this company now." 
> 
> If Aubrey were still running things, then everything we've seen over the past two months has been a charade: His resignation as chairman, the board shuffle, the agreement by Dunham to try and turn the company around, and all that he's said about his (Dunham's) role.


IF AUBREY was not still running things .... he would not still be the CEO and on the Board

----------


## Pete

Loeb's Third Point fund moves into Chesapeake
Reuters  23 minutes ago
Nevada May 9, 2012. REUTERS/Steve Marcus
By Sam Forgione and Svea Herbst-Bayliss

NEW YORK/BOSTON (Reuters) - *Activist investor Daniel Loeb may be gearing up for another boardroom battle after having amassed a big position in embattled natural gas producer Chesapeake Energy Corp (CHK),*

Loeb's $8.7 billion hedge fund Third Point listed the embattled natural gas producer as its fourth largest position, according to emails the New York-based firm sent to several investors. Reuters reviewed a copy of the email.

The fund did not explicitly say whether Loeb has a net long position or a short position on Chesapeake. If an investor is long, he expects the share price to rise; a short position indicates he expects the stock will decline in price.

A person familiar with Third Point, who did not want to identified, said the hedge fund could have acquired its position through a combination of buying shares, debt and derivatives.

*Third Point's big move into Chesapeake was disclosed only hours before U.S. financial markets were ready to close for the July 4 holiday but still managed to generate waves.*

Chesapeake has been making headlines itself in the recent months as Aubrey McClendon, its chief executive officer, has come under fire for taking out more than $1.3 billion in personal loans from a firm that also does business with Chesapeake. The loans were first disclosed by Reuters.

Chesapeake's share price has tumbled 37.77 percent in the last 52 weeks to trade at $19.36, far below the $50 per share that several shareholders see it trading at in the future.

*The company's relatively cheap share price plus the recent restructuring of the board might make for exactly the kind of conditions that activist investors like Loeb seek out.

Known for his acerbic tongue and penchant for overhauling management at some of America's best-known companies, including Yahoo, Loeb has delivered a string of successes in the last years, treating his clients to annualized returns of 21 percent.*

Loeb did not respond to an email seeking comment about his hedge fund's move into Chesapeake, which appears to have occurred in the past month.

Chesapeake recently restructured its board, giving more power to activist investors Carl Icahn and O. Mason Hawkins of Southeastern Asset Management, who are two of the energy company's largest shareholders.

Loeb reported to investors that his other top positions are Yahoo Inc (YHOO), gold, Delphi Corp.(DEE.TO) and Apple Inc (AAPL). Several investor sources said Loeb is believed to be "long" in all of the companies.

During the first six months of the year, Loeb's biggest portfolio, the Third Point Offshore Fund, has gained 3.9 percent while the Third Point Ultra fund was up 6 percent and the Third Point Partners Fund is up 4.5 percent.

*Over the years, Loeb has frequently fired off letters to boards and executives who were not performing up to his standards. Most recently, he tangled with Yahoo, winning a victory by picking up three board seats, including one for himself.

Loeb was also successful in getting former Yahoo CEO Scott Thompson ousted after discovering that Thompson, who had been on the job only for a few months, had falsified his resume.*

*Loeb first cut his teeth in the energy sector by having taken on energy company Pogo Producing Co a few years ago. He got the company to expand its board, securing two seats for himself and associate. The company was later acquired by Plains Exploration & Production Company.
Indeed a potential sale has been on the minds of other investors as well. Southeastern Asset Management's Hawkins suggested two months ago that Chesapeake should consider selling itself. And both Hawkins and Carl Icahn, who also recently took a stake in Chesapeake, have both indicated that Chesapeake's share price is still undervalued.*

"Chesapeake is at the full position to have the best assets, so shame on us if we don't produce a lot of earnings and a lot of cash flow," Hawkins said.

Although Loeb has not disclosed his intentions for Chesapeake, Noster Capital's Pedro Noronha, who was among the first to publicly call for the board to terminate its chief executive officer, said he welcomed Third Point's involvement.

Icahn sounded an even more definitive tone this week. In a CNBC interview on Monday, Icahn said that shareholders have taken control of the company and that it can fill its income gap by cutting costs.

"I think natural gas in the next few years is going to go quite a bit higher, and Chesapeake will be there to take advantage of it... I would not sell it at all now," Icahn said.

(Reporting by Sam Forgione and Svea Herbst-Bayliss; Editing by Matthew Goldstein, Tim Dobbyn)

----------


## Snowman

> Known for his acerbic tongue and penchant for overhauling management at some of America's best-known companies, including Yahoo, Loeb has delivered a string of successes in the last years, treating his clients to annualized returns of 21 percent.
> ...
> Loeb was also successful in getting former Yahoo CEO Scott Thompson ousted after discovering that Thompson, who had been on the job only for a few months, had falsified his resume.


Yahoo is hardly what should be called a success story over the last seven years, it might show that he can get what he wants done, however that has not helped their stock price and does not done much to make Yahoo a more viable company.

----------


## jn1780

We'll see what happens. Aubrey could very well be a "lame duck" CEO as the board figures out a plan.

----------


## Pete

I just posted in the Candy Factory Lofts thread that there will be a new Pops location in Bricktown.


Here's a quick list of things Aubrey has been spending his time on while the company he runs is in complete upheaval:
Opening three new Pops locations (the aforementioned and two at the airport)Hiring grocery store managers and planning the new Nichols Hills MarketRemodeling Nichols Hills PlazaExpanding Classen CurvePutting together the new convenience store development at NW 50th & Western

I know he has people to help him, but McClendon is famous for getting deep into the details of everything, and all of these projects are the product of his personal vision.  You can bet he is very involved in all.

----------


## Bailey80

> I just posted in the Candy Factory Lofts thread that there will be a new Pops location in Bricktown.
> 
> 
> Here's a quick list of things Aubrey has been spending his time on while the company he runs is in complete upheaval:
> Opening three new Pops locations (the aforementioned and two at the airport)Hiring grocery store managers and planning the new Nichols Hills MarketRemodeling Nichols Hills PlazaExpanding Classen CurvePutting together the new convenience store development at NW 50th & Western
> 
> I know he has people to help him, but McClendon is famous for getting deep into the details of everything, and all of these projects are the product of his personal vision.  You can bet he is very involved in all.


Perhaps this is McClendon's version of "ugly coping."

----------


## Maynard

Chesapeake ordered to pay $100M to Texas leaseholders -- July 11, 2012



> U.S. District Judge Gray Miller in Houston has ordered Chesapeake Energy Corp. (NYSE: CHK) to pay more than $100 million to Texas leaseholders that claimed the Oklahoma City-based company reneged on agreements to purchase mineral rights, Bloomberg reports.
> 
> The leaseholders sued Chesapeake in 2008 for failing to complete the purchase of gas leases after energy prices fell as much as 50 percent, Bloomberg reports. A different U.S. judge in Houston ruled in favor of Chesapeake at the time, saying the lease contracts werent final.
> 
> The U.S. Court of Appeals in New Orleans in February sided with the Texas leaseholders and sent the case back to Houston. Miller agreed with the New Orleans court that Chesapeake breached the contracts, Bloomberg reports.
> 
> The evidence in this case indicates that the closing did not occur because Chesapeake  the buyer  declined to attend, Miller said in a 10-page ruling on July 10.
> 
> A spokesman for Chesapeake told Bloomberg the company will appeal the judgment.
> ...

----------


## blangtang

cant sleep...Hey Maynard what u think of this...?

-------------
*An independent research firm called into question the size of Chesapeake Energy Corp.'s CHK -1.75% proved reserves of oil and natural gas*, an important metric institutional investors use to value energy producers, in a report published this week.

more here...oops that link got chopped...
-------
The report zeroed in on reserves in the Barnett and Haynesville shale formations in Texas and Louisiana, which make up 42% of the gas the company estimates is in fields it owns. ITG calculated reserves for Chesapeake's developed wells in that region at 2.8 trillion cubic feet, 70% of the amount estimated by a third-party engineering firm for Chesapeake's 2011 annual report. That difference accounts for approximately 12% of what Chesapeake estimates is left in all of its existing wells.

Chesapeake's engineering consultant, Netherland, Sewell & Associates Inc. generated its estimate with internal information provided by the company. ITG relied solely on public information. The report attributes the variance between the estimates to "differing type curve assumptions," referring to how quickly production volumes will decline.

Chesapeake and Netherland, Sewell said their estimates are accurate. "Our independent engineers at Netherland, Sewell & Associates, Inc. have been determining reserves for over 50 years and evaluating Chesapeake reserve assets for over 10 years using the most comprehensive data set available," a Chesapeake spokesman said. "We are confident in the accuracy of their reports and our public filings based on them."

Chesapeake's stock has fallen seven percent since Tuesday, when ITG published the report, closing at $18.66 on Thursday.

ITG's analysis was done with well-by-well data the firm obtained on Chesapeake's fields from public sources, such as the Railroad Commission of Texas.

ITG produces reports at the request of its institutional investors, who began to ask for a study of Chesapeake's reserves this spring, said Manuj Nikhanj, head of energy research at ITG. That coincided with disclosure that Chesapeake CEO, Mr. McClendon, had arranged to borrow more than $1 billion from private equity investors in the company.

In addition to questioning the reserves Chesapeake booked on its developed wells in the Barnett and Haynseville fields, ITG discounted the reserves the company is counting in fields it owns but has not yet dug wells in. That is because the wells don't produce gas cheaply enough to generate a profit and because Chesapeake has shifted its drilling operations to oil fields and natural gas in other regions, according to the report.

The analysts said they believed a significant portion of the company reserves in areas including the Barnett "have no positive value, heralding a potential writedown in our opinion."
------

no one doubts that Chesapeake has a load of assets, but much of the value is tied to how they account for the reserves...

...on further thought, this is just another media "hit piece" on Chesapeake that we can all ignore...

----------


## Maynard

Exclusive: Chesapeake board changes could trigger bonus windfall for many - July 17, 2012



> Chesapeake Energy Corp often boasts that it's one of America's best workplaces, offering its 13,500 employees such benefits as Botox injections, NBA tickets and a fitness center with an Olympic-sized pool and a rock-climbing wall.
> 
> What the company hasn't disclosed is perhaps the most extraordinary perk of all: A group of about 1,600 employees is guaranteed a unique type of payment if the company changes hands, internal Chesapeake documents reviewed by Reuters show.
> 
> The provision is included as boilerplate contract language for almost 12 percent of the company's workforce, mainly mid-level employees. If control of the company changes, the change obligates Chesapeake to pay the group a total of at least $100 million and as much as $140 million in cash.
> 
> The 1,600 employees represent positions across the company and its subsidiaries, the documents show. They include title attorneys, land men, lab technicians and senior security officers - not simply top executives who typically receive so-called golden parachutes.
> 
> Perhaps most unusual, the Chesapeake employees would be entitled to these "change-of-control" payments even if they kept their jobs at Chesapeake after the company changed hands. For some employees, that means cash payments of 50 percent of their salary plus 50 percent of their most recent annual bonus, according to contracts examined by Reuters.
> ...

----------


## ou48A

I have actually received 2 golden parachutes with 2 different energy companies and I was hardly very high on the food chain. My dad  received one when he retired. At one time the use of the poison pill defense was fairly commonly in the industry. We can thank Boone Pickens.

----------


## OKCTalker

Journal Record today: Chesapeake Energy Corp. is facing two lawsuits that seek class-action status from employees who lost part of their retirement savings when the company’s stock price plunged after a series of unflattering revelations in the press about CEO Aubrey McClendon’s personal business dealings. 

Aren't these the same employees who have (see Maynard's post 881 above) botox, a fitness center, several on-campus restaurants, etc., and 1,600 of whom have essentially golden parachutes ("change-in-control" bonuses) that pay 50% of their salary and 50% of their most recent bonus if the company changes hands? 

They're suing for their losses when the stock went down, but were they returning their gains when the stock went up?

----------


## Maynard

Chesapeake Energy selling Barnett Shale acreage       07/23 02:22 PM

--------------------------------------------------------------------------------

HOUSTON, July 23 - Chesapeake Energy Corp, a U.S. oil and gas company facing funding shortfalls this year and next, is selling 3,300 acres (1,335 hectares) in the Barnett Shale in north Texas as part of its effort to limit exposure to low-priced natural gas.

Chesapeake, under pressure from big shareholders to cut costs due to its heavy spending, depressed gas prices and a big debt load, has already laid off 8 percent of its workforce in the Barnett Shale. The company also previously said it would entertain offers for its Fort Worth office tower.

The company's real estate arm, Chesapeake Land Development, aims to raise nearly $100 million from the sales of its Barnett Shale land parcels, according to the unit's website.

A spokeswoman for the company declined to comment.

The sales mark a retreat for the company that helped to pioneer the concept of urban drilling. 

When natural gas traded at around $13 per million British thermal units in 2008, Chesapeake drilled wells at a Fort Worth country club, in north Texas neighborhoods and even at the Dallas-Fort Worth International Airport.

This year, natural gas prices fell to their lowest level in a decade, so the company said it was devoting 85 percent of its budget toward drilling for oil. 

To help fill a funding gap of around $17 billion for this year and next, Chesapeake has said it would sell up to $14 billion in assets this year. So far, the company has announced $6.6 billion in sales.

Shares of Chesapeake rose 1.3 percent to $17.43 in afternoon New York Stock Exchange trading.

----------


## Pete

> The company also previously said it would entertain offers for its Fort Worth office tower.


I had not heard that before.  Here's more from the Fort Worth paper:




> Oklahoma City-based Chesapeake paid $104 million for the property at 100 Energy Way, formerly 100 Pier 1 Place. At the time of the sale, Chesapeake said it would move as many as 400 employees into the top half of the building.
> 
> Chesapeake has a $55 million mortgage with CLG Hedge Fund in Plano, which is due June 12, 2014, according to deed records. The Tarrant Appraisal District values the property at $62.7 million, down from $72 million in 2009, records show.
> 
> Read more here: http://www.star-telegram.com/2012/06...#storylink=cpy

----------


## adaniel

Everything I've heard from people in the know is that the Ft Worth office is done. They have maybe 700 people in that area. They've already laid off 70 employees (and probably A LOT more contractors). The eventual goal is for CHK to just have a field office (which generally has at most 40-50 people to keep an eye on things). What will happen to the rest? I'm sure some will get offers from whoever buys their acreage, a handful may get relocated back to OKC, the rest may be SOL.

----------


## Pete

If you look at the numbers for that office building they bought in Ft. Worth, you'll see it's appraised at only 60% of what they paid for it, and no doubt they've put a ton more money into it.

Looks like they'll do well just to cover their mortgage there and won't net much, taking a big loss in the process.

----------


## ou48A

This looks like good news.
http://www.bizjournals.com/houston/m...html?ana=yfcpc

Chesapeake plans to sell $7B of assets in Q3
Chesapeake Energy Corp. (NYSE: CHK) plans to sell three Permian Basin asset packages in the third quarter of 2012, the company said in its second quarter earnings report.

The Oklahoma City-based company said it has signed a purchase and sale agreement with affiliates of Houston-based EnerVest Ltd. for producing assets in the Midland Basin portion of the Permian Basin. It is currently negotiating agreements for the other two packages.

CEO Aubrey McClendon said in the company’s Aug. 6 report that Chesapeake expects to enter into about $7 billion of asset sales in the third quarter. The company now expects 2012 asset sales to total $13 billion to $14 billion.

Chesapeake reported second quarter 2012 net income to common stockholders of $929 million, or $1.29 per fully diluted common share, on revenue of $3.389 billion. That compares to net income of $467 million, or 68 cents per diluted share, on revenue of $3.318 billion in the same quarter a year earlier.

However, when excluding various items that are typically not included by analysts, adjusted net income to common stockholders was $3 million, or 6 cents per fully diluted common share, in the second quarter of 2012, which compares to $528 million, or 76 cents per diluted share, in the same quarter a year earlier.

Chesapeake also wrote down 4.6 trillion feet of natural gas, Forbes reports. The reserves were primarily in the Barnett and Haynesville shale plays in Louisiana and Texas.

Chesapeake’s major competitor is Irving-based Exxon Mobil Corp. (NYSE: XOM), which has a significant presence in Houston.

----------


## OKCTalker

> Adjusted net income to common stockholders was $3 million, or 6 cents per fully diluted common share, in the second quarter of 2012, which compares to $528 million, or 76 cents per diluted share, in the same quarter a year earlier.


Can you imagine how hard they worked to keep from showing an operational loss for the quarter? These numbers are beyond belief.

----------


## sooner88

Does anyone else think that it is a little worrisome that they are selling a large amount of producing assets? While this will make their statements look better right now, but they are limiting their future potential revenue.

----------


## BoulderSooner

> Does anyone else think that it is a little worrisome that they are selling a large amount of producing assets? While this will make their statements look better right now, but they are limiting their future potential revenue.


no . they have to raise capital to fund drilling to keep assets ...      depending on valuation   they have between 20 and 50 billion dollars in assets

----------


## icecold

> no . they have to raise capital to fund drilling to keep assets ...      depending on valuation   they have between 20 and 50 billion dollars in assets


It worries me.  If the company were doing well they would not have to sell off good land, chk midstream, etc.

----------


## Pete

Their stock has done substantially better since the board shakeup but their fundamentals haven't really changed.

I know there are more winds of change blowing and the rest of this year and next should be very interesting.

----------


## ou48A

There is one thing that has improved for CHK and other operators 
When looking on the horizon in the next year or 2,,,,, the price of NG should see further improvement.

The depletion rates on most of the new NG shale plays are high and drilling for dry natural gas has dropped significantly. This will bring the supply vs- demand situation into better balance particularly if the economy ever improves. More electrical generation than ever is now using NG.

Hopefully when combined with more financial accountability this should put the worst of the times behind CHK. 
Higher NG prices will also help others in our area who are also in the business. 

This will also help the OKC & Oklahoma economys.

----------


## Questor

They're massively over leveraged. I think selling off some land is the right thing for them at this moment. Their stock is up 10% over the past 7ish days if I just read the charts right, which is more than double the gain for the DJIA. Seems like good news to me.

----------


## Teo9969

> It worries me. * If the company were doing well* they would not have to sell off good land, chk midstream, etc.


Honestly, there's nobody in the world outside of a few indoctrinated employees that think Chesapeake is doing well. I think 99% of the people familiar with the situation would say CHK is in a tight spot. But the massive sale of assets they are undergoing is the only way that they will be able to do well in the future.

----------


## dankrutka

Pretty fair story on NPR this morning: http://www.npr.org/2012/08/08/158378...to-shift-gears

----------


## Pete

CHK is selling billions in assets just to meet their operating cash requirements and because they have no other choice if they want to stay in business.

This is not a part of some grand business strategy; it's about survival pure and simple.


They are trying to hold on in the hopes that nat gas prices will rebound soon and are also hoping oil prices will stay up long enough for them to cash in on that production shift.


But no matter how you spin it, they have been way wrong on the natural gas market for years and are now reactively trying to shift into oil, no matter those prices have been up for the better part of a decade while they largely sat on the sidelines with all their focus on gas.

I hope they get their act together but even beyond the corporate governance issues they have made a lot of bad business decisions.

----------


## soonerguru

This can't be good:

http://newsok.com/chesapeake-energy-...rticle/3699562

----------


## icecold

> CHK is selling billions in assets just to meet their operating cash requirements and because they have no other choice if they want to stay in business.


This backs up your statement....

http://www.bloomberg.com/news/2012-0...eld-sales.html

----------


## Pete

Chesapeake Favored CEO Over Leaseholders, Suit Claims
By Laurel Brubaker Calkins - Aug 22, 2012 9:01 PM PT

Aug. 23 (Bloomberg) - Chesapeake Energy Corp. (CHK) let Aubrey McClendon, its chief executive officer, profit from lucrative Texas oil and gas wells while denying the same chance to leaseholders on the properties, according to a lawsuit.

Chesapeake lost one-fifth of its market value this year as the impact of tumbling gas prices was compounded by disclosure that McClendon borrowed more than $800 million last year to finance his stakes in thousands of company-owned oil and gas wells. McClendon was stripped of his chairman’s role in June and is under investigation by the board for his borrowings.

According to a complaint filed yesterday in federal court in Houston, McClendon was allowed to purchase a 1 percent to 2 percent interest in wells drilled by Chesapeake, using his stake in the wells as collateral. The company was contractually obligated to offer the leaseholders a similar chance to profit in wells it developed across a 10,900-acre swath described as the “sweet spot” of the Barnett Shale, an oil and gas formation under Fort Worth, Texas, according to the plaintiffs, two Houston energy companies.

----------


## Teo9969

It's been pretty quiet the past 2 months. Something here or there...but nothing really substantive. Anybody have any idea of what's going on in Chesapeakeville...particularly as it pertains to jobs in OKC.

----------


## Pete

I know the new chairman and board members are digging into the details and trying to get a handle on what is going on there.

Also keep in mind, the board investigation of Aubrey's financial dealings is still pending.


There is probably a lot going on behind the scenes that the public will never know about.

----------


## pw405

Overheard a conversation at a bar this weekend from somebody who works there.... Rumored to start having lay offs this week.  Obviously don't know more than this, but I was sitting on a patio and the person talking was right behind me.  Don't know how credible their rumor was, and it it obviously may be completely false.  Anybody heard similar?

----------


## jn1780

> Overheard a conversation at a bar this weekend from somebody who works there.... Rumored to start having lay offs this week.  Obviously don't know more than this, but I was sitting on a patio and the person talking was right behind me.  Don't know how credible their rumor was, and it it obviously may be completely false.  Anybody heard similar?


That wouldn't surprise me. How many workers they end up laying off is the more important question.

----------


## jn1780

> Overheard a conversation at a bar this weekend from somebody who works there.... Rumored to start having lay offs this week.  Obviously don't know more than this, but I was sitting on a patio and the person talking was right behind me.  Don't know how credible their rumor was, and it it obviously may be completely false.  Anybody heard similar?


That wouldn't surprise me. How many workers they end up laying off is the more important question. Then again their still wasting money like crazy.

----------


## Pete

They have a lot of contractors which are usually the first to go.

If they start laying off full-time employees, that's a bad sign.

----------


## adaniel

> They have a lot of contractors which are usually the first to go.
> 
> If they start laying off full-time employees, that's a bad sign.


They've already laid off about 70 in their Ft Worth Office, plus some small layoffs in their field offices.

----------


## lasomeday

Yeah, they have had about 200 people leave since the latest bonuses came out in July.  They have people quitting left and right!  Its a sinking ship and people are bailing.

These lawsuits happen all the time! They have been stealing money from royalty owners for years.  Now they are starting to blame their partners.

http://www.tulsaworld.com/business/a...1_DonnaT527518

----------


## Pete

I would think with Devon, Continental and SandRidge all in aggressive hiring mode that some CHK employees may be opting for a switch.

There is still plenty up in the air at Chesapeake.

----------


## Pete

Chesapeake has total assets estimated at $45 billion, so $14 billion represents a sell-off of about 31% of the company.


***************


Chesapeake asset deals going as planned: CEO

(Reuters) - Chesapeake Energy Corp (CHK) will sell up to $14 billion in assets by the end of the year as planned, with proceeds targeted to debt reduction, the company's chief executive said on Thursday.

The Oklahoma City company also needs to sell some of its oil and gas interests to fill a funding gap that Barclays analysts estimate at $4 billion in 2013.

"About $13 to $14 billion in sales remains our goal for the year," Chesapeake CEO Aubrey McClendon told investors at the Barclays energy conference in New York. "We should be a cash generator this year as a result of our asset sales."

By the end of the third quarter, Chesapeake will have announced nearly $12 billion in assets so far this year. That figure includes the sale of most of the company's 1.5 million acres in the Permian Basin and its midstream business, McClendon said.

But the Permian deals might not close in the third quarter as previously planned.

"There will probably be some spillover in the fourth quarter," the executive said.

McClendon declined to provide more detailed status updates on its planned deals.

Shares of Chesapeake rose to $19.65 in premarket trading, up from Wednesday's New York Stock Exchange close of $19.54.

(Reporting By Anna Driver, editing by Dave Zimmerman)

----------


## blangtang

Is Chevron About to Pursue an Acquisition Spree?

http://www.investingdaily.com/15615/...uisition-spree

some speculation about both Chesapeake and Continental being acquisition targets by the big fish...

----------


## Pete

I think Chesapeake is still such a mess with almost indecipherable financing schemes and pending litigation that most companies would shy away from buying the whole thing, and instead just pick off the assets they've been selling.

However, I'm very nervous that the new board members merely want to maximize the profits for the shareholders they represent and would jump at the chance to sell the company if they had the right offer.  After all, none of them have Oklahoma ties and I doubt they would be too concerned about the impact on OKC.

And Aubrey no longer has enough power and influence to stop a sale if that is the wish of the majority of the board.

----------


## lasomeday

I have friends at Chesapeake that told me they had massive layoffs today in the land department.  I am not sure how many got laid off, but it is massive. Probably between 200 and 400 people.

----------


## ImTheDude

> Yeah, they have had about 200 people leave since the latest bonuses came out in July.  They have people quitting left and right!  Its a sinking ship and people are bailing.
> 
> http://www.tulsaworld.com/business/a...1_DonnaT527518


my wife just left a couple weeks ago after working there for 7 years. Was a tough decision for her and the long term job security factor did come into play.

----------


## Pete

Not sure why they booked a $219 million loss on this property even before they put it on the market.  Also, that is a lot more than they paid for it, but I'm sure they put a ton of money in as they always do.

It also means they plan to lose $219 million on a property only worth about $63 million.  So, they have more than 4 times the value of the property invested.



Chesapeake Puts Boom Symbol on Block
By DANIEL GILBERT

Chesapeake Energy Corp. CHK had bold ambitions for the natural-gas fields of north Texas in 2008, when it bought a Fort Worth landmark and rechristened it the Chesapeake Plaza.

Now the cash-strapped driller, which is based in Oklahoma City, is trying to sell the glass-and-granite high-rise it *bought for $104 million* as it scales back its operations in Texas's Barnett Shale. The retreat is among the most dramatic examples of how America's second-biggest gas producer, known for its lavish spending, is grappling with a gas glut which has caused natural-gas prices to collapse and the company's revenue to shrivel.

Chesapeake is drilling in the Barnett with just two rigs, down from a peak of 44 in 2008. In June, the company in June laid off 70 workers in Fort Worth, the first cuts since 2009 to a staff of about 12,500. Last month, it confirmed that it plans to unload the 20-story tower, too.

The company was emerging as a natural-gas powerhouse in March 2008 when it acquired the 460,000-square-foot building in downtown Fort Worth from Pier 1 Imports Inc., *paying about 60% above the assessed value. Chesapeake Plaza is now valued at $62.7 million*, according to the Tarrant Appraisal District.

*Chesapeake booked a $219 million loss associated with Chesapeake Plaza and surface land last quarter, calculating its value based in part on a third-party offer.*

The building will almost certainly attract plenty of interested buyers but probably not at the price Chesapeake paid in 2008, said Matt Heidelbaugh, a senior director at Cushman & Wakefield, a commercial-real-estate broker and consultant. "I think Chesapeake has shown themselves to be less price-sensitive than a real estate investor would be," he said, referring to the prices Chesapeake has paid for real estate in Fort Worth and Oklahoma City.

For Chesapeake, getting high prices for its assets is important, as it seeks to raise at least $13 billion this yearroughly equivalent to its market capitalizationby selling drilling rights to some of the 16 million acres it has leased over the last few years. It needs the money to fund its drilling for more lucrative oil, pare its $14.3 billion debt and satisfy shareholders concerned about its liquidity.

Chesapeake isn't alone in feeling the pain of low natural-gas prices. Devon Energy Corp. DVN +1.61% and Exxon Mobil Corp., XOM +1.05% which are also major players in the Barnett Shale, have also cut back on drilling there.

As a group, these companies have pumped billions of dollars into the regional economy, helping it weather the recession. In July, the metropolitan area that includes Fort Worth and Dallas had 7% unemployment, compared with 8.3% nationally, according to the Bureau of Labor Statistics.

Chesapeake alone has spent some $13 billion in the region since 2004, and says it has paid more than $1.5 billion in royalties to landowners and more than $4.3 billion in leasing bonuses. It was the second-highest payer of property taxes in 2011 for Fort Worth.

But officials are now taking note of the energy companies' pullback.

Fort Worth's government is working to persuade contractors and other businesses to use vehicles that run on natural gas, a bid to reduce air pollution and help gas producers by generating more demand for their product.

"If we can increase the usage, we can help drive the price back up, and help bring the drilling back," Fort Worth Mayor Betsy Price said in an interview. "Which is good for everybody."

Chesapeake remains committed to the Barnett, said Michael Kehs, a company spokesman. But he added, "It will be a less active area for a period of time until the economics support bringing those rigs back."

Energy companies drilling in the Barnett a decade ago first cracked the code of how to extract gas from shale rock, using technological advances that have unlocked massive deposits across the country. But the industry has glutted the market, sending gas prices below $3 per million British thermal units, which is too low for most gas producers to profit drilling shale wells.

Chesapeake, which was founded in 1989 out of a small brick building, has expanded its Oklahoma City headquarters into a 50-acre campus that includes four gourmet restaurants, a 72,000-sqare-foot gym and a vegetable garden for employees the size of a city block. When Chesapeake added the Fort Worth tower to its real-estate empire, the price of natural gas had climbed to $10 per million British thermal units, lifting Chesapeake's stock price to new heights, and the company had just recorded its highest per-share profit.

"We're not here to drill a few wells and then leave," Aubrey McClendon, Chesapeake's co-founder and chief executive, said when the purchase was announced in 2008, according to a company newsletter that touted amenities like a terrace-level restaurant with a view of the Trinity River.

But the steep drop in natural-gas prices this year, compounded by lower demand in a warm winter, has taken a toll on Chesapeake's balance sheet. The gap between Chesapeake's projected cash flow and planned expenditures has widened to nearly $10 billion.

The company's stock has fallen about 35% in the last year, weighed down by its cash crunch and a governance controversy involving Mr. McClendon's financial dealings. The company's largest shareholders, who installed four new directors on the board in June, have called for the company to spend less while raising more cash through asset sales.

Write to Daniel Gilbert at daniel.gilbert@wsj.com

----------


## Oil Capital

Hold your horses, Pete.

The $219 million loss was booked for surface land and [Chesapeake Plaza] in the Barnett Shale operating area.  We have no way of knowing for sure, but logic suggests that the bulk of that write-down is related to the surface lands, not to Chesapeake Plaza.   Hence, they neither have $219 million invested in Cheseapeake Plaza, nor do they expect to lose $219 million on Chesapeake Plaza.

It will be interesting to see what it sells for.  But, Pete, you should know better than to equate Appraised Value with what a property is worth on the market.  Just as an example.  One and Two Shell Plaza in Houston are appraised at a total of just under $271 Million and just sold for around $550 Million.

----------


## Pete

That makes more sense.


BTW, CHK has a $54 million loan on the building so even with it's sale they won't net much if anything.

----------


## Oil Capital

> That makes more sense.
> 
> 
> BTW, CHK has a $54 million loan on the building so even with it's sale they won't net much if anything.


Further on my point above re:  your confusing appraised values with market value:

Continental Resources reportedly paid $22.5 million for the 20 N. Broadway Building that was, at the time of their purchase, appraised at $15.8 Million.

The Opubco properties were sold to American Fidelity for approximately $74 Million (a deal that was called "a bargain by any measure"), and yet they were appraised at less than $43 Million.

----------


## Pete

I'm not confusing anything.

Sometimes properties sell for more than appraised value and sometimes they sell for less.  Local municipalities do their best to approximate true value in order to get the most in tax revenue, and their numbers are based on market data.  Likewise, property owners can appeal if they feel that the appraisal is too high, but again have to verify with data.  It's not a perfect system but in the information age, appraised values are much more accurate than they used to be.

No way to know the real market value until there is an actual sale.

----------


## Oil Capital

> I'm not confusing anything.
> 
> Sometimes properties sell for more than appraised value and sometimes they sell for less.  Local municipalities do their best to approximate true value in order to get the most in tax revenue, and their numbers are based on market data.  Likewise, property owners can appeal if they feel that the appraisal is too high, but again have to verify with data.  It's not a perfect system but in the information age, appraised values are much more accurate than they used to be.
> 
> No way to know the real market value until there is an actual sale.


Maybe you haven't confused them in your mind, but you have confused them in your posts, such as by claiming the appraised value as the "worth" of a building.  See, e.g., your post #916:  "a property only worth about $63 million".  Knowing this adds a little perspective to your repeated claims that Chesapeake has wildly overpaid for everything they have purchased.  They may have overpaid, but it looks like it is not to the extent you have implied.

Appraised values may be more accurate than they used to be, but they are _not_ a reliable gauge of the "worth" or market value of a building.  See the examples I posted above.  Indeed, it would be quite unusual to find a commercial property that sells for less than appraised value.

----------


## onthestrip

> Maybe you haven't confused them in your mind, but you have confused them in your posts, such as by claiming the appraised value as the "worth" of a building.  See, e.g., your post #916:  "a property only worth about $63 million".  Knowing this adds a little perspective to your repeated claims that Chesapeake has wildly overpaid for everything they have purchased.  They may have overpaid, but it looks like it is not to the extent you have implied.
> 
> Appraised values may be more accurate than they used to be, but they are _not_ a reliable gauge of the "worth" or market value of a building.  See the examples I posted above.  Indeed, it would be quite unusual to find a commercial property that sells for less than appraised value.


What perspective? There is no way around the fact that CHK has grossly overpaid for basically every piece of property they have bought in recent years. Appraised values are usually set by A)the construction costs B)a recent sale price of the property or C) comps...so usually they are fairly accurate. And the fact that there are some big corporations that buy a large property for more than its appraisal doesnt change things much. Its just that theyll pay more for a piece of property thats integral to their operations. And since there arent many buyers like this, appraisers arent going to jack up a value because of it. Most other commercial properties are valued by income or future income...and this is where CHK has been the most reckless, overpaying so much for their retail ventures when it is totally unjustified due to rental income not coming close to servicing the debt. Aubrey basically just wants to play Sim City with CHK dollars.

----------


## Oil Capital

> What perspective? There is no way around the fact that CHK has grossly overpaid for basically every piece of property they have bought in recent years. Appraised values are usually set by A)the construction costs B)a recent sale price of the property or C) comps...so usually they are fairly accurate. And the fact that there are some big corporations that buy a large property for more than its appraisal doesnt change things much. Its just that theyll pay more for a piece of property thats integral to their operations. And since there arent many buyers like this, appraisers arent going to jack up a value because of it. Most other commercial properties are valued by income or future income...and this is where CHK has been the most reckless, overpaying so much for their retail ventures when it is totally unjustified due to rental income not coming close to servicing the debt. Aubrey basically just wants to play Sim City with CHK dollars.


Dude, before you crank up your little strawman factory even more than you already have, I am not saying and have not said that Chesapeake hasn't overpaid; nor that their real estate investments make sense; nor that Aubrey McClendon has been a good guardian of Chesapeake's corporate resources.  You will look in vain for my having said any such things.

The perspective that should have been added to the many posts claiming exorbitant overpayments by Chesapeake, as I explained above, is quite simple:   Paying $X or X% above _appraised valued_ is _NOT_, in the real world, the same as paying $X or X% over the "_worth_" or _fair market value_ of a building or parcel of land.  In the real world, appraised values are not a reliable gauge of the true market value or "worth" of properties.  Anyone who engages in the real estate business relying on the county assessor's appraised values will have their hat handed to them, post-haste.

----------


## Pete

> Indeed, it would be quite unusual to find a commercial property that sells for less than appraised value.


There are hundreds of examples just in Oklahoma County alone.

Off the top of my head, the SandRidge properties, the Bank of Oklahoma building and Oklahoma Tower all sold under assessed value.

----------


## Pete

Here's something really interesting....

I was looking at the Tarrant County Assessor's site (Ft. Worth area) and found that Chesapeake owns 430 separate properties there, with the total assessed value of over $193,000,000.  Chesapeake Plaza and associated land is only $62,000,000 of that.

Almost all of it is commercial vacant land and is held by Chesapeake Land Company, which is their real estate development arm, not their exploration arm.

----------


## Oil Capital

> There are hundreds of examples just in Oklahoma County alone.
> 
> Off the top of my head, the SandRidge properties, the Bank of Oklahoma building and Oklahoma Tower all sold under assessed value.


Perhaps so.  I withdraw my assertion that there are few sales for less than appraised value.   If anything, that more firmly establishes the unreliability of appraised values as a proxy for "worth" or market value.

----------


## Pete

The assessors make use of every bit of data available to arrive at assessed value and in fact list them as "market value" on their sites.

It's no different than hiring an independent appraiser to determine value...  They merely crunch numbers from somewhat comparable sales.  It's also what residential realtors do when they are putting a property on the market or representing a buyer.


By no means is that data 100% accurate but it's the best approximation of value available.  And if you look at recent sales, the final transaction prices tend to be in the general ballpark the large majority of the time.

That is, unless Chesapeake is involved.

----------


## Oil Capital

> The assessors make use of every bit of data available to arrive at assessed value and in fact list them as "market value" on their sites.
> 
> It's no different than hiring an independent appraiser to determine value...  They merely crunch numbers from somewhat comparable sales.  It's also what residential realtors do when they are putting a property on the market or representing a buyer.
> 
> 
> By no means is that data 100% accurate but it's the best approximation of value available.  And if you look at recent sales, the final transaction prices tend to be in the general ballpark the large majority of the time.
> 
> That is, unless Chesapeake is involved.


... or, apparently Continental Resources (who paid 42% over appraised value), or American Fidelity (who paid 72% over appraised value), just to throw out 2 recent examples that come to mind.

Your faith  in the county assessor's numbers is cute, but unsupported by reality.

----------


## Pete

Continental and AF both bought furniture, fixtures and equipment in those deals which at least partially explains the premiums.

----------


## dankrutka

Arguing with Pete is like arguing with a research machine who enhales pertinent facts with every breath. 

It's probably a better idea to engage him in conversation than to call him out. You're probably about to be out-facted by his truthiness.

----------


## Oil Capital

> Continental and AF both bought furniture, fixtures and equipment in those deals which at least partially explains the premiums.


LOL  Yeah, used furniture and equipment adds so much value to a multi-million dollar building purchase.  Yes, that might explain 1 or 2% of the 42-72% premiums paid in those two deals.  Nice try, though.

Upon further research into Chesapeake's purchases, I was quite surprised to find that for commercial properties, the premiums they have paid over appraised value have generally fallen right in line with (and in several cases are well below) the premiums paid by Continental and American Fidelity.

----------


## Pete

> Upon further research into Chesapeake's purchases, I was quite surprised to find that for commercial properties, the premiums they have paid over appraised value have generally fallen right in line with (and in several cases are well below) the premiums paid by Continental and American Fidelity.


I have detailed records that show that for all of CHK's OKC-area purchases (well over 300) they have averaged paying 2.5 times the assessed value.  Many of these properties were subsequently demolished.


Also, if you can't participate in these forums without being insulting and belligerent -- a consistent pattern of yours -- you will be banned.

----------


## onthestrip

> LOL  Yeah, used furniture and equipment adds so much value to a multi-million dollar building purchase.  Yes, that might explain 1 or 2% of the 42-72% premiums paid in those two deals.  Nice try, though.
> 
> Upon further research into Chesapeake's purchases, I was quite surprised to find that for commercial properties, the premiums they have paid over appraised value have generally fallen right in line with (and in several cases are well below) the premiums paid by Continental and American Fidelity.


So should two large corporations that bought a single large property that would become their company headquarters skew all the other appraisels of commercial properties? The Oklahoma Tower and the old Devon tower are scarce properties, its not like American Fidelity and Continental had a lot of options, of course they are going to pay a premium for a new company headquarters. Now buying a block of homes for multiple times the value for a strip center...thats another story

----------


## Oil Capital

> So should two large corporations that bought a single large property that would become their company headquarters skew all the other appraisels of commercial properties? The Oklahoma Tower and the old Devon tower are scarce properties, its not like American Fidelity and Continental had a lot of options, of course they are going to pay a premium for a new company headquarters. Now buying a block of homes for multiple times the value for a strip center...thats another story


Except there is absolutely no evidence whatsoever that either of them paid any "premium" over true market value.  They only paid a "premium" over the assessor's appraised value.  In fact, far from paying a premium business reporters and even Pete said that American Fidelity got a "very good deal"l on the Opubco property.  If paying 72% above appraised value is a "very good deal" that rather strongly suggests the appraised value did not equal market value.

American Fidelity and Continental each had plenty of options available to them other than making the purchases they did.

----------


## Oil Capital

> I have detailed records that show that for all of CHK's OKC-area purchases (well over 300) they have averaged paying 2.5 times the assessed value.  Many of these properties were subsequently demolished.


Have you calculated the total paid and the total appraised value?  Those would be interesting numbers.

----------


## Pete

> Have you calculated the total paid and the total appraised value?  Those would be interesting numbers.


Yes.  I have a monster spreadsheet that tracks every single purchase (also demolitions and building permits) in Oklahoma County.

It all ties directly back to specific records and was thoroughly fact-checked by Bloomberg for a national story they did.


Some exact numbers:

332 purchases
157 demolitions
249.6% premium on average for all 332 buys


I may publish more details at some point.

----------


## Oil Capital

Here's some more interesting information related to the topic of whether appraised values are a good guide to market value.

Continental  bought their new headquarters for $22.5 Million.  
Appraised value was $15.8 Million.  

When Devon put the building up for sale, Mark Beffort, the managing director of Grubb & Ellis said he thought the building was worth "more than the about $80-per-square-foot price of Leadership Square in 2005". There are 307,000 square feet in the building. That would put the building market value at about $24.5 million.

He was a lot closer in his estimate than the county assessor.   In any event, rather than paying a premium, Continental may have actually gotten a good deal.  There is a pretty good reason Continental might have gotten a good deal:  Devon wanted to sell it to a company moving in from outside OKC.

----------


## ou48A

CHK paid more than market value for some of their properties. 
CHK has the reputation within the industry of paying more than they should.
On the contrary CLR has purchased much of its acreage at below curent market prices and well before large price increases.

----------


## Oil Capital

> Yes.  I have a monster spreadsheet that tracks every single purchase (also demolitions and building permits) in Oklahoma County.
> 
> It all ties directly back to specific records and was thoroughly fact-checked by Bloomberg for a national story they did.
> 
> 
> Some exact numbers:
> 
> 332 purchases
> 157 demolitions
> ...



How did you calculate the premium, if I may ask?  Did you use the amount by which the total paid exceeded the total appraised value, or did you add the premium paid on each purchase and divide by 332 purchases?

The reason I ask is that from the records I have randomly looked at, it appears that most of the properties for which they paid a large "premium" over appraised value were residential and smaller commercial properties.  (I presume most were in the path of their development plans and they were willing to pay pretty much whatever it took to get them.)  On the other hand, in the large commercial property purchases I have seen, they have paid amounts that are well within (and in some cases well below) the range of "premiums" paid by other commercial property purchasers in OKC (e.g., Continental and American Fidelity).

----------


## Teo9969

> Yes.  I have a monster spreadsheet that tracks every single purchase (also demolitions and building permits) in Oklahoma County.


Great! I'll take one!

----------


## Pete

I should have said they paid 250% of the assessed value.

They paid huge premiums on lots of buildings, including several that had sold just a few years prior for much less.

The 250% is the average across all the properties; there are a bunch where they paid well more than that.

----------


## ou48A

Chesapeake Energy sells shale assets, pipelines for $6.9 billion - Yahoo! Finance

 17 minutes ago

(Reuters) - Chesapeake Energy Corp is selling $6.9 billion of gas fields and pipelines in a move to repay part of the troubled company's massive debt load and to fund this year's operations.

The company is selling most of its assets in the Permian Basin to Royal Dutch Shell Plc and Chevron Corp, and nearly all of its remaining infrastructure network.

Chesapeake has been selling assets this year to meet an estimated $10 billion funding gap. It plans to use some of the proceeds from Wednesday's announcement to trim its $14.33 billion debt load by $4 billion. The company's market value is roughly $13.37 billion.

The company sold its pipeline network for more than analysts had expected, but got less for its Permian assets than expected, Argus Research analyst Phil Weiss said.

"Is this a fire sale? Maybe, maybe not. But it's certainly less than (Chesapeake) would have liked us to think previously," Weiss said. "When you look at the acquirers - Chevron and Shell - I certainly wouldn't expect them to overpay."

The company holds 1.5 million acres in the Permian Basin, a vast source of oil and natural gas in the western part of Texas and the southeastern part of New Mexico.

Chesapeake's Permian sales work out to about $3,200 per acre, less than half the $7,500-an-acre average that sellers in the Permian had reaped in 10 previous sales during 2011 and 2012, said Morningstar analyst Mark Hanson.

Given the quality of Chesapeake's assets in the Permian, though, Hanson had expected a price of around $3,750 an acre.

Chesapeake shares were little changed in morning trading Wednesday, around the opening price of $20.09.

The deal is part of the company's strategy to shift away from cheap natural gas into more lucrative crude oil. It also comes after a Reuters investigation in June showed Chesapeake and Encana Corp had colluded in 2010 to avoid bidding against each other in Michigan land deals.

Chesapeake's chief executive, Aubrey McClendon, said the company had reached about 85 percent of its goal to sell $13 billion to $14 billion of assets this year.

"These transactions are significant steps in the transformation of our company's asset base to a more balanced portfolio among oil, natural gas liquids and natural gas resources and production," McClendon said in a statement.

Chesapeake has been working to sell assets in the Permian Basin since February. Depressed natural gas prices have crimped cash flow at Chesapeake and many other energy companies, leaving asset sales as a good way to raise cash.

Chesapeake is selling about 618,000 acres in the southern Delaware Basin portion of the Permian Basin to Shell, which said it is paying $1.94 billion.

Another 264,000 acres in the Permian is being sold to Chevron. Terms of that deal were not disclosed, and a Chevron representative was not immediately available to comment.

The company is keeping 470,000 acres in the Permian.

In total, Chesapeake is raising about $3.3 billion from the sale of Permian Basin assets.

Chesapeake said in May that more than 10 companies had looked at the Permian acreage. Investment bankers said some potential buyers had blanched at the assets because of concerns about levels of natural gas liquids in the package as well as the need for an aggressive drilling program to hold on to some of the land.

Also Wednesday, Chesapeake said it would raise $3 billion from selling nearly all of its remaining pipeline and related assets in several transactions.

The company previously announced the largest of the transactions - a $2.7 billion deal pending with Global Infrastructure Partners - when it signed a letter agreement with the infrastructure company in June. [ID:nL4E8H88RP] It said then that the deal would bring in more than $2 billion.

The company is also selling some land in Ohio's Utica shale formation for a total of $600 million in four separate deals. After the deals close, Chesapeake will have about 1.3 million acres left in the Utica.

Reuters reported earlier this year that McClendon has taken $1.1 billion in personal loans against his stakes in Chesapeake wells during the past three years.

The loans, which came mostly from an investment management company that also did business with Chesapeake, had not been disclosed to shareholders. The Securities and Exchange Commission and the Internal Revenue Service have launched inquiries.

----------


## OKCTalker

This could go in threads for either "Chesapeake Business Practices" or "Chesapeake Empire Marches On." 

I drove past CHK's building at 900 NW 63rd (SE/C at Classen) - the black Rand Elliott structure that previously housed the Midstream division until sold earlier this year. Due to dark skies and rain, you could see through the smoked glass that the building is all but vacant - I think one floor had lights on in offices, and another office here or there was lit, but the only other lights were burning in common areas such as hallways. 

I understand that the Midstream people have gone away, but what does CHK now do with a very expensive, brand-new, built-out empty building on the main campus? What about the others currently under construction on the east side of Classen - will they ever be finished out inside? Wouldn't it make sense to start pulling remaining employees to the main campus, and shed real estate east of Classen and farther away? They would make great buildings for mid-size companies, but CHK would incur huge losses on each sale.

----------


## Pete

Yes, they are set to sell about one-third of their assets this year and the speculation is that they'll have to sell more in 2013 just to fund their operations.  So, how does that affect their office space?

In addition to the building you mentioned (#13 in CHK vernacular) they are ready to finish their two biggest buildings late this year and early next year, #'s 14 & 15.  They have purchased a whole rash of off-campus properties to house their employees and I don't think they are renting much space anywhere, so they might consolidate their employees housed in CHK-owned buildings like the Caliber Center and Atrium Towers back to their HQ and then lease out the empty space they leave.

Of course, they have put a ton of money into all their purchased buildings to customize them for their needs, but perhaps those improvements will work for other businesses.

----------


## jn1780

Yes, like a new concrete parking lot where asphalt would have worked just fine. Whats the point when they were always going to leave anyway?

They would be lousy house flippers. Grand dreams that will never happen.

----------


## Just the facts

nm

----------


## Pete

Heard from a CHK employee that Chesapeake is laying off people today.

Hope to find out more in terms of departments, numbers, etc.

----------


## catch22

Here it comes....

----------


## Pete

Just last month, they spent over $2 million on vacant industrial land assessed for $205K near the RR tracks north of 63rd.

----------


## Teo9969

> Just last month, they spent over $2 million on vacant industrial land assessed for $205K near the RR tracks north of 63rd.


. . .I just can't help but think that no one is that stupid.

----------


## 1972ford

They are praying for a cold winter and LNG export terminals in the near furture or a Chinese company is going to buy them out.  Maybe if they can just hold on for 3 or 4 years inflation will get them out of this mess.

----------


## soonerguru

> Just last month, they spent over $2 million on vacant industrial land assessed for $205K near the RR tracks north of 63rd.


Well, having vacant industrial land is far more important to their operations than employees. Is Romney running things there now?

----------


## Pete

I never heard how many people were let go yesterday but it seems to be across all departments.

They are also undergoing a considerable re-org, with lots of shifting responsibilities and reporting relationships.

----------


## onthestrip

> I never heard how many people were let go yesterday but it seems to be across all departments.


Maybe the Gazette will report the specifics because I highly doubt we will see it in the Oklahoman

----------


## Pete

Chesapeake never releases details so there is no way to know for sure.

Even the employees themselves don't know how many were let go.

----------


## OKCTalker

And there were 42 thumbnail photographs of new hires in last weekend's DO, although I understand they are usually delayed weeks or months after actual DOH.

----------


## Pete

Chesapeake is certainly still hiring for some positions...  There is no broad reaching freeze of any type.


And today it was announced that Carl Icahn has bought another $1 billion worth of CHK stock and now controls over 7% of the company.  Between Icahn and Southeastern Asset Management, they now control 20% of Chesapeake.  Both are like minded in terms of being very proactive in the way the company is run.

I suspect very big changes are soon going to be forced upon CHK.  The new Chairman and board members have been very quiet while they are all trying to learn the company, and Aubrey has been keeping an uncharacteristically low profile.

There are also some big things pending, like the board investigation of McClendon's financial dealings and the price fixing issue.  And despite the pledge to focus on core businesses, CHK continues to buy expensive speculative land, is in the process of staffing and operating a grocery store in NH Plaza, and Aubrey is opening yet another Pop's in Bricktown.

I think we are in the eye of the storm right now.

----------


## jn1780

A large company is always going to be hiring someone that has a specific skill set to replace those that quit or were fired for poor performance.

----------


## Pete

> A large company is always going to be hiring someone that has a specific skill set to replace those that quit or were fired for poor performance.


Yes, but it's common for companies to enact strict hiring freezes.

I've worked for several where we were absolutely not allowed to replace even those who left through attrition.  At best, we could hire hourly consultants/contractors for a certain period of time.


That does not seem to be the case at Chesapeake.

----------


## soonerguru

> Chesapeake is certainly still hiring for some positions...  There is no broad reaching freeze of any type.
> 
> 
> And today it was announced that Carl Icahn has bought another $1 billion worth of CHK stock and now controls over 7% of the company.  Between Icahn and Southeastern Asset Management, they now control 20% of Chesapeake.  Both are like minded in terms of being very proactive in the way the company is run.
> 
> I suspect very big changes are soon going to be forced upon CHK.  The new Chairman and board members have been very quiet while they are all trying to learn the company, and Aubrey has been keeping an uncharacteristically low profile.
> 
> There are also some big things pending, like the board investigation of McClendon's financial dealings and the price fixing issue.  And despite the pledge to focus on core businesses, CHK continues to buy expensive speculative land, is in the process of staffing and operating a grocery store in NH Plaza, and Aubrey is opening yet another Pop's in Bricktown.
> 
> I think we are in the eye of the storm right now.


McClendon is a crazy person.

----------


## OKCTalker

Aubrey is off the Forbes 400, but don't count him out. He's a charismatic, serial deal-maker with access to capital and capitalists, but facing big legal challenges.

----------


## warreng88

> And there were 42 thumbnail photographs of new hires in last weekend's DO, although I understand they are usually delayed weeks or months after actual DOH.


I was hired last March and my picture didn't appear until that July so they are really delayed.

----------


## ereid

Pete, do you have a link to the announcement?

----------


## Pete

> Pete, do you have a link to the announcement?


You mean the announcement of the layoffs?

They never provide those.

----------


## ereid

No, the Icahn announcement. For some reason, I thought he was over 7% during the summer.

----------


## Pete

> No, the Icahn announcement. For some reason, I thought he was over 7% during the summer.


Yes, sorry, the story I read said he got to the 7% mark in the 2nd quarter.


On a related topic, CHK just released their financials for 2Q and once you strip out the one-time asset sales, the only had net income of $3 million.

The will have to sell off more assets in 2013 just to fund their operations.

----------


## adaniel

> You mean the announcement of the layoffs?
> 
> They never provide those.


I was under the impression you have to notify the workforce commission if you are having layoff greater than a certain number, usually 100 more, to let them know a bunch of people are about to get on unemployment insurance. Of course , they can always cut 95-99 at a time or lay off 1099 contractors.

----------


## Pete

From what I'm hearing, it wasn't a huge layoff and may have only been in IT.

----------


## pw405

> From what I'm hearing, it wasn't a huge layoff and may have only been in IT.


Especially glad I didn't take that IT job I got offered to start as a contractor in February.  Lol, and people said I was crazy to turn down a job from them.

----------


## Dubya61

> Especially glad I didn't take that IT job I got offered to start as a contractor in February.  Lol, and people said I was crazy to turn down a job from them.


LOL, indeed.  I was mulling over a job with them and a friend of mine said that her spidey sense about them was that it was a cult.

----------


## OKCTalker

When the only news out of Chesapeake is the replacement of their longtime legal counsel with a trial lawyer from McAfee & Taft, you know it's not looking good to those on the inside who really know what's going on. Henry Hood headed CHK's legal department since 1995, and was most recently known as the guy who said (paraphrasing), "Yes, the board members knew everything about Aubrey's loans." (They didn't.) 

Chesapeake Energy names new general counsel | NewsOK.com 

*Chesapeake Energy Corp. named a longtime Oklahoma City trial attorney from the state's largest law firm as its general counsel Friday.*
James R. Webb, a partner at McAfee & Taft, will become senior vice president  legal and general counsel for Chesapeake.

Chesapeake said former general counsel Henry J. Hood, the company's senior vice president for land and legal since 1997, will retain his responsibilities for Chesapeake's land and regulatory departments.

Webb, 45, has been working on a contract basis with Chesapeake for the last four months as chief legal counsel.

----------


## Easy180

Man for an attorney this may be the highest volume highest paying gig in the country...Unfortunately lol

----------


## blangtang

Archie Dunham, a CHK director, buying shares recently:

CHK Insider Transactions | Chesapeake Energy Corporation C Stock - Yahoo! Finance

----------


## soonerguru

> I find it rather humorous that anytime anyone ever worries about any company in Oklahoma, their default twitch is "looks like they are relocating to Houston."  If Aubrey gets the boot, maybe they will, or maybe they won't.  Oklahoma City is a completely different environment today than it was during the energy exodus to Texas in the 1980s.  It's even different when Kerr McGee was dissolved, but that company had dried up long before Anadarko swallowed them up.  The city is much more appealing to companies when considering the QOL factor, so the chance is greater they will want to stay.
> 
> Now, if CHK DOES become a take-over target by a Texas company... well, let's just put it this way:  Texans only care about Texans.


Agree. Houston is a total craphole. Other than some nice museums, it offers: 

- Endless sprawl
- Third-world economic inequality
- Terrible highway and public transit infrastructure
- Miserable weather
- Copious crime virtually everywhere in the city
- People live there to collect a check, not because they want to live there
- General Texas backward racial and social attitudes
- Horrific traffic coupled with bad roads
- Loser sports franchises

Houston's halcyon days are in the past. Just do a simple search for Houston message boards and you'll quickly get a sense of how much that city has changed for the worse and how it offers very little in "quality of life" save for some very good restaurants. In my opinion, OKC is getting very close to competing with cities like Houston. Right now, if I were unfortunate enough to be marooned in that hellhole, I would jump at a chance to come to OKC. Right now our quality of life is better, and so much improvement is under way. 

The OKC Chamber has some real opportunity to pluck some companies out of Houston, IMO.

----------


## Pete

Chesapeake Energy Lenders Extend A Lifeline
Forbes.com
10/2/12

So much for*Chesapeake Energy‘s plan of selling assets to reduce debt. After a lackluster sale of acreage in west Texas and a delay of closing other deals, Chesapeake last night announced that it has convinced its lenders to amend borrowing terms to give the company more wiggle room.

Before now, Chesapeake’s borrowing ceiling was capped by covenants at an amount equal to four times Earnings Before Interest, Taxes, Depreciation and Amortization (Ebitda). But with the company unlikely to stay below that level for long, lenders have agreed to a temporary maximum leverage threshold of 6 times Ebitda. This will gradually fall to 4.25 times Ebitda a year from now.

At the end of June Chesapeake reported total long-term debt of $14.3 billion.

Giving*Aubrey McClendon*some time to sell more assets and cut capital spending is certainly a less messy path than declaring Chesapeake in default on its loans. But it does prove that McClendon’s big plans to shed billions in assets hasn’t panned out as hoped.

Right now it’s nearly impossible to get buyers interested in natural gas fields, and with supplies of natural gas liquids like propane and ethane flooding the market, McClendon’s much heralded push into “liquids-rich” plays hasn’t been the savior he forecast.

Analyst Tim Rezvan with Sterne Agee sees the debt ceiling move as the sign that Chesapeake is about to make a dramatic shift in its corporate strategy. Rezvan expects that Chesapeake, having been under control of a new board for a quarter now, is set to dramatically scale back capital spending — even if it means taking a big hit to profitability (and Ebitda). That lenders agreed to giving Chesapeake more wiggle room is a vote of confidence in the new board, chaired by former ConocoPhillips CEO Archie Dunham.

Rezvan thinks that instead of relying on asset sales to fund drilling expenses, Chesapeake next year might try to accomplish something that it hasn’t done in any of the past 10 years — live within its cash flow.

----------


## blangtang

Special Report: The casualties of Chesapeake's "land grab" across America

Special Report: The casualties of Chesapeake's land grab across America | Reuters

they must have a whole news room dedicated to digging up dirt on Chesapeake!

----------


## HangryHippo

It seems like Reuters is on a bit of a crusade with all this.  But a little leadership would have gone a long way in protecting Chesapeake before all this.

----------


## soonerguru

> Special Report: The casualties of Chesapeake's "land grab" across America
> 
> Special Report: The casualties of Chesapeake's land grab across America | Reuters
> 
> they must have a whole news room dedicated to digging up dirt on Chesapeake!


Whether or not Reuters has an agenda, reading the way they treated their lease holders and contractors makes them seem like scum bags of the highest order.

----------


## blangtang

Aubrey is doing his first interview on cnbc today with Cramer in the 5 pm hour

----------


## OKCTalker

Cramer has previously expressed that he felt misled by Aubrey. This should be an interesting interview.

----------


## dankrutka

What happened?

----------


## ABryant

video:

Chesapeake CEO: Oil Consumption Lowest in 5 Years - CNBC

Cramer Tours Chesapeake&#39;s Lucas Well Site - CNBC

Nothing too interesting. Aubrey came across well, but that is his job.

----------


## ou48A

This appears to be the answer to many problems and a huge deal for our nation.
With this we can become a stronger and more prosperous nation.
+CHK is involved. We should be doing everything we reasonably can to capture our share of the GTL industry here in Oklahoma.



Shale Glut Becomes $2 Diesel Using Gas-to-Liquids Plants - Bloomberg

Drivers are next in line to benefit from the U.S. shale boom. 

Technologies that create motor fuels from raw materials other than oil, some drawing on techniques first commercialized in Nazi Germany, are poised to turn the glut of U.S. natural gas into energy for cars, trucks and planes.

A Chesapeake Energy Corp.-backed company and Oxford Catalysts Group Plc are planning U.S. factories to make diesel, gasoline and jet fuel from gas, which fell to a decade-low price this year. Their goal is to make motor fuels more cheaply and easily than oil-based products produced at giant refineries, and all within two years. 

U.S. gasoline prices have jumped more than 125 percent since the end of 2008 as crude doubled to more than $100 a barrel. At the same time hydraulic fracturing processes, or fracking, helped gas producers unlock once inaccessible reserves in shale rock. That’s boosted output and driven down prices, sparking interest in using the surplus energy to fill fuel tanks. 

“It’s going to happen in North America,” Roy Lipski, chief executive officer of Oxford, England-based Oxford Catalysts, said in an interview. Turning gas into liquid fuels “is the flip-side of the coin to fracking for shale gas, because what are you going to do with all the gas?” 

Shell’s Pearl 

So-called gas-to-liquids technology has been proven on a larger scale, primarily at Royal Dutch Shell Plc (RDSA)’s plant in Qatar. Smaller production typically is targeted for areas producing gas that’s “stranded,” or unserved by pipelines. The economics depend on the feedstock staying relatively cheap. 

While U.S. natural gas prices are currently about $3.50 per million British thermal units, the futures curve shows prices rising to more than $6 per mmBtu during the next 10 years. Every $1 increase in the price of gas boosts the cost of producing a barrel of diesel by $9, Oxford Catalysts said. 

Oxford Catalysts can produce a barrel of premium diesel for $66, or $1.57 a gallon, using gas at $4 per thousand standard cubic feet ($3.89 per mmBtu) at plants with a capacity of just 1,500 barrels a day. The unprofitable technology developer said a plant that size can be built for about $150 million and would last for 20 years. 

It costs about $124 a barrel, or $2.95 a gallon, to make premium diesel from oil, the company estimated. The U.S. average price for diesel at the pump is about $4.12 a gallon. 

Messerschmitt Fuel 

Oxford Catalysts is planning a factory in Pennsylvania, near the Marcellus Shale, that may go into production by the end of 2014, using a process known as Fischer-Tropsch after the German scientists who developed it in the 1920s. Germany commercialized the process in the 1930s to manufacture liquid fuel from domestic coal amid oil shortages before and during World War II. 

The fuel accounted for about 95 percent of Germany’s aviation gasoline during the Battle of Britain as Hitler’s Messerschmitts faced Royal Air Force Spitfires in the early 1940s, Daniel Yergin, the chairman of IHS Cambridge Energy Research Associates, wrote in his Pulitzer Prize-winning 1991 book “The Prize.” 

Fischer-Tropsch systems break down gas into carbon monoxide and hydrogen and then recombine the two to make synthetic oil. From there, the liquid can be converted into diesel, jet fuel and naphtha. Oxford Catalysts owns hundreds of patents for technologies that make the reaction feasible on a small scale. 

The company, whose shares have lost almost half their value since a 2006 initial public offering, expects its fuel to be blended with lower-grade diesel. 

Biggest Plant 

The strategy differs from Shell, which began production at its $19 billion Pearl project last year in Qatar to process gas from offshore fields. Pearl, the world’s biggest GTL plant, has the capacity to produce 260,000 barrels of fuel and oil products a day and helped Shell increase its dividend this year for the first time since 2009. Shell CEO Peter Voser said in November he’s considering a similar plant in the U.S. 

Several smaller companies are pursuing other gas-to-liquid technologies to exploit the oversupply of gas. 

Sundrop Fuels Inc., half-owned by Chesapeake, the second- biggest U.S. gas producer, expects to begin construction this year on a plant near Alexandria, Louisiana, that will produce as much as 50 million gallons (189 million liters) of gasoline a year. Its method combines cellulosic biomass, mainly forestry waste, with gas at temperatures of more than 1,300 degrees Celsius (2,372 degrees Fahrenheit) to produce a gas that’s processed into fuel. 

Pressing Need 

“Our nation’s most pressing clean energy need is not electricity generation, for which there are many new technologies, but for transportation fuel,” Sundrop CEO Wayne Simmons said in an e-mail. “Natural gas plays an important role in this.” 

Primus Green Energy Inc. developed a technique to make gasoline from gas or plant material, such as wood waste and non- food crops. Gas prices fell to a 10-year low in April, making it an easy decision to push the gas version first, said CEO Robert Johnsen. The Hillsborough, New Jersey-based company is pursuing a deal to sell the fuel to an airline. 

“The great thing about the natural gas market is its availability and the predictions for low cost for an extended period of time,” he said in an interview. “Not too many feedstocks have that.” 

Commercial Plant 

Primus may begin building its first U.S. commercial facility next year, which will produce as much as 20 million gallons of fuel annually through a methanol-to-gasoline process, with backing from Israel Corp., Israel’s biggest holding company. 

The company hasn’t received any subsidies and its production costs are “less than $2 a gallon,” Johnsen said. 

Primus’s “break-even natural gas price” is $11 per mmBtu, he said, assuming the price of crude stays unchanged. “I doubt that in a scenario where you have $11 natural gas you won’t have a higher price for petroleum.” 

Coskata Inc. (COSK), based in Warrenville, Illinois, developed systems to produce cellulosic ethanol from wood, agricultural waste and non-food crops, and is now shifting its focus to using gas as a feedstock. It was offered a $250 million U.S. Department of Agriculture loan guarantee in January 2011 for a cellulosic ethanol refinery, and changing the approach means the company won’t take advantage of the government backing. 

Government Mandates 

The company’s business model was based on the U.S. Environmental Protection Agency’s renewable fuel standard, which mandates that oil companies blend certain types of fuels made from biomass into their products. The policy would have ensured demand for Coskata’s product, said CEO Bill Roe. 

Those mandates have been challenged by the American Petroleum Institute, which sued the EPA in March, saying the requirements are unachievable, and House Republicans introduced a bill in June calling for the program to be modified. There’s also a push to revise the mandate to include fuels made from gas. 

That’s making wood less appealing as a feedstock, while the business case for gas gets stronger, said Roe. The company expects to produce ethanol for “significantly less than $1.50 per gallon,” according to its website. Standard corn-based ethanol costs about $3.40 a gallon to produce, according to Bloomberg New Energy Finance. 

“There’s real uncertainty around biomass,” Roe said. “We’re not keen to bet that the mandates are going to remain in place, put capital in the ground around a biomass conversion plant and then find out next year that the whole RFS gets turned upside down.” 

Biotech Process 

Calysta Energy LLC, based in Menlo Park, California, uses biotechnology to convert gas to liquid fuel, by engineering naturally occurring enzymes through controlled genetic mutation. 

“We’ve got more natural gas now than we’ve ever had,” CEO Alan Shaw said in an interview. “If we can get biology into the marketplace, we can address the small- to medium-sized fields. That’s what the industry is crying out for.” 

Shaw was previously CEO of the biotechnology company Codexis Inc. (CDXS) 

Turning gas into fuel may be more useful as a way to make money from resources far from pipelines, known as stranded gas, said Walter Hart, a director at Houston-based energy research company IHS Inc. (IHS) Using gas as a feedstock for liquid fuels will only pay off if prices stay low for decades. 

“The opportunity’s certainly there, but will it be there for the 30 or 40 years of the project? That’s the bet you have to make,” Hart said in a telephone interview. 

GTL technology still may be a smart bet, said Pavel Molchanov, an analyst with Raymond James & Associates Inc. in Houston. 

“As far as the eye can see, the price of natural gas in North America is going to be vastly cheaper on an energy equivalent basis than the price of petroleum,” he said.

----------


## HangryHippo

There is some really cool stuff happening.  Hopefully Chesapeake can help Sundrop get this really churning.

----------


## Pete

At Chesapeake Energy it's time to show, not tell
By Anna Driver

HOUSTON (Reuters) - Chesapeake Energy Corp (CHK) is under the gun to show evidence that it is changing its free-spending ways when it reports third-quarter earnings November 1.

The company's largest investors, Carl Icahn and Mason Hawkins, were so unhappy with the company's bloated balance sheet that they seized control of the board in June. With more than four months of work under the new board's belt, analysts and investors are looking for signs that change is under way at the second-largest producer of natural gas in the United States after Exxon.

"I think everybody is going to be looking very closely at this first full quarter they've had since the major changes," said Jake Dollarhide, chief executive of Longbow Asset Management, which holds Chesapeake bonds and stock. "It will be very interesting to see how these numbers compare to a year ago."

----------


## OKCTalker

Chesapeake Posts Biggest Loss in 3 Years After Gas Writedowns
2012-11-01 20:39:25.556 GMT


By Joe Carroll
     Nov. 1 (Bloomberg) -- Chesapeake Energy Corp. reported its biggest net loss in more than three years after a plunge in natural gas prices prompted a $2 billion asset writedown.
     Chesapeake reported a net loss of $2.01 billion, or $3.19 a share, compared with profit of $922 million, or $1.23, a year earlier, the Oklahoma City-based company said in a Business Wire statement today. Excluding one-time items such as the asset write-down, Chesapeake earned 10 cents a share, one cent more than the average of 34 analysts’ estimates compiled by Bloomberg.
     Gas futures traded in New York tumbled 29 percent from a year earlier to an average $2.893 per million British thermal units for the July-to-September period as increasing demand for the fuel failed to erode a growing surplus from U.S. shale wells.
     Chief Executive Officer Aubrey McClendon has been shifting the company’s focus from gas to production of oil and so-called gas liquids such as butane, which sell for higher prices.
Chesapeake, the second-biggest U.S. gas producer, has been winding down drilling in gas fields in Louisiana and Texas to boost production from liquids-rich formations in Ohio and Oklahoma.
     U.S. production of so-called dry gas, or gas without liquid byproducts, rose 4.1 percent in July to 2.02 trillion cubic feet a day, the most ever for that month of the year, Energy Department figures showed.

                           Asset Sales

     McClendon is selling assets to raise as much as $14 billion this year to plug a funding shortfall aggravated by the plunge in gas prices. The company said last month it will have $2.3 billion in surplus cash-flow when 2012 ends, an about-face from its May 1 warning to investors that it was in danger of running out of cash as early as 2013.
     The results were announced after the close of U.S. stock trading. It was the biggest quarterly loss since the first three months of 2009. Shares fell 0.9 percent to $20.07 at the close in New York.
     Earlier today, Chesapeake said it obtained a $2 billion, five-year term loan. Proceeds will be used to refinance a credit pact Chesapeake Energy got in May that pays a higher interest rate, the Oklahoma City-based company said in a regulatory filing. Bank of America Corp., Goldman Sachs Group Inc. and Jefferies Group Inc. arranged the loan.

                      Corporate Governance

     Chesapeake lost 9.1 percent of its market value this year as the impact of falling gas prices was compounded by disclosures that McClendon borrowed more than $800 million last year to finance his personal stakes in thousands of company- owned oil and gas wells.
     McClendon was removed from the chairman’s role in June and more than half the board was replaced at the insistence of Chesapeake’s largest investors, Southeastern Asset Management Inc. and Carl Icahn.
     The board has been conducting an internal investigation for more than six months of McClendon’s borrowings from some of the company’s biggest financiers. Chesapeake hasn’t said when the board will finish the inquiry. Probes also are underway at the Internal Revenue Service and the U.S. Securities and Exchange Commission.
     Exxon Mobil Corp. is the biggest U.S. gas producer.

     (Chesapeake scheduled a conference call to discuss second- quarter results for 9 a.m. tomorrow. To access the call, go to
Chesapeake Energy - America's Champion of Natural Gas.)

----------


## catch22

Phew.......OUCH. $2 BILLION loss? $2,000,100,000.00

O_O

----------


## BoulderSooner

> Phew.......OUCH. $2 BILLION loss? $2,000,100,000.00
> 
> O_O


actually a pretty good quarter .. beat the street

----------


## Swake2

> actually a pretty good quarter .. beat the street


No, it’s a terrible quarter for the company. Just not quite as bad as the street thought it was going to be.

----------


## Pete

Stock is way down over the last couple of days...

Had climbed back up to $21.50 will the hope of the new board but is now back below $19.

----------


## BoulderSooner

> No, it’s a terrible quarter for the company. Just not quite as bad as the street thought it was going to be.


write downs  are paper losses .. they made money during a big restructure

----------


## Swake2

> write downs  are paper losses .. they made money during a big restructure


It's a write down in the value of the hard assets that the company is having to sell to service it's debt. Not some goodwill write down. This is bad.

----------


## Kokopelli

A little good news from Chesapeake Energy  today.

Peake Fuel Solutions has developed a system that allows heavy duty trucks to mix less expansive natural gas with diesel to save money. 

Read more:      Chesapeake affiliate develops way to mix diesel, natural gas | NewsOK.com

----------


## pw405

Just picked up about 40 shares at $16.50.  Up about 4.2% since I bought.  I can't complain.... YET!!

----------


## Pete

Carl Icahn just upped his investment to 9% of the company.

Although the stock is still floundering, that's a sign he thinks better days are ahead and since he has representation on the new Board, he should know.

----------


## okc_bel_air

Chesapeake announced in emails to their staff they are starting a "Voluntary Separation Program".  Rumors are they are looking to shed 10% of the workforce, local and national.

----------


## HangryHippo

This is the article that talks about the program.  I really hope Chesapeake can get it together.  Things do not look good.

----------


## onthestrip

> This is the article that talks about the program.  I really hope Chesapeake can get it together.  Things do not look good.


Ive been quite critical of them in the past but I dont see this as a sign that "things do not look good." If anything this is a positive for them as they shed some costs. And this is only for employees that are 55 and up and have been there for 5+ years, so its not a large amount of employees. For those employees, the severence package looks to pretty good. And it looks like they have almost raised the amount of money they needed to with the selling of assets this year. Only thing is that they are going to have to do it again in 2013. The new board and big shareholders have reigned in Aubrey's big spending so things are looking somewhat better for them.

----------


## Pete

The article says about 275 employees would be involved.

However, the fact they have shed a bunch of assets and need to do the same again next year indicates their employee base will be shrinking and maybe significantly.

Their stock is back down into the low to mid 16's which is about where it was before the board shakeup.

----------


## HangryHippo

> Ive been quite critical of them in the past but I dont see this as a sign that "things do not look good." If anything this is a positive for them as they shed some costs. And this is only for employees that are 55 and up and have been there for 5+ years, so its not a large amount of employees. For those employees, the severence package looks to pretty good. And it looks like they have almost raised the amount of money they needed to with the selling of assets this year. Only thing is that they are going to have to do it again in 2013. The new board and big shareholders have reigned in Aubrey's big spending so things are looking somewhat better for them.


Well, I put this into a greater context with what I hear from current and former Chesapeake employees, news reports, and the fact that they're going to have do all of this again next year.  The stock price has fallen again and I'm just not that optimistic.  It does seem like they are doing what they can to ensure their survival.

----------


## Pete

I could see a scenario where after all the asset sales, the board then initiates a big shake-up of the staff.

Right now, they need McClendon to not only make the deals, but to navigate the complicated web of financial arrangements.  It's common knowledge that Chesapeake does things in a very complicated manner, with many layers of borrowing that stretches across all types of different assets.  They really need Aubrey to help unwind this so they can guarantee clear title to potential buyers.

After that, I think he and a lot of his top people may be back on the hot seat.  The board may want different leadership once the company is stabilized.

Aubrey now has very little stock and thus no real leverage if the board wants to make a change.

----------


## adaniel

I know that about 300 employees have voluntarily left since the summer. So another haircut of just under 300 employees being bought out brings their employee count down less than 10%. Something tells me they are definitely not done with this. Further complicating matters is that they are largely selling off their oil rich assets, making them even more dependent on nat gas, which isn't going anywhere in price with it being 50 degrees in Chicago in December.   

I definitely feel the new CEO and board is doing their best to right the ship but until natural gas prices come up and soon, CHK is still in hot water.

----------


## blangtang

McClendon made the list of worst CEOs

The Worst CEOs of 2012 - Businessweek

----------


## AltusBorn

LMFAO. I can't believe Tom Ward isn't on this list as well.

----------


## Pete

If you click through to the full article it says that CHK now only has $143 million in cash, down from $1 billion a year ago.  It also alleges that they are deliberately slow-paying vendors due to cash flow problems.


SPECIAL REPORT: Chesapeake, McClendon endure rocky year; more uncertainty ahead
Thu Dec 27, 2012 2:29pm EST

Aubrey McClendon, 53, endured a trying year running the second-largest natural gas producer in the United States, Chesapeake Energy Corp. But as corporate, state and federal probes into McClendon and the company continue, 2013 isn't looking much easier.

Facing a cash crunch, the natural-gas giant that McClendon founded had been counting on profits from land that was leased in Colorado, North Dakota and Wyoming. The deals, however, have soured - at a cost to Chesapeake of more than a billion dollars, the company told investors in November.

Like property owners in Michigan and Texas, land owners in North Dakota have sued Chesapeake over allegations that the company reneged on leasing agreements. And now, one of its leading regional contractors is suing Chesapeake for allegedly failing to pay a $15 million bill, court documents show.

McClendon's personal finances also remain strained: This autumn, according to a document filed in Oklahoma County, Oklahoma court, he put up at least part of his renowned wine collection as collateral for a loan from a fellow Oklahoma tycoon.

In building Chesapeake to the size and stature it holds today, McClendon oversaw $43 billion in spending over 15 years to snap up drilling rights across the country, holdings equal in area to West Virginia. But that empire, and the personal fortune he intertwined with it, is now under severe financial and legal strain across much of America.

----------


## Just the facts

I remember the movie Brewster's Millions where Richard Prior had to spend $30 million in 30 days with nothing left to show for it.  It would be hard to spend $43 billion in 15 years and end up with CHKs problems.

----------


## AltusBorn

I hate to think about the negative impact that CHK tanking would have on OKC. But it is fairly fascinating in an objective, cautionary tale sort of way. After reading the Reuter's article and hearing about the layoffs, early buyouts, general uneasyness among their remaining employees as well as the construction stoppages at NH Plaza and elsewhere, it certainly feels like the end is near. 

Does anyone seriously believe that Chesapeake as we know it today will survive 2013? Or that Aubrey will still be CEO at this time next year?

----------


## OKCTalker

> I remember the movie Brewster's Millions where Richard Prior had to spend $30 million in 30 days with nothing left to show for it.  It would be hard to spend $43 billion in 15 years and end up with CHKs problems.


CHK's problem has always been its unwillingness to control costs. That isn't a problem when you're selling a very profitable product, but when the prices crash and you don't cut back, there is ALWAYS going to be trouble. AKM didn't learn from his near disaster in 2008, he didn't learn again in 2012, and a year of significant asset sales isn't staunching the flow of red ink.

----------


## Pete

They still need Aubrey to help with the asset sales and to help unwind the complex web of financing used by Chesapeake.  They may also need him to help defend some of these pending lawsuits.

Beyond that is anybody's guess.


You may recall that the new board ordered a full internal review of Aubrey's personal financials and how they have been intertwined with the company's interests (hedge fund, personal loans, etc.).  But that was a while ago and it seems strange there has been no news on this front.  Remember, they kept Burns Hargis on the board specifically because he was heading this probe.

----------


## 1972ford

Maybe Devon or continental can scoop them up at bargain prices if they end up having to sell.  Wonder what assets they will have to sell off next don't they need like 8 billion in sales to keep the cash flowing

----------


## progressiveboy

This was in the DO Saturday Edition. Looks like local asset being sold. IBC buys office building from CHK. See link below.





IBC Bank-Oklahoma buys office building for Oklahoma City headquarters | NewsOK.com

----------


## bchris02

> This was in the DO Saturday Edition. Looks like local asset being sold. IBC buys office building from CHK. See link below.
> 
> 
> 
> IBC Bank-Oklahoma buys office building for Oklahoma City headquarters | NewsOK.com


Does this mean anything?  I would think with all the new construction they are putting in they would be soon divesting real estate they no longer need.

----------


## progressiveboy

> Does this mean anything?  I would think with all the new construction they are putting in they would be soon divesting real estate they no longer need.


 Yes it does! Since this is a Chesapeake business practice thread, then selling a big chunk of Real Estate " could" fall under CK Business practices. I believe they are divesting because they are being pressured to sell off assets to raise capital.

----------


## bchris02

> Yes it does! Since this is a Chesapeake business practice thread, then selling a big chunk of Real Estate " could" fall under CK Business practices. I believe they are divesting because they are being pressured to sell off assets to raise capital.


Ah, by "mean anything" I meant does it mean anything in regards to the health of Chesapeake.  A lot of people are on edge about them right now.

----------


## mmonroe

January issue of Forbes

Two Celebrated Investors Want To Fix Their Funds--And Chesapeake Energy - Forbes

----------


## Pete

December 30, 2012, 5:58 p.m. ET
Chesapeake Energy Probe of McClendon Drags Into 2013
By DANIEL GILBERT
wsj.com

When Chesapeake Energy Corp.'s CHK +3.46% biggest shareholder helped engineer a boardroom coup in June, it called on the company to wrap up a probe into Chief Executive Aubrey McClendon's financial dealings within "weeks not months."

But a half-year later, the board has yet to issue its report on the hundreds of millions of dollars Mr. McClendon borrowed from firms that conducted deals with Chesapeake.

A spokesman for the Oklahoma City company, the nation's second largest natural-gas producer, said only that the review is continuing.

*A person close to the board said that the investigation is likely to conclude in mid-January and is unlikely to result in the ouster of Mr. McClendon*. He stepped down as Chesapeake's chairman in June but remains CEO and continues to serve on Chesapeake's board.


Some shareholders have expressed impatience with the probe. New York City's Office of the Comptroller, which manages pension funds owning 1.6 million Chesapeake shares, said it was concerned that the inquiry was headed by V. Burns Hargis, who, as chairman of the board's audit committee, had been the board's point person supervising Mr. McClendon's transactions related to Chesapeake.

"He is, in effect, overseeing an investigation into conduct for which he had oversight responsibility, and that's a conflict," said Assistant Comptroller Michael Garland. "The fact that we've yet to see the results of that investigation exacerbates our concerns."

Mr. *Hargis* is the president of Oklahoma State University, which has received significant donations from Chesapeake, including a $2 million gift last year. Mr. Hargis in June offered to step down from Chesapeake's board after failing to receive a majority of shareholder votes at the annual meeting. But *the board exercised its authority to keep him on until the probe was complete.*

Through a spokesman, Mr. Hargis declined to comment.

A spokesman for Mr. McClendon, the company's co-founder, declined to comment.

Chesapeake's shares are down 26% this year, giving the company a market capitalization of about $11 billion.

A spokeswoman for the company's largest shareholder, Southeastern Asset Management Inc., which owns 13.5% of Chesapeake's shares outstanding, didn't respond to requests for comment. Southeastern supported the decision to keep Mr. Hargis on until the probe is complete.

The probe began in April, after it was revealed that entities controlled by Mr. McClendon had borrowed up to $1.4 billion from private-equity firm EIG Global Energy Partners LLC, which has paid hundreds of millions of dollars for preferred shares in Chesapeake subsidiaries. Some corporate-governance experts and a shareholder said there was the potential for a conflict of interest, which Chesapeake has denied. EIG declined to comment.

Mr. McClendon borrowed the money largely to pay for his share of the drilling costs for wells in which he owns a small interestinvestments he acquired through a perk that allowed him to take a small stake in every well Chesapeake drilled. The company and Mr. McClendon in May agreed to end that perk in June 2014.

The arrangement goes back to 1993, when Chesapeake went public. As a result, lawyers reviewing Mr. McClendon's financial arrangements have had to sift through an enormous number of documents, the person close the board said. He noted that the U.S. Securities and Exchange Commission also is investigating the perk, which may have spurred additional attention by the lawyers conducting the company's probe.

Under pressure from Southeastern and activist investor Carl Icahn, Chesapeake in June agreed to replace four board members with independent directors. Chesapeake also stripped Mr. McClendon of his chairmanship and appointed an independent chairman.

Beyond Mr. McClendon's activities, shareholders have expressed concern about Chesapeake's cash shortfall and high spending as it ramped up oil production despite shrinking revenue from low natural-gas prices. Chesapeake drew on its credit lines and took out a high-interest loan, repaying the debt with the proceeds of more than $11 billion in asset sales.

Chesapeake's oil output nearly doubled in the third quarter from a year earlier, and its average daily production increased 24%. But its debt has climbed 53% this year, reaching $16.2 billion at the end of September. Chesapeake had pledged to pare debt to $9.5 billion by year-end but subsequently pushed that target into next year. The company's spending slowed slightly in the third quarter, but Chesapeake used about 84% of its drilling budget in the first nine months of the year. Chesapeake slashed the number of drilling rigs it operates by 46% this year, an indicator of future spending.

Chesapeake and Southeastern have touted the changes that the energy company has made to its corporate governance.

In addition to replacing a majority of the board, Chesapeake cut director pay by 20% and eliminated a perk that allowed directors to use company aircraft for personal travel.

Southeastern over the summer called the changes "the most significant governance changes that we have ever witnessed at a company.

----------


## Teo9969

> January issue of Forbes
> 
> Two Celebrated Investors Want To Fix Their Funds--And Chesapeake Energy - Forbes


Well, that's about the best news we've heard about this in a long time. By no means a guarantee of anything, but at last it's not depressing news.

----------


## Pete

It does seem that things seem to be steadying a bit at Chesapeake.

I know they will still have to sell billions more this year, but it sounds like they are executing a plan that makes some sense.  As opposed to the previous business model that was ultimately exposed as unsustainable.

It sounds like the new board had gotten tough with Aubrey, which is exactly what was needed.

----------


## Dubya61

> It does seem that things seem to be steadying a bit at Chesapeake.
> 
> I know they will still have to sell billions more this year, but it sounds like they are executing a plan that makes some sense.  As opposed to the previous business model that was ultimately exposed as unsustainable.
> 
> It sounds like the new board had gotten tough with Aubrey, which is exactly what was needed.


I also liked that they seemd to understand Mr. McClendon's value:




> Hawkins and Cates needed to get McClendon back to what he has always been exceptional at doinguncovering new gas deposits and striking great deals.

----------


## Pete

Yes, although you have to wonder how much they'll be seeking out new assets when for the foreseeable future they will be in sell mode.

I think they need Aubrey for sales as well, but after most of that work is done I actually think his position will be much more tenuous, especially because by then the new board will have a much better handle on operations and far less reliant on any one person.

I always thought unless something completely new came out of the internal investigation -- or the price-fixing suit turned out very badly -- that AKM would get another year, but maybe only that.

----------


## OKCTalker

Two words: CORE BUSINESS.

----------


## okcfollower

No Bonus for Aubrey: 
Chesapeake says no bonus for CEO in 2012 | NewsOK.com

Looks like things at CHK are getting back to where they should be! I'm glad they are changing things fast...maybe it will save the company and keep it in OKC for when times get good for them again

----------


## blangtang

The Board also retained a nationally recognized consultant to assist management in identifying opportunities for the Company to reduce its overhead expenses. Following such review, the Board and management determined that t*he Company will target a reduction of approximately $190 million in overhead expenses over the next two years.* Further, *the Board has reduced the Company's aggregate annual budgeted charitable, trade association and political expenditures by approximately 30% for 2013, 40% for 2014 and 50% for 2015 compared to 2012 expenditures* and increased the frequency with which the Governance Committee reviews reports detailing such payments and commitments from an annual to a quarterly basis. 

its a bummer for the charities that may be impacted by this...

----------


## Pete

I wonder if they'll take a hard look at the arena sponsoring rights.

I know it's a long-term contract but I'm sure they could buy their way out and let the arena find another sponsor.

I can't imagine how having the Chesapeake name on a sports facility helps their bottom line in any real way, and they are spending a big chunk of change on that.


And of course, all their ancillary real estate is bound to come under intense scrutiny.  Maybe Aubrey will buy some of it personally.


In any event, cutting $190 million over two years should not be much of a challenge given the extreme excess at that company.


Glad to see the board getting tough, as it's been long overdue and will make Chesapeake a much more solid enterprise.

----------


## blangtang

Ouch!

Chesapeake's attempt to find the southern edge of the Bakken, is being described as the largest failure in drilling in the state since the 1980's. 

Chesapeake Drills Unsuccessful Wells in Southwest ND - KXNet - Bismarck/Minot/Williston/Dickinson

I'm not in the oil biz, but is $60 million a lot for dry wells?  

I like the video in that article, shows how barren and sparse that Bakken land is

----------


## OKCTalker

If I read this correctly, $190 million over two years is $95 million per year, and a tiny fraction of their annual non-operating expenses or COGS. Even if it is $190 million PER YEAR, that's still a small drop. This is like watching Congress fight over cutting the federal budget. Which may help explain why the stock fell 4.2% today after yesterday's announcement. 

Pete - I'm sure that Aubrey has a list of properties prioritized by his willingness to sell, and we're seeing that begin: CHK Land selling "Hertz Building" to IBC Bank, and Arcadia Farms selling land at 192nd & May to a residential developer. I don't think we'll see anything move from one AKM-related entity to another, not with the complex lending agreements and cross-collateralization on real estate. For crying out loud, he can't open a bottle of wine without George Kaiser's approval.

----------


## Teo9969

> If I read this correctly, $190 million over two years is $95 million per year, and a tiny fraction of their annual non-operating expenses or COGS. Even if it is $190 million PER YEAR, that's still a small drop. This is like watching Congress fight over cutting the federal budget. Which may help explain why the stock fell 4.2% today after yesterday's announcement. 
> 
> Pete - I'm sure that Aubrey has a list of properties prioritized by his willingness to sell, and we're seeing that begin: CHK Land selling "Hertz Building" to IBC Bank, and Arcadia Farms selling land at 192nd & May to a residential developer. I don't think we'll see anything move from one AKM-related entity to another, not with the complex lending agreements and cross-collateralization on real estate. *For crying out loud, he can't open a bottle of wine without George Kaiser's approval.*


That would be awful!

----------


## ou48A

JP Morgan upgraded CHK to overweight from underweight.
It looks like there may be some light at the end of the tunnel for this company?

----------


## catch22

Can you clarify what underweight and overweight means in this context?

----------


## Pete

I was told by a CHK employee that they have now laid off 250 contractors in the Land department -- 150 a few months ago and then 100 just last week.

Also lots of rumors around that they will trim 10% of their full-time employees.

----------


## Easy180

> I was told by a CHK employee that they have now laid off 250 contractors in the Land department -- 150 a few months ago and then 100 just last week.
> 
> Also lots of rumors around that they will trim 10% of their full-time employees.


Gonna be hard pressed to find $80k salaries elsewhere in the metro

----------


## ou48A

> Can you clarify what underweight and overweight means in this context?



Overweight (stock market) - Wikipedia, the free encyclopedia
This explains it better than I could

----------


## catch22

> Overweight (stock market) - Wikipedia, the free encyclopedia
> This explains it better than I could


Thank you

----------


## soonerguru

The Lost Ogle is reporting (through their "mole network") that Chesapeake is laying people off in OKC as we speak. Aubrey will be the subject of many voodoo doll curses from  a lot of OKC families tonight.

----------


## pw405

> The Lost Ogle is reporting (through their "mole network") that Chesapeake is laying people off in OKC as we speak. Aubrey will be the subject of many voodoo doll curses from  a lot of OKC families tonight.


Looking on Lostogle and don't see anything.  Where did you see this?

----------


## soonerguru

> Looking on Lostogle and don't see anything.  Where did you see this?


They put it on my Facebook feed. Here's a cut and paste:


The Lost Ogle
2 hours ago
Hearing rumors that Chesapeake is laying off (aka "Restructuring") part of it's Oklahoma City staff today. That's not good.
Like    @TheLostOgle on Twitter
Chris Stowe likes this.

Robert Turley Like this hasnt been expected for about 2 yrs. Sorry for the people who get let go.
2 hours ago  Like  5

Whitney Duvall Shocker!
about an hour ago  Like  1

Cory Heath Chesapeake, Halliburton, Schlumberger, and Baker Hughes all are. I was laid off from Halliburton yesterday....about that email position? Lol
about an hour ago via mobile  Like

Chris Penrod I wonder if any news sources are covering the layoffs right now. This is kind of a big deal 
about an hour ago  Like  2

Joe Daugomah Aubry good dude not
about an hour ago via mobile  Like

Jessica Thompson Shocker.
about an hour ago  Like

Shelley Sunderland They started a few weeks ago.
about an hour ago via mobile  Like  1

Anna Unruh Pendergast Takemire Hope Jamie is safe...
28 minutes ago via mobile  Like

----------


## pw405

> They put it on my Facebook feed. Here's a cut and paste:
> 
> 
> The Lost Ogle
> 2 hours ago
> Hearing rumors that Chesapeake is laying off (aka "Restructuring") part of it's Oklahoma City staff today. That's not good.
> Like    @TheLostOgle on Twitter
> Chris Stowe likes this.
> 
> ...


Ah, I see... well no surprises there I suppose.  

Friend of mine has an offer tentative on mgmt. approval.  Wonder if she should be worried?

----------


## venture

> Ah, I see... well no surprises there I suppose.  
> 
> Friend of mine has an offer tentative on mgmt. approval.  Wonder if she should be worried?


Last hired, first fired?

Sad but I think everyone knew the honeymoon was going to come crashing down at some point. Everyone has been pushing NG more and more, well as it gets more use production increases and prices will likely start to fall some. Once they started cutting production to keep prices inflated you knew it was bad. They couldn't cover their costs/expenses/debts on the falling prices.

----------


## soonerguru

> Ah, I see... well no surprises there I suppose.  
> 
> Friend of mine has an offer tentative on mgmt. approval.  Wonder if she should be worried?



why would she want to go there? Has she considered Devon?

----------


## pw405

> why would she want to go there? Has she considered Devon?


No openings for the position she interviewed for.  

Breaking news:  rumors of a FAKE Aubry Mclendon Twitter post have now come to light.

I don't user Twitter - anybody care to confirm?

----------


## Bailey80

> No openings for the position she interviewed for.  
> 
> Breaking news:  rumors of a FAKE Aubry Mclendon Twitter post have now come to light.
> 
> I don't user Twitter - anybody care to confirm?


There's only  three or four fake Aubrey twitter accounts out there. This one is pretty funny.
https://twitter.com/AubreyMcLendon

----------


## pw405

Well, this is certainly a breath of fresh air!

This analyst makes some very good points about CHK's positioning right now...  


No Bakken, But Everything Else - Chesapeake Energy Is Set Up To Succeed - Seeking Alpha

----------


## blangtang

McClendon got the boot, err, I mean he's retiring.  Wonder if he gets the golden 'chute!

update: stock up about 6% on news, lol!

----------


## onthestrip

> McClendon got the boot, err, I mean he's retiring.  Wonder if he gets the golden 'chute!
> 
> update: stock up about 6% on news, lol!


Huh? Where is this news coming from? And their stock was not up 6% today, it was up 4 cents.

----------


## warreng88

> Huh? Where is this news coming from? And their stock was not up 6% today, it was up 4 cents.


I was told the same thing by a friend who said he got an internal email and a press release was sent out.

----------


## Tydude

KOCO 5 is reporting that Aubry McClendon will retire on April 1st

----------


## OKCTalker

This is great news in the long term, but I'm not so sure about the short term. 

AKM: He will receive a huge severance and possibly remain invested in their wells, and he can devote full time/attention towards non-CHK projects, not the least of which is his defense in the upcoming Michigan collusion/price fixing case. 
CHK: This puts to rest any question about who is running things and whether Aubrey will return as chairman at a later date. However, the company loses his vision, and this doesn't eliminate the corporate liability in Michigan. 
Real estate: With professional management firmly in place, they'll consolidate employees to the campus and continue the sale of non-core real estate, and perhaps Aubrey can complete or sell his properties on Western Avenue. 

So who's got the over/under on CHK stock value as of market close tomorrow, close on February 28th, and close on December 31st?

----------


## HangryHippo

NEWSOK is reporting the same.

----------


## pw405

> So who's got the over/under on CHK stock value as of market close tomorrow, close on February 28th, and close on December 31st?


After hours trading has it up BIG so far.  Closed at $18.97.  After hours price is already at $20.50.

Feeling pretty good about buying at $16.45

----------


## Pete

Not surprised.

I expected the new board to take some time to make sure they understood the complex deals and financing that they inherited, then push AKM out.

Also, they should be wrapping up their internal probe of all of Aubrey's intermingled business deals with CHK and perhaps this timing has something to do with that.


Will be very interesting to see who takes his place.

----------


## DoctorTaco

So...what does this mean? Immediate talk is that CHK is now prime takeover target.

----------


## Pete

Also, it will be interesting to see what happens to NH Plaza and the tons of other ancillary properties owned by CHK.

I don't think Aubrey is in a position to buy them and it would be funny to see how much he would actually pay out of his own pocket rather than the company's.

----------


## Pete

> So...what does this mean? Immediate talk is that CHK is now prime takeover target.


Don't know why they would be more of a takeover target with this change...  Aubrey had almost no power to influence that decision -- just one board vote.

----------


## DoctorTaco

Fair point.

----------


## adaniel

> So...what does this mean? Immediate talk is that *CHK is now prime takeover target.*


No more than it already was IMO. They still have a lot of mopping up to do before most companies would even start looking at them. 

Lots of people might say he was forced out. But if I were a betting man, I would say this decision was more of Aubrey's than anyone else.

----------


## Pete

> Lots of people might say he was forced out. But if I were a betting man, I would say this decision was more of Aubrey's than anyone else.


Respectfully disagree.

I'm sure they told him he could either resign or he would be fired.  CHK is still a pretty big mess, having to sell billions more in assets this year just to have cash flow.  Plus, several big lawsuits are pending and they are just wrapping up the internal investigation of Aubrey's co-mingled business dealings.

I think they kept him around for a while because they had to; they needed his help to unwind the complex web of deals so they could sell off some big assets.  By now, they have a much better handle on things and no longer need him.  I suspect the more they dug, the less they trusted him.

Based on the way he conducted that business -- or at least what the public knows about it -- I would have absolutely no trust in him either, at least in terms of running a large, complex enterprise.

----------


## pw405

> No more than it already was IMO. They still have a lot of mopping up to do before most companies would even start looking at them. 
> 
> Lots of people might say he was forced out. But if I were a betting man, I would say this decision was more of Aubrey's than anyone else.


Ya, I don't think this makes a buyout any more likely.   I think the only company that could afford to buyout would be Exxon.  While I'm not an expert on corporate takeovers, I think it is true that for every $1 CHK stock rises, the price to buy the company goes up by $664,000,000.  (664 million shares outstanding).   I also understand that there is some Oklahoma law that makes buying them more difficult.  May have read it on this thread... does that ring a bell to anybody?

----------


## Pete

> The board said it has found no evidence to date of improper conduct in the CEO’s relationship with the company. 
> 
> The board will release its review of McClendon's financial transactions on Feb. 21, when announcing earnings results.
> 
> “While I have certain philosophical differences with the new board, I look forward to working collaboratively with the company and the board to provide a smooth transition to new leadership for the company,” McClendon said in the statement.


Chesapeake CEO Resigns After Scrutiny on Personal Loans - Bloomberg

----------


## Snowman

As long as they are selling the assets, there probably is less risk in just buying them than the company

----------


## Pete

OKLAHOMA CITY--(BUSINESS WIRE)--
Chesapeake Energy Corporation (CHK) today announced that its Co-founder, Chief Executive Officer and President, Aubrey K. McClendon, has agreed to retire from the company on April 1, 2013 and will continue to serve as Chief Executive Officer until his successor is appointed. Mr. McClendon, 53, has served as Chesapeakes Chief Executive Officer since the inception of the company in 1989 and served as Chairman of the Board from its founding until 2012.

Archie W. Dunham, Chairman of the Board, stated: Over the past 24 years, Aubrey McClendon has created one of the most valuable and innovative companies in the energy industry. Under Aubreys strong leadership, Chesapeake has built an unmatched portfolio of natural gas and oil assets in creating one of the worlds leading energy companies. He has been a pioneer in the development of unconventional resources, and he has also been a leader in the effort to make the United States energy independent. However, as the company moves towards more fully developing the value of its outstanding assets, Chesapeake is at an important transition in its history and Aubrey and the Board of Directors have agreed that the time has come for the company to select a new leader. The Board will be working collaboratively with Aubrey to make a smooth transition to Chesapeakes next Chief Executive Officer.

Mr. Dunham continued: Going forward, the company will strive to continue as a low cost producer of oil and gas while further enhancing and strengthening its balance sheet. Capital allocation and operating decisions will be made with the goal of prudently growing the companys intrinsic value per share for the long-term benefit of its shareholders. By forging ahead with a new Chief Executive Officer, the companys strong management team and talented employees will continue to develop the industrys best assets to create substantial value for shareholders and themselves in the years ahead.

Aubrey K. McClendon, Chesapeakes Chief Executive Officer, said: Over the past 24 years, I have had the privilege of developing Chesapeake into one of the worlds premier energy companies. It has been an honor to work with my outstanding management team and the companys 12,000 very talented and dedicated employees. I am extremely proud of what we have built over the last quarter of a century, and I am confident that Chesapeake is in a great position to continue to grow and achieve great success in the future as it realizes the full value of its outstanding assets. While I have certain philosophical differences with the new Board, I look forward to working collaboratively with the company and the Board to provide a smooth transition to new leadership for the company.

The Board expects to release the results of its previously announced review of the financing arrangements, and other matters, between Mr. McClendon (and the entities through which he participates in the Founder Well Participation Program) and any third party that has had or may have a relationship with the company in any capacity, in its earnings announcement scheduled for release before market open on February 21, 2013. The Boards extensive review to date has not revealed improper conduct by Mr. McClendon. The Board and Mr. McClendons decision to commence a search for a new leader is not related to the Boards pending review of his financing arrangements and other matters.

The Board has retained Heidrick & Struggles to assist the Board in its search of Mr. McClendons successor. The Board also intends to consult with Mr. McClendon in connection with this search. The search process will include a full review of internal and external candidates.

During this interim period, Mr. McClendon will work closely with Steven C. Dixon, Chief Operating Officer, and Domenic J. DellOsso, Jr., Chief Financial Officer, to transition certain day-to-day management responsibilities in advance of the completion of the search process for the new Chief Executive Officer. The company and the Board are committed to its current drilling program with respect to its existing $6.0 billion drilling and completion budget for 2013, its ongoing asset sales program and intention to reduce the companys long-term debt.

Mr. McClendon will resign from the Board of Directors at the time his successor is appointed and will receive his full compensation and other benefits to which he is entitled in accordance with the terms of his employment agreement. Mr. McClendon will continue to be an important partner with the company given his stock ownership as well as his interests in certain of the companys wells in connection with the Founder Well Participation Program, which will terminate on June 30, 2014.

----------


## ou48A

> Ya, I don't think this makes a buyout any more likely.   I think the only company that could afford to buyout would be Exxon.  While I'm not an expert on corporate takeovers, I think it is true that for every $1 CHK stock rises, the price to buy the company goes up by $664,000,000.  (664 million shares outstanding).   I also understand that there is some Oklahoma law that makes buying them more difficult.  May have read it on this thread... does that ring a bell to anybody?


What is more likely than a buyout are more asset sales.

Doing it this way lets a company buy without taking on baggage such as debt.
Several of the majors XOM, CVX, BP, RDS-A and COP dwarf CHK and would probably not have a major problem buying CHK if they thought it was a wise choice,,,, but IMHO there will be no takers because of the baggage.

----------


## Pete

> McClendon said today he was parting with the company and that he had”certain philosophical differences with the new Board.”
> 
> But Icahn, in a statement Tuesday, applauded McClendon’s history:
> 
> “Aubrey has every right to be proud of the company he has built, the world class team of people at Chesapeake and the collection of assets he has assembled, which in my opinion, are the best portfolio of energy assets in the country. While it is known that some of these assets will be sold by the company in due course, I do not believe that this will in any way effect the ultimate realization of Chesapeake’s potential.
> 
> “I am confident that history will prove that Aubrey has been correct about the value of natural gas in general and the value of Chesapeake in particular.”


Carl Icahn Has Kinds Words for Chesapeake?s Aubrey McClendon - Deal Journal - WSJ

----------


## ou48A

On a day like today everybody who is directly involved will be saying nice things!

----------


## soonerguru

> No more than it already was IMO. They still have a lot of mopping up to do before most companies would even start looking at them. 
> 
> Lots of people might say he was forced out. But if I were a betting man, I would say this decision was more of Aubrey's than anyone else.


No way. No way the guy leaves without getting the axe. This is all for show. Other shoe probably about to drop from the various investigations.

----------


## adaniel

> Respectfully disagree.
> 
> I'm sure they told him he could either resign or he would be fired.  CHK is still a pretty big mess, having to sell billions more in assets this year just to have cash flow.  Plus, several big lawsuits are pending and they are just wrapping up the internal investigation of Aubrey's co-mingled business dealings.
> 
> I think they kept him around for a while because they had to; they needed his help to unwind the complex web of deals so they could sell off some big assets.  By now, they have a much better handle on things and no longer need him.  I suspect the more they dug, the less they trusted him.
> 
> Based on the way he conducted that business -- or at least what the public knows about it -- I would have absolutely no trust in him either, at least in terms of running a large, complex enterprise.


Definitely don't disagree with anything said. But I don't see their problems ending anytime soon and IMO they probably still need him as a bullet shield when the flurry of lawsuits finally go to trial. He had pretty much been pushed back to an observer in the peanut gallery and had no real power.

I'm thinking AM knew it was over for him and CHK and just wanted to move on to do the next big thing. For better or worse there's still a lot of people out there that think he's the gold standard of the energy business.

----------


## Pete

Chesapeake says it is not for sale: memo

HOUSTON (Reuters) - The departure of Chief Executive Aubrey McClendon is not an indication that Chesapeake Energy Corp (CHK) is up for sale, according to an email to sent to employees on Wednesday.

"...the company is not for sale," Chairman Archie Dunham wrote.

Dunham also said the Chesapeake's board has set a drilling and completion budget of $6 billion.

Chesapeake said McClendon will step down on April 1.

----------


## Pete

> McClendon, in an email to employees this afternoon, said, “Although this is due to certain philosophical differences that exist between the Board and me, the separation will be amicable and smooth.”
> 
> Chairman Archie Dunham, in a staff email this afternoon assured employees that the culture McClendon had put into place at Chesapeake would endure.
> 
> “The Board has no intention of eliminating childcare, shutting down the Fitness Center, or selling the Company cafeterias.”
> 
> More importantly, he stated that “the company is not for sale” and that Chesapeake would carry out its planned $6 billion in drilling this year.


Aubrey McClendon Is Out At Chesapeake Energy - Forbes

----------


## soonerguru

Well the good news here is that Aubrey will have more time to focus on failed shopping center developments.

----------


## Pete

All the real estate is still owned by Chesapeake Land Company.

Aubrey owns Pops and a bunch of acreage in east Edmond and has a stake in Deep Fork Grill and Balliets.

Classen Curve, NH Plaza and the scores of office buildings and other properties are still owned by CHK.  I would expect all of this will be put up for sale in the near future and I doubt we'll see any new construction on the CHK campus any time soon.

Strange they just demolished Glenbrook Centre West, as that 5-story building was in decent shape and certainly worth more than a vacant lot.

----------


## Snowman

> Huh? Where is this news coming from? And their stock was not up 6% today, it was up 4 cents.


Some souses only show the difference over the standard trade hours, +0.04, 0.21%‎. 

It has moved higher in after hours trading, +1.85, 9.75%

----------


## jn1780

I love the language: "philosophical differences " LOL

----------


## rlewis

Maybe this whole debacle ends up as a net plus for OKC.  Chesapeake will continue to get back onto stable financial footing, and then you have an entrepreneur like Aubrey cut loose.  At 53, it's hard to imagine that he'll just ride off into the sunset.  Say what you will about some of his business dealings; he still knows the business very well and has a lot of contacts to draw from.  I can see him starting another O&G company, or like Tom Ward, taking over another one and building it up.  Maybe 5-10 years down the road, OKC may have another big O&G player building a big campus here.

----------


## jn1780

> Definitely don't disagree with anything said. But I don't see their problems ending anytime soon and IMO they probably still need him as a bullet shield when the flurry of lawsuits finally go to trial. He had pretty much been pushed back to an observer in the peanut gallery and had no real power.
> 
> I'm thinking AM knew it was over for him and CHK and just wanted to move on to do the next big thing. For better or worse there's still a lot of people out there that think he's the gold standard of the energy business.


I doubt he would want to separate himself willingly with lawsuits pending. Having lawsuits and investigations aimed at him personally is bad for his self interests.

----------


## Pete

> Maybe this whole debacle ends up as a net plus for OKC.  Chesapeake will continue to get back onto stable financial footing, and then you have an entrepreneur like Aubrey cut loose.  At 53, it's hard to imagine that he'll just ride off into the sunset.  Say what you will about some of his business dealings; he still knows the business very well and has a lot of contacts to draw from.  I can see him starting another O&G company, or like Tom Ward, taking over another one and building it up.  Maybe 5-10 years down the road, OKC may have another big O&G player building a big campus here.


Excellent points.

----------


## ou48A

[QUOTE=rlewis;613928]Maybe this whole debacle ends up as a net plus for OKC.  Chesapeake will continue to get back onto stable financial footing, QUOTE]


Archie Dunham is very competent…. 
That’s probably good news for OKC.

----------


## catch22

> Maybe this whole debacle ends up as a net plus for OKC.  Chesapeake will continue to get back onto stable financial footing, and then you have an entrepreneur like Aubrey cut loose.  At 53, it's hard to imagine that he'll just ride off into the sunset.  Say what you will about some of his business dealings; he still knows the business very well and has a lot of contacts to draw from.  I can see him starting another O&G company, or like Tom Ward, taking over another one and building it up.  Maybe 5-10 years down the road, OKC may have another big O&G player building a big campus here.


Maybe with his next company, they build a tower.

----------


## Teo9969

The only way I see it making CHK more likely for a buy out is that if he's already being let go, then maybe the web of transactions is not as complex as we once thought.

----------


## Teo9969

> Maybe this whole debacle ends up as a net plus for OKC.  Chesapeake will continue to get back onto stable financial footing, and then you have an entrepreneur like Aubrey cut loose.  At 53, it's hard to imagine that he'll just ride off into the sunset.  Say what you will about some of his business dealings; he still knows the business very well and has a lot of contacts to draw from.  I can see him starting another O&G company, or like Tom Ward, taking over another one and building it up.  Maybe 5-10 years down the road, OKC may have another big O&G player building a big campus here.


This was my initial thought as well. The most important thing is obviously CHK staying afloat...but I certainly expect to see Aubrey start something new very very quickly.

----------


## blangtang

This comes from a SEC filing on january 7th.  

here's the link if anyone is bored and wants to read it

EDGAR Pro

I thought it was odd at the time they stuck this clause in the final paragraph at the bottom of the filing, sort of buried it if you know what i mean.

----

 Other Compensation Matters

*The Compensation Committee has also implemented a clawback policy*, modified stock ownership guidelines for executive officers and modified the Companys dividend and voting rights with regard to restricted stock.  *The clawback policy allows the Company to recover certain incentive-based compensation from executive officers in the event that the Company is required to restate any financial statements filed with the Securities and Exchange Commission.*

---
Again, maybe this is nothing, and it wouldn't really affect the day to day operations going forward, but it seemed odd at the time it was filed and now with an "executive" out just 3 weeks later, I have to wonder if this is just boilerplate legalese, or if there may be a restatement of earnings coming, with a clawback.  Wasn't there a big bonus a few years back ?

We shall see.

I hope Aubrey forms some kind of crazy huge hedge fund and builds another campus in some other part of town  :Smile:

----------


## zookeeper

> CHK and McClendon are both great and getting better every day .... did/do you read the annual report? ...   ISS is a joke ... *clearly you have something personal against AM and or CHK*


What a difference a year and a half can make. When MikeOKC was posting what we now know as fact you were smearing him and thought he had a personal problem with Aubrey McClendon. Looking through this thread is eye opening but in the long run, this has got to be the best thing for Oklahoma City.

----------


## onthestrip

Im not sure Aubrey has the kind of cash these days to go buy a smaller O&G company like Tom Ward did. He doesnt own much CHK stock and I dont think he exactly saved much over the years, he was always better at spending money. Will at least make some decent money off the Thunder the next few years. 

Speaking of Ward/Sandridge...Tom Ward better take note of this because in a year he could be in the same boat as Aubrey with his conflicts of interest and greedy CEO practices.

----------


## ou48A

CHK was started with $50,000.

I’m pretty sure Aubrey can find ownership in the oil and NG business if he so wishes.
Not every aspect of the oil & NG business requires billions or even hundreds of millions to get started.

----------


## Teo9969

Furthermore, just because he got outed at CHK does not mean that there are not dozens if not hundreds of eager investors who would love to give him money to start a new company. Say what you want, but he built a monster at CHK and someone at some point is going to reap major rewards for it.

----------


## progressiveboy

> Furthermore, just because he got outed at CHK does not mean that there are not dozens if not hundreds of eager investors who would love to give him money to start a new company. Say what you want, but he built a monster at CHK and someone at some point is going to reap major rewards for it.


 There is a saying that goes like this, "A fool and his money are soon parted".

----------


## BoulderSooner

> Im not sure Aubrey has the kind of cash these days to go buy a smaller O&G company like Tom Ward did. He doesnt own much CHK stock and I dont think he exactly saved much over the years, he was always better at spending money. Will at least make some decent money off the Thunder the next few years. 
> 
> Speaking of Ward/Sandridge...Tom Ward better take note of this because in a year he could be in the same boat as Aubrey with his conflicts of interest and greedy CEO practices.


He is still worth close to a billion

----------


## LuccaBrasi

> Maybe this whole debacle ends up as a net plus for OKC.  Chesapeake will continue to get back onto stable financial footing, and then you have an entrepreneur like Aubrey cut loose.  At 53, it's hard to imagine that he'll just ride off into the sunset.  Say what you will about some of his business dealings; he still knows the business very well and has a lot of contacts to draw from.  I can see him starting another O&G company, or like Tom Ward, taking over another one and building it up.  Maybe 5-10 years down the road, OKC may have another big O&G player building a big campus here.


The way things are going for Tom Ward, he and Aubrey may one day need to hook back up and see if they can do it all over again!

----------


## onthestrip

> He is still worth close to a billion



Yet I get the feeling he couldnt put together $10 million in cash tomorrow morning.

----------


## Skyline

> Chesapeake says it is not for sale: memo
> 
> HOUSTON (Reuters) - The departure of Chief Executive Aubrey McClendon is not an indication that Chesapeake Energy Corp (CHK) is up for sale, according to an email to sent to employees on Wednesday.
> 
> "...the company is not for sale," Chairman Archie Dunham wrote.
> 
> Dunham also said the Chesapeake's board has set a drilling and completion budget of $6 billion.
> 
> *Chesapeake said McClendon will step down on April 1.*


Seriously April 1st, Lol....... April Fool's!

----------


## onthestrip

> The way things are going for Tom Ward, he and Aubrey may one day need to hook back up and see if they can do it all over again!


I get the feeling this Ward/shareholder thing is going to get uglier. Have been reading over some of the statements that Sandridge and TPG Axon mailed out. Ward has got paid a whole lot for a company their size. Not to mention the stock has been in the tank. And cant forget the fact that his family owned companies that bought leases, which in turned sold to Sandridge... Its not looking good for him.

----------


## jn1780

Yeah, I will wait until the investigations and lawsuits are over before I start speculating on what Aubrey's next business will be.

----------


## Teo9969

> Yet I get the feeling he couldnt put together $10 million in cash tomorrow morning.


If he didn't have $10M sitting in the bank I'd be shocked.

----------


## Teo9969

> There is a saying that goes like this, "A fool and his money are soon parted".


Ummm...a lot more people have made money hand over fist because of Aubrey McClendon than have lost money.

----------


## mkjeeves

What became of the wine storage place he was building and then mothballed? Did it get finished, still mothballed or changed to something else?

----------


## Pete

> What became of the wine storage place he was building and then mothballed? Did it get finished, still mothballed or changed to something else?


Construction stopped not long after his infamous margin call in 2008:

----------


## Pete

> A person familiar with the terms of McClendon's departure said it was being treated as "termination without cause," entitling the CEO to some of the most generous benefits laid out in an employment contract that details a wide range of severance scenarios.
> 
> McClendon is entitled to total compensation of about $47 million (29.8 million pounds). That figure includes $11.7 million in total cash compensation based on McClendon's salary and bonus, which will be paid out over a period of four years. It also includes restricted stock awards already given to McClendon that have a value of $33.5 million, the person familiar with the compensation package said.
> 
> He is also entitled to deferred compensation of about $800,000 and personal use of corporate jets that could be worth up to $1 million over four years, the person said.


Chesapeake CEO McClendon steps down after year of tumult | Reuters

----------


## soonerguru

> He is still worth close to a billion


Before or after his stock tanked? Weren't you saying he would be around for a long time and that the investigations wouldn't amount to much, or am I confusing you with another poster?

----------


## soonerguru

> I get the feeling this Ward/shareholder thing is going to get uglier. Have been reading over some of the statements that Sandridge and TPG Axon mailed out. Ward has got paid a whole lot for a company their size. Not to mention the stock has been in the tank. And cant forget the fact that his family owned companies that bought leases, which in turned sold to Sandridge... Its not looking good for him.


Napoleans like Ward and Aubrey sure like to big-time it around town. Gag. Fail.

----------


## BoulderSooner

> Before or after his stock tanked? Weren't you saying he would be around for a long time and that the investigations wouldn't amount to much, or am I confusing you with another poster?


per forbes last march Aubrey McClendon Net Worth | Celebrity Net Worth

----------


## Teo9969

Talked to a higher up at a local energy company (on whose board AKM sits). They say it went like this: 

AKM walked into a meeting and presented to the board the 2013 budget (or maybe 2014...I can't remember). 

Board: "You have to operate the company under the cash flow" 
AKM: "This company will not grow operating under the cash flow"
Board: "You have to operate under the cash flow" 
AKM: "Well then either I need to leave or you all need to leave"
Board "We are not going anywhere"
AKM: "Then I am done"

They also said, that there is 0% AKM is done as a businessman.

----------


## catch22

McClendon unlikely to leave energy industry, analyst says | News OK

According to this he has to stay out of competing business until 2016.

----------


## Rover

I thought they reported at the time he only has a 6 MONTH non compete.

Non-competes are notoriously hard to completely enforce too.

----------


## catch22

> I thought they reported at the time he only has a 6 MONTH non compete.
> 
> Non-competes are notoriously hard to completely enforce too.


6 months from the end of severance payments, which are scheduled to end in 2016. According to that article.

----------


## HangryHippo

That's harsh.  I'm skeptical that Aubrey stays away for four years though...

----------


## OKCTalker

Non-compete agreements are more enforceable when they are specific in terms of activity, geography and duration. That said, I don't think that Aubrey is going into the natgas exploration business. Not many other more established players are doing well in that space right now - he'd be a smart, experienced startup, but needing OPM. Being a bad steward of OPM is what got him into this mess in the first place. 

Besides, he's facing significant legal liability from a variety of directions, and any money judgment could take away anything he's earned. CHK wouldn't indemnify him personally for claims, any personal G/L coverage would be limited, and any attempt to exempt personal assets would be unwound. He'll be fighting legal battles for some time, and some will involve him pointing fingers at CHK, and them pointing them right back at him. 

Net worth? Including contingent liabilities I believe that he's massively underwater, but he's relatively young, smart, charismatic and fighting for his reputation. It'll be a long road.

----------


## jbrown84

> Archie Dunham is very competent. 
> Thats probably good news for OKC.


Not if he has no interest in keeping the company here...

----------


## ou48A

Energy prosperity at work for OKC I hope it can continue.


RIGZONE - Oklahoma City Fears an End to Chesapeake's Largess

Thursday, February 07, 2013

OKLAHOMA CITY - At the 100-acre headquarters of Chesapeake Energy Corp., cranes continue to erect new glass-walled buildings and the company is seeking a sushi chef for what will be the fifth restaurant on its campus.

But the buzz here is that the nation's second-biggest natural-gas producer is cutting back on spending. And that worries some of its 5,000 employees here, as well as local government officials, nonprofit leaders and even some sports fans, all of whom have benefited from the largess of Chesapeake and its co-founder and chief executive, Aubrey McClendon.

Mr. McClendon, a native son of Oklahoma City, was ousted last week by directors insisting on financial austerity. His departure follows Chesapeake's decision to cut in half its charitable contributions, which totaled more than $56 million in 2010 and 2011 combined, within three years and to chop $190 million in overhead within 24 months.

The natural-gas company's finances have suffered from low prices for natural gas, compounded by its heavy spending to find and pump greater amounts of more-lucrative oil.

The company plans to sell assets to raise at least $5 billion this year to pay for its drilling and to reduce debt, which at the end of September exceeded the company's current $13 billion market capitalization.

Directors of local nonprofits, from food banks to arts organizations, that have received donations for years from Chesapeake and from Mr. McClendon say they are worried.

"It's hard not be concerned," said Lori Dickinson, president of the Foundation for Oklahoma City Public Schools, which doles out school supplies and pays for programs for city schoolchildren. Chesapeake accounts for 15% of its budget.

Energy companies, including Devon Energy Corp. (DVN), SandRidge Energy Inc. (SD) and Continental Resources Inc. (CLR), have helped drive an economic expansion here in recent years. The companies have recruited workers from across the country and have built big headquarters. Unemployment in the metro area was 4.7% in December, compared with the national average of 7.8%.

But Chesapeake has taken a leading role in transforming a city that used to be dismissed as a cow town. Its name is on the arena that is home to its professional basketball team, the Thunder, a major source of civic pride. The team reached the finals of the National Basketball Association's championship last year, losing to the Miami Heat.

Mr. McClendon, who helped bring the team from Seattle and owns 19% of it, has pledged to donate to Oklahoma schools the amount of fees Chesapeake pays for naming rights multiplied by his ownership stake in the team for at least this year and last.

"Oklahoma City's national and international perception has changed because of the Thunder," said Jim Couch, the city manager. A framed team jersey, autographed by the players, hangs on the wood paneling of his office.

"It's been pretty public that they're going to shed some assets," Mr. Couch said of Chesapeake. "How that goes and what means for Oklahoma City, I don't know."

Michael Kehs, a Chesapeake spokesman, said: "Our commitment to being a helpful and engaged corporate citizen will continue." Chesapeake employees will continue to volunteer their time local organizations, and the corporation will make financial and in-kind contributions, he added. A spokesman for Mr. McClendon declined to comment.

Mr. McClendon has his own financial issues to contend with. He owed at least $846 million in loans at the end of 2011, according to a regulatory filing in April.

He used most of the proceeds to participate in a perk that allows him to acquire a small stake in every well Chesapeake drills as long as he pays his share of the costs, which totaled $457 million in 2011.

The perk sparked controversy last year after disclosures that Mr. McClendon borrowed from firms that invested in Chesapeake, and he and the board of directors agreed to end the practice next year.

A board review hasn't found any misconduct, the company said last week.

Despite an exit package of almost $50 million, to be paid out over four years, Mr. McClendon's cash needs are likely to remain high. He is again investing in the company's new wells this year. A state filing in January indicated that he and his wife have repaid a 2009 loan from George Kaiser, a Tulsa oil magnate. Mr. McClendon has pledged as loan collateral many of his assets, including a wine collection and a warehouse full of old gasoline pumps and oil memorabilia, and has plans to develop lakefront property in Michigan.

Mr. McClendon's departure, coupled with Chesapeake's spending cuts, have prompted anxiety among some employees, which Chairman Archie Dunham moved to address last week. He told employees in an email that the board isn't planning to eliminate its child-care facility, shut down its 72,000-square-foot gym or sell its campus restaurants.

Except for a recent increase in the gym-membership fee, which the company won't divulge the size of, the flagship campus isn't showing signs of a financial squeeze.

Modern, glass-walled offices are going up next to Chesapeake's red-brick, Georgian-style buildings and will house employees currently working elsewhere in the city. A fifth restaurant called Skyline, will be perched on the top floor and offer a view of downtown six miles away. Chesapeake has posted job openings for a sushi chef and cooks to serve Mongolian and Italian offerings.

But some members of Chesapeake's board, controlled since June by directors nominated by its largest shareholders, have raised eyebrows at the company's amenities. Chesapeake, however, has long argued that they are key to attracting talented employees and maximizing productivity.

Some Thunder fans have speculated Chesapeake's spending diet could hurt the basketball team it sponsors. But the company has a sponsorship agreement that runs for at least a decade under which it pays between $6 million and $7 million a year in sponsorship fees and naming rights to the Chesapeake Energy Arena.

The team is a big hit with Oklahomans like Gary May, who drove an hour to see the Thunder play the Dallas Mavericks here on Monday. The 57-year-old contract driller pumped his fist as the hometown team scored, en route to a 112-91 victory.

Mr. May said he is sorry to see Mr. McClendon leave Chesapeake. But taking in the glitz of the arena, and thinking of his glimpses of Chesapeake's sprawling campus, he marveled at all the funds that went to things other than producing oil and gas.

"There's probably a lot of money spent where it didn't need to be spent," he said.

----------


## CitySlickR

If only nat gas would have stayed high ... sigh

----------


## ou48A

> Not if he has no interest in keeping the company here...



Why do you say that?
We have other energy companies doing well enough in OKC.

----------


## HangryHippo

I am quite worried that Archie will want to move CHK to a bigger city.

----------


## BoulderSooner

> I am quite worried that Archie will want to move CHK to a bigger city.


no chance

----------


## onthestrip

This part from that article makes me really question how much Aubrey is actually worth and whether he really could put together a few million in cash in a short time. Guess it doesnt much matter really but it makes me think that Aubreys best days are behind him and I question whether he will be much of a player in the oil and gas business in the future.

_Mr. McClendon has his own financial issues to contend with. He owed at least $846 million in loans at the end of 2011, according to a regulatory filing in April.

 He used most of the proceeds to participate in a perk that allows him to acquire a small stake in every well Chesapeake drills as long as he pays his share of the costs, which totaled $457 million in 2011._

----------


## SharkSandwich

I heard there were some layoffs today.  Not sure how widespread.

----------


## warreng88

One of the biggest problems with Chesapeake as with a lot of larger organizations is the lack of communication between management and employees. Here is the what happened with me while I worked there. 

I started employment at CHK on March 7, 2011 in the lease records group. I was given my work by a coordinator and had to give my work back to them for them to check. I reported to the supervisor who reported to the Lease Records Supervisor but the coordinators also reported to the supervisors. At one point in time, we were told we could go and work elsewhere and make more money, but would have to do more work (duh!) 

Everything you ever heard about CHK is true: they worship Aubrey, you work your tail off, but the benefits are amazing. Every other week they had a party on the lawn with free all you can drink beer, wine and all you can eat food. The fitness center was easily the best I have ever seen. 72,000 square feet with tanning booths, two cardio rooms, a full basketball court, half basketball court, a golf simulator, rock climbing walls, sauna, lap pool, squash courts, spin room and a very impressive weight room. The restaurants were top notch and cheap. 

My direct supervisor was let go in September of 2012. I was pulled into my new supervisor's office the next day and was told all the things I had done wrong since I started. No "good job on this, this is where you can improve." I was then told this was being done to all the people she was taking on. I checked with them and that was not true. In November, I was told I was making too many mistakes. I told her I never got the work that was wrong back so I didn't know I was making any mistakes. She told me she would make sure I got it all back so I could make sure I didn't make the same mistakes. On December 21st, I was pulled in for my semi-annual review and was again told I was making too many mistakes and would need to stop making them or disciplinary action would be taken. I again told her I had not gotten anything back so i didn't know what to correct. I then nonchalantly asked if I should start looking for another job and she nodded, but said there would be enough basic work to keep me there for a while. 

We were off on Christmas eve and day, were closed on the day after due to the storm and I had already planned on taking off the Friday, so I only worked Thursday the week after Christmas. We were off on New Year's Eve and New Year's Day and my wife got food poisoning on New Year's Day so I was up all night with her. They have something called flex time where if you have an appointment or come in late, you can make it up later that week so I got to work at 10 am. Around 1:00 I was called into my supervisors office to tell me I was released from my employment. So, a day and a half after I was told there would be enough basic work to keep me around, I was let go. I am not sure if she was lying to me at the time of the review or they had to make cuts after the first of the year, but either way a reason would have been nice even though we are a right to work state and I don't have to be given a reason to be let go. 

I start my new job at a bank making 20% more than what I was making at CHK tomorrow.

----------


## Pete

Thanks for sharing, Warren.  Really sorry you lost your job but it sounds like it may have been a blessing in disguise.


I've been around companies like Chesapeake before, mainly tech companies out here in California.  Many of them show up on the "best places to work" lists for a while simply because they are very generous with pay and perks.  But the truth is, companies that go overboard with these things always seem to have something to hide.

All is fantastic until that inevitable first bump where they can't simply keep throwing money at people and problems, and then the pressure gets turned way up, the layoffs start and suddenly in many ways they are far worse employers than those that are simply responsible businesses that can maintain an even keel -- and thus provide continual, steady employment over a long period of time.

I've seen this happen so many times that I am now very suspicious of companies that lavish their employees.  My first thought is, "Why are they trying so hard?  What are the problems they are seeking to mask?"

----------


## OKCTalker

Warren - Thanks for sharing your story, which echoes those from others who work/have worked for CHK. There are long lists of what they offer employees, what they expect in return, and of other people who are willing to take your job. 

It's unfortunate that you weren't given the opportunity to improve. Most employees want to succeed, as do their wise employers and managers. Even if there are 100 people standing in line for your job, a wise manager will do what he/she can to make it work. 

Greener pastures. Good luck at the bank!

----------


## HangryHippo

Well, this is some much-needed good news for CHK.

----------


## Just the facts

So now they are out a really good CEO for no reason.  What a bunch of morons.

----------


## Pete

Misconduct and poor judgment are two totally different things.

----------


## Just the facts

> Misconduct and *poor judgment* are two totally different things.


Never understimate someone's desire for short-term gains at your long-term expense.

----------


## onthestrip

> So now they are out a really good CEO for no reason.  What a bunch of morons.


You probably think the same for Tom Ward too.

----------


## OKCTalker

_"Separately, Chesapeake said a board review concluded that the company didn't violate antitrust laws with its 2010 leasing activities in Michigan, which have been the focus of an inquiry by the U.S. Department of Justice."_

I think that the USDOJ, the Michigan Attorney General, a grand jury, jury and judge will want to have a say in that.

----------


## HangryHippo

> _"Separately, Chesapeake said a board review concluded that the company didn't violate antitrust laws with its 2010 leasing activities in Michigan, which have been the focus of an inquiry by the U.S. Department of Justice."_
> 
> I think that the USDOJ, the Michigan Attorney General, a grand jury, jury and judge will want to have a say in that.


Undoubtedly, but this is good news and hopefully the DOJ comes to the same conclusion.

----------


## Just the facts

> You probably think the same for Tom Ward too.


I'm still waiting for the facts to come in but I suspect they will find no wrong doing as well.  I think it is some Wall Street hacks trying to make a quick buck by manufacturing scandal so they can manipulate stock prices.  THAT is what should be investigated.

----------


## onthestrip

> I'm still waiting for the facts to come in but I suspect they will find no wrong doing as well.  I think it is some Wall Street hacks trying to make a quick buck by manufacturing scandal so they can manipulate stock prices.  THAT is what should be investigated.


Facts to come in...? Have you not been reading the sandridge thread and the articles in it? Just like Aubrey, there might not necessarily be anything illegal but there is certainly wrongdoing and some highly questionable practices. 

And are some Wall Street hacks behind this? Maybe, maybe not. But you dont see them going after Harold Hamm, Larry Nichols or any Tulsa energy companies. There is a reason they went after Aubrey and Tom, its because they are basically stealing from shareholders. How else do you explain Ward getting paid $70+ million the last 3 years even though the stock has tanked. Or the fact that Ward has unlimited usage on company jets. Or the fact that Ward made $260,000 last year from Sandridge when they bought his "personal" Thunder tickets. Or they fact that his board made of up of his pals are paid the same as Exxons, who is a larger company by a factor of 143. Or the big one, the fact that his sons company (who up until 2 years ago had the same address as Sandridge) holds 478,000(!) acres in the same play as Sandridge does. Not to mention the acreages his son has already sold to sandridge.

Im a Sandridge shareholder, and even being a lifelong OKC area resident Im inclined to vote for a board shake up, even if it could mean some bad news for OKC. I just cant tolerate blatant greed and theft.

----------


## Just the facts

Maybe you should sell your stock in Sandridge.

----------


## Teo9969

> So now they are out a really good CEO *for no reason.*  What a bunch of morons.


There is a reason, and it has nothing to do with all the "impropriety" that Reuters and other media tried to assign to AKM. CHK is out a really good CEO because the new board can't stomach the amount of leverage AKM believes in using to run a company. That's really not that surprising for a board who has to answer to shareholders of a company the size of CHK.

----------


## blangtang

The earnings release is tomorrow in the AM, might find out some new stuff...

----------


## jn1780

> There is a reason, and it has nothing to do with all the "impropriety" that Reuters and other media tried to assign to AKM. CHK is out a really good CEO because the new board can't stomach the amount of leverage AKM believes in using to run a company. That's really not that surprising for a board who has to answer to shareholders of a company the size of CHK.


True, just like how someone loosing all their money at Riverwind isn't illegal. Doesn't mean I would want them running my business.

----------


## dankrutka

> True, just like how someone loosing all their money at Riverwind isn't illegal. Doesn't mean I would want them running my business.


I'll never understand why "losing" is misspelled "loosing" so often. Like "lead" instead of "led." Sorry. Pet peeve.

----------


## zookeeper

It's funny how so many seem to believe McClendon has somehow been vindicated. There was plenty to all those reports. Since when do we believe internal investigations? Reuters take on this inside sweetheart and Goodbye Aubrey investigation Chesapeake probe finds no intentional CEO misconduct | Reuters
Too many Chesapeake homers in this thread now trying to get you to forget what should not be forgotten.
McClendon's ouster was the best thing for Chesapeake and Oklahoma City. Reuters may have saved our city in the long run.

----------


## OKCTalker

If this board existed in 1982, there would be people singing the praises of Beep Jennings and Bill Patterson, and talking about all the good things that they did.

----------


## Pete

It should be noted that the recent $1B sale of assets to Sinopec came at only about one-third the value Chesapeake had placed on them last year.

Just goes to show how incredibly far off the McClendon regime was off on so many things.

----------


## Pete

Chesapeake, CEO McClendon under SEC investigation
Reuters – 42 minutes ago

(Reuters) - Chesapeake Energy Corp said the U.S. Securities and Exchange Commission was investigating the company and Chief Executive Aubrey McClendon and had issued subpoenas for information and testimony.

The company said on Friday it was advised by the SEC in December that an informal inquiry, launched by the regulator in May, was continuing as an investigation.
Regulators in the agency's Fort Worth office are looking into a controversial program that grants McClendon a share in every well that Chesapeake drills.

The company said in a regulatory filing that it was also responding to related inquiries from other regulatory agencies and self-regulatory organizations.

----------


## HangryHippo

Well, ****.

----------


## soonerguru

> Chesapeake, CEO McClendon under SEC investigation
> Reuters  42 minutes ago
> 
> (Reuters) - Chesapeake Energy Corp said the U.S. Securities and Exchange Commission was investigating the company and Chief Executive Aubrey McClendon and had issued subpoenas for information and testimony.
> 
> The company said on Friday it was advised by the SEC in December that an informal inquiry, launched by the regulator in May, was continuing as an investigation.
> Regulators in the agency's Fort Worth office are looking into a controversial program that grants McClendon a share in every well that Chesapeake drills.
> 
> The company said in a regulatory filing that it was also responding to related inquiries from other regulatory agencies and self-regulatory organizations.


Well thanks a lot Aubrey. This development is a 10.0 on the Richter Scale.

----------


## Pete

And don't forget there is an on-going grand jury investigation in Michigan regarding possible CHK price fixing.


Long after Aubrey steps down one month from today, Chesapeake is still going to be sorting out these messes.

----------


## soonerguru

Interesting that Chesapeake waited three months to report the investigation. They've known about it since December. Clearly the "there was nothing there" argument is bogus.

----------


## soonerguru

> And don't forget there is an on-going grand jury investigation in Michigan regarding possible CHK price fixing.
> 
> 
> Long after Aubrey steps down one month from today, Chesapeake is still going to be sorting out these messes.


If Chesapeake is still around...

----------


## HangryHippo

What is the likely outcome of the SEC investigation if it finds intentional wrongdoing?

----------


## HangryHippo

Was told there were more layoffs at CHK today.

----------


## BoulderSooner

> Interesting that Chesapeake waited three months to report the investigation. They've known about it since December. Clearly the "there was nothing there" argument is bogus.


investigation just started  it was an inquiry before

----------


## Easy180

Chesapeake and Sandridge having big problems at the same time...If both turn out badly it would be a huge hit to the metro...There just aren't many (more like any) 60-100k jobs up for grabs out there

----------


## soonerguru

> investigation just started  it was an inquiry before


Yes. I know. My point was if you read the article Chesapeake was informed about the formal investigation in December, so they've known about this for months, but waited until yesterday to come clean to their share holders. It's quite clear Aubrey's departure had something to do with this.

----------


## soonerguru

> Chesapeake and Sandridge having big problems at the same time...If both turn out badly it would be a huge hit to the metro...There just aren't many (more like any) 60-100k jobs up for grabs out there


There aren't a lot of those jobs, but there are other employers who pay better than that in OKC. You're right that it would be a big hit to OKC, and, by the way, so will this sequester BS if the arbitrary cuts are allowed to happen.

----------


## jn1780

> Chesapeake, CEO McClendon under SEC investigation
> Reuters – 42 minutes ago
> 
> (Reuters) - Chesapeake Energy Corp said the U.S. Securities and Exchange Commission was investigating the company and Chief Executive Aubrey McClendon and had issued subpoenas for information and testimony.
> 
> The company said on Friday it was advised by the SEC in December that an informal inquiry, launched by the regulator in May, was continuing as an investigation.
> Regulators in the agency's Fort Worth office are looking into a controversial program that grants McClendon a share in every well that Chesapeake drills.
> 
> The company said in a regulatory filing that it was also responding to related inquiries from other regulatory agencies and self-regulatory organizations.


Someone tell the SEC an investigation is not needed. Chesapeake already conducted an investigation and determined it was a Reuters conspiracy. Lol

Hopefully the SEC will come up with the same conclusion or just focus in on Aubrey and leave Cheaspeake alone.

----------


## warreng88

Burns Hargis resigns from CHK board and is replaced by former Pride International Inc. CEO Louis A. Raspino, who worked with Archie Dunham (current Board Chairman) when the former Conoco executive was a member of the company's board.

Burns Hargis resigns from Chesapeake Energy board | News OK

----------


## OKCTalker

I'll defend Burns Hargis as a good man with a long history of doing good things in our state, but who didn't resign from CHKs board when he should have. This is a reminder that those serving on the boards of public companies have a fiduciary duty to the shareholders, and that sometimes you have to say no to the founder CEO who hired you, even if that risks losing substantial board compensation, jet shares and perks.

----------


## soonerguru

> I'll defend Burns Hargis as a good man with a long history of doing good things in our state, but who didn't resign from CHKs board when he should have. This is a reminder that those serving on the boards of public companies have a fiduciary duty to the shareholders, and that sometimes you have to say no to the founder CEO who hired you, even if that risks losing substantial board compensation, jet shares and perks.


I'm wondering if Hargis and others face any criminal liability from the ongoing SEC matters.

----------


## Pete

The Aubrey McClendon era at Chesapeake has ended.

Originally, they had said a new CEO would be announced before he left, but clearly that isn't going to happen now.


Outgoing CEO McClendon bids Chesapeake's Oklahoma City workers farewell
Outgoing CEO Aubrey McClendon reassured Chesapeake Energy workers the company is in good hands.

----------


## Pete

Two days after Aubrey steps down, two of his closest execs are forced out.  Interestingly, both Hood & Price were very involved in all the commercial real estate dealings.

Very curious considering the new CEO is yet to be named.



Two of Chesapeake’s executives to leave
By Sarah Terry-Cobo 
Oklahoma City energy reporter; 405-278-2849; sarah.terry-cobo@journalrecord.com; @JRSarahTC	
Posted: 10:06 AM Wednesday, April 3, 2013


OKLAHOMA CITY — Two high-level Chesapeake Energy employees will soon the company. Thomas Price, senior vice president of corporate development and government relations, has worked with the company since 1992 and was a consultant since Chesapeake’s inception. Henry Hood, senior vice president of land, has worked for the company since 1995.

In an email to employees, acting CEO Steven Dixon announced the news.

“It is with mixed emotions that I announce that Henry Hood and Tom Price – two of our most long tenured executives – will be leaving the company on May 3,” Dixon wrote. “They have been valued members of our leadership team and have played key roles in the historic success of our company.”
Price was in a meeting and not immediately available for comment.

Dixon also announced that Martha Burger would lead an initiative in the land department that would, “encompass a comprehensive review and analysis of the entire function.”

According to the email, Michael Kehs and his strategic media and marketing/communications teams, and Taylor Shinn, with his market development team, would now report to Jeff Mobley, senior vice president of investor relations and research. Dixon announced that Paul Hagemeier, vice president of environment, health and safety, and the corporate development and government relations teams led by Vice Presidents Scott Rotruck, Kevin McCotter and Julie Wilson would report to Jim Webb, along with Jamie Maddy and Sarah Gainer.

Thursday was Chesapeake CEO and co-founder Aubrey McClendon’s last day.


Read more: Two of Chesapeake?s executives to leave | The Journal Record

----------


## OKCTalker

Hood was reassigned last year when James Webb was hired from McAfee & Taft to be the new SVP and senior legal counsel. It was - and is - thought that Webb's litigation experience is a better fit for what lies ahead for CHK. You can't say this was unexpected. 

With land being assigned to Martha Burger who will "lead an initiative" that would "encompass a comprehensive review and analysis of the entire function," expect big changes. 

The news hasn't yet been picked up by the WSJ, Reuters or Bloomberg, and the stock is down almost 3% on the day.

----------


## Pete

As I mentioned, very interesting such a big shakeup would occur before a new CEO was hired.

It seems the new board and chairman really wants to get things moving and were just waiting for Aubrey to leave so they could start implementing their plan.


They still have $6 billion in assets to shed this year as their stated goal, so much more change is coming and fast.

----------


## HangryHippo

Regarding Webb over Hood, that makes a lot of sense.

Other than selling off excess property and halting their overpriced purchases, what big changes do you think we'll see come out of Burger's initiative?

----------


## coov23

Economists and business experts are predicting another oil and gas boom soon. Obviously, oil is still booming, but most think CNG is on the verge of a surplus shortage. Meaning, it's going to continue to rise fast. Some say 14.00 btu by next April. Wow! 

Seeking Alpha

----------


## tillyato

> Economists and business experts are predicting another oil and gas boom soon. Obviously, oil is still booming, but most think CNG is on the verge of a surplus shortage. Meaning, it's going to continue to rise fast. Some say 14.00 btu by next April. Wow! 
> 
> Seeking Alpha


I would love to see $14/mcf next year, but have no idea what that guy is thinking with a prediction like that. I haven't seen anything that would warrant those kinds of prices, we will be lucky to be at $6-7/mcf by April 14 IMHO.

----------


## Pete

Nat Gas almost HAS to come up off the floor eventually, although Chesapeake and SandRidge themselves have played a big role in the oversupply.

Hopefully both companies can hang in there, continue tightening their belts and diversifying, then ultimately reap the benefits of their huge gas volumes.

----------


## Bellaboo

Last May, Natural gas contracts hit $ 1.99 per thousand. The May 13 futures contract is $ 4.04 today......

----------


## tillyato

I agree that natural gas has nowhere to go but up, but (I think) it will be a slow steady climb over the next decade rather than a big jump in the next couple of years. I just don't see how it would possibly get to over $10/mcf by this time next year, but certainly wouldn't complain if it did. $6/mcf in 1Q 14 would be 50% higher than today's prices, which are already significantly higher than a year ago.

----------


## ou48A

The switch to more electrical generation has helped NG prices recover to present levels. The increased use of NG has displaced large amounts of coal, but record amounts of coal are now being exported.
Even though there is far less drilling for dry NG there will be large amounts of NG associated with oil shale / liquids production that will be coming on line that will be impact NG prices for a considerable length of time.

As much as they reasonably can (they are very late to this part of the game) CHK and SD need to continue to become more diversified by producing more crude oil. There are still good opportunities for both in the energy transportation sector IMHO and that’s how they could reinvent their companies.

----------


## tillyato

> As much as they reasonably can (they are very late to this part of the game) CHK and SD need to continue to become more diversified by producing more crude oil. There are still good opportunities for both in the energy transportation sector IMHO and that’s how they could reinvent their companies.


SD is at least in a good position with its (hopefully) liquids rich acreage in the Missisippi Lime. It better be rich, since SD now more or less has all of their eggs in one basket with that play. Unfortunately, as part of its divestitures CHK has been forced to sell some of its best liquids rich assets. The transition to diversification will be a longer road for CHK, but getting gas prices up to the $6/mcf level would be a huge boost for them while they are making the transition.

----------


## ou48A

> SD is at least in a good position with its (hopefully) liquids rich acreage in the Missisippi Lime. It better be rich, since SD now more or less has all of their eggs in one basket with that play. Unfortunately, as part of its divestitures CHK has been forced to sell some of its best liquids rich assets. The transition to diversification will be a longer road for CHK, but getting gas prices up to the $6/mcf level would be a huge boost for them while they are making the transition.


I hear mixed things about the liquids rich acreage in the Mississippi Lime.

----------


## BoulderSooner

judge dismisses lawsuit against CHK 

Judge dismisses shareholder lawsuit against Chesapeake | News OK

----------


## Just the facts

> judge dismisses lawsuit against CHK 
> 
> Judge dismisses shareholder lawsuit against Chesapeake | News OK


That's what happens when you go to court with nothing but a news article as evidence.

----------


## ou48A

> The switch to more electrical generation has helped NG prices recover to present levels. The increased use of NG has displaced large amounts of coal, but record amounts of coal are now being exported.
> Even though there is far less drilling for dry NG there will be large amounts of NG *associated with oil shale / liquids production* that will be coming on line that will be impact NG prices for a considerable length of time.
> 
> As much as they reasonably can (they are very late to this part of the game) CHK and SD need to continue to become more diversified by producing more crude oil. There are still good opportunities for both in the energy transportation sector IMHO and that’s how they could reinvent their companies.




To follow up on this^ post.
This discusses the NG that is associated with oil and liquids. 
Because there is so much bonus NG I don’t believe we will see significant NG prices increases form where we are anytime soon. The best new hope I see for prices is if the regulators start allowing more LNG exports.


3 Regions Where Natural Gas Production Is Growing (CHK, KOG)
April 10, 2013 | 

If you haven't noticed yet, natural gas prices have started to head higher. A combination of factors, including a surprisingly cold March, have led to resilient demand. As prices have inched up, two top Wall Street banks have seen enough momentum to raise their 2013 price target for natural gas. Morgan Stanley's price forecast was bumped up by 7% to $3.93 per million British thermal units, or MMBtu, while Goldman Sachs raised its forecast from $3.75 per MMBtu all the way to $4.40 per MMBtu. 

That's good news for those companies in regions where natural gas production is actually growing. Overall since the end of 2011, North American dry shale gas production has risen by 9.95% to 27.2 billion cubic feet of production per day as of the beginning of this past February. This rise has been driven primarily by production growth at three big plays. Let's take a look.

*Eagle Ford* 
While not known for natural gas, the Eagle Ford Shale has actually seen a 43.12% pop in natural gas production according to data from the Energy Information Administration, or EIA, over the past year. *Most of this gas is associated with oil and liquids*, as fewer companies are drilling in the dry gas window at the moment.

 For example, Chesapeake Energy's (NYSE: CHK  ) core acreage is in the sweet spot of the oil window. Despite that, 19% of the company's fourth-quarter production was natural gas. As Chesapeake increases its overall production, natural gas production increases as a byproduct of its liquids-focused drilling. Further, as the nation's No. 2 gas producer, Chesapeake is one of the biggest beneficiaries of higher gas prices.
*
 Marcellus* 
According to the EIA, natural gas production out of the Marcellus jumped 55.28% over the past year. Top producer, Range Resources (NYSE: RRC  ) , produced a total of 146 Bcf of natural gas last year. That production easily exceeded that of number two producer EQT's (NYSE: EQT  ) 103 Bcf of natural gas production last year. 
These two companies hold one thing in common: Both are among the lowest-cost producers of natural gas in the country, which gives them a competitive advantage to make money when most of their competitors cannot. Investors in these low-cost producers have been served well as both have returned around 40% over the past year. 

*Bakken*
 While the Bakken is known for its oil, *natural gas production skyrocketed by 94.38%* according to data from the EIA. Part of the reason more gas is being produced is because less of it is being flared -- instead, it's being put into pipelines. Most of this infrastructure simply didn't exist until recently and now that companies have a way to get gas to market, they're able to sell instead of flare.

The impact of this reduced flaring is clearly evident at Kodiak Oil & Gas (NYSE: KOG  ) . In 2011 the company produced 1,329 MMcf of gas, but flared 807 MMcf. That's 61% of the gas! Last year the company produced 6,613 MMcf of natural gas and while it flared 3,311 MMcf, down to 50% of what was produced. Meanwhile, the overall amount of gas that hit the market jumped a staggering 533%. 

Kodiak isn't the only company growing its associated gas production. Over the past two years, *Continental Resources (NYSE: CLR  ) has grown its overall production faster than its peers, so that it's now the top producer in the play.* While its production is heavily weighted toward oil, which accounted for 72% of production, *it's still growing natural gas production as a byproduct of its oil growth.* 

The Foolish bottom line
 There's one main theme that runs throughout: Companies will produce more natural gas if it's profitable to do so. For some, that's being the low-cost producer giving them the ability to profit when others cannot. For the rest, *natural gas production growth happens naturally because of its associated with more profitable oil and natural gas liquids.* Given the economics of these regions, its not surprising to see this increase in natural gas production. 


As the nation's second-largest natural gas producer, Chesapeake Energy is a name to watch as gas prices head higher. Not only that but energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company's management and spiraling debt picture. While the debt issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy.

----------


## tillyato

> To follow up on this^ post.
> Because there is so much bonus NG I don’t believe we will see significant NG prices increases form where we are anytime soon. The best new hope I see for prices is if the regulators start allowing more LNG exports.


+1. LNG exports are the best strategy for mid term (5-10 years out) increases in NG prices in North America, and will add tens of thousands of jobs domestically along with an increase in the GDP in the hundreds of billions of dollars per year. Domestic demand alone cannot keep up with the rate of increasing supplies that will continue to be produced in the coming years. I just  hope DOE approves the new construction of LNG export terminals soon, before every other major NG producing country gets a head start on us. This is one of many areas where politics in the regulation of the energy industry really hurts Oklahoma companies.

----------


## fromdust

> Nat Gas almost HAS to come up off the floor eventually, although Chesapeake and SandRidge themselves have played a big role in the oversupply.
> 
> Hopefully both companies can hang in there, continue tightening their belts and diversifying, then ultimately reap the benefits of their huge gas volumes.


Sure Sandridge has diversified....straight to oil.

----------


## Just the facts

I see Chesapeake has decided that their CEO should focus primarily on the stock price.

Chesapeake Energy outlines new pay plans | News OK




> The directors last week asked shareholders to approve a plan they say would tie 91 percent of executive pay to shareholder interest, with only 46 percent of the pay guaranteed.

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## HangryHippo

This seems like encouraging news for Chesapeake:

Chesapeake announces first-quarter profit | News OK

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## ljbab728

$100M worth of good new for Chesapeake.

Federal judge sides with Chesapeake Energy Corp. in bond lawsuit | News OK




> A federal judge in New York sided with Chesapeake Energy Corp. on Wednesday in its dispute with a bank over the early redemption of bonds issued in 2012, a decision that could save the energy company more than $100 million.

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## coov23

Chesapeake named new CEO. The bad part? He's international vice-president of the company that bought Kerr-McGee and moved them to Houston. Yikes.

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## dcsooner

> Chesapeake named new CEO. The bad part? He's international vice-president of the company that bought Kerr-McGee and moved them to Houston. Yikes.


So when does Chesapeake get bought by Anadarko? OKC will lose again in the world of Oil and Gas.  When will this city learn about diversification to offset corporate moves. Once that happens ( takeover) momentum in OKC will slow.  Thanks Archie

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## coov23

Hook. Line and sinker with good ole, DC. Sky is falling! If okc could only be as good as DC. What happens if the federal gov't falls there? Don't tell me that's far fetched. It's not. Especially, with the budget issues.

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## Teo9969

> So when does Chesapeake get bought by Anadarko? OKC will lose again in the world of Oil and Gas.  When will this city learn about diversification to offset corporate moves. Once that happens ( takeover) momentum in OKC will slow.  Thanks Archie


CHK bought by a <$50B company?

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## coov23

Btw, who's Archie? You mean Aubrey? The guy that has already started another business? Oh, and okc has diversified. They've diversified a lot. Your doom and gloom bit is getting old.

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## HangryHippo

> Btw, who's Archie? You mean Aubrey? The guy that has already started another business? Oh, and okc has diversified. They've diversified a lot. Your doom and gloom bit is getting old.


Archie Dunham is the non-Executive Chairman of Chesapeake Energy and the man that probably had the ultimate say in who became the new CEO.  And OKC hasn't diversified nearly as much as they need to, but we're getting better in this regard.  And Lawler's history is a legitimate cause for concern for some.  That's fine if it worries DC.  It doesn't have to worry you.

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## dcsooner

> Hook. Line and sinker with good ole, DC. Sky is falling! If okc could only be as good as DC. What happens if the federal gov't falls there? Don't tell me that's far fetched. It's not. Especially, with the budget issues.



You better hope the federal government doesn't fall because last I heard Tinker AFB hires about 20K, Ft Sill is what keeps Lawton alive not to mention the alltus AFB, FAA etc

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## adaniel

Really poor understanding of what is going on here. 

Kerr-McGee was sold under differing circumstances (it was a shell of its former self by the time Anadarko purchased it) and was the path chosen by their shareholders. The fact that it is the same guy means nothing. Chesapeake couldn't be sold even if it wanted to. Things have stabilized there but nobody is touching that company with a 6 foot pole. There is far more pressure to sell off assets to pay down debt and refocus their drilling program. I would frankly be more worried about any affects from that.

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## dcsooner

> Archie Dunham is the non-Executive Chairman of Chesapeake Energy and the man that probably had the ultimate say in who became the new CEO.  And OKC hasn't diversified nearly as much as they need to, but we're getting better in this regard.  And Lawler's history is a legitimate cause for concern for some.  That's fine if it worries DC.  It doesn't have to worry you.


Yea remember the Company FOUNDED in Oklahoma like Kerr McGee? Phillips 66, that was was bought/merged with Conoco to make ConocoPhillips in HOUSTON?
Although Archie was Oklahoma born, his pedigree now is distinctly, Houston.

 He was a Director of the American Petroleum Institute, the U.S.-Russia Business Council and the *Greater Houston Partnership*. He served on the board of the Memorial Hermann Healthcare System *in Houston*, the board of visitors of M.D. Anderson Cancer Center *Houston* the board of Trustees of the *Houston* Symphony, the *George Bush Presidential Library* and the Smithsonian Institution. He served as a Trustee of *Houston Grand Opera*

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## warreng88

> Btw, who's Archie? You mean Aubrey? The guy that has already started another business? Oh, and okc has diversified. They've diversified a lot. Your doom and gloom bit is getting old.


Archie Dunham is the Independent Non-Executive Chairman for CHK. He was appointed in June of last year when Aubrey was stripped of his Chairman title.

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## HangryHippo

> Really poor understanding of what is going on here. 
> 
> Kerr-McGee was sold under differing circumstances (it was a shell of its former self by the time Anadarko purchased it) and was the path chosen by their shareholders. The fact that it is the same guy means nothing. Chesapeake couldn't be sold even if it wanted to. Things have stabilized there but nobody is touching that company with a 6 foot pole. There is far more pressure to sell off assets to pay down debt and refocus their drilling program. I would frankly be more worried about any affects from that.


Are you not making the case with your own post that CHK will not be what it once was by the time this is all over?  Doesn't that lend credence to the idea that it could be sold?  There were most certainly interested parties, but CHK's debt load was keeping them at bay.  Once CHK is a shell of its former self (debt gone, smaller asset core) doesn't that make them an even more attractive target?  I'm not saying that the new CEO is here to move them to Houston as a part of this conspiracy theory, but to totally dismiss the idea that CHK might leave seems a little brash.  Of course, Kerr McGee's shareholders approved and we don't know what CHK's would do, but you get the idea.

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## ljbab728

In case someone doesn't know, it was reported that Chesapeake has donated $1M today to the Red Cross to assist with recovery efforts.  Kudos to them.

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## HangryHippo

> In case someone doesn't know, it was reported that Chesapeake has donated $1M today to the Red Cross to assist with recovery efforts. * Kudos to them.*


Indeed.

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## OKCTalker

CHKs stock price is closing in on its 52-week high of $22.97 (currently $22.48). The 12 month graph looks like the Vomit Comet's altitude profile during a training mission, but the company seems to be making some headway.

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## ou48A

More and more of CHK's revenue is now coming from liquids, which helps.
Some investors are finally liking the future prospects of natural gas prices and they have got to like a better managed company that comes without the turmoil at the top. 
A well run profitable company is always in our city’s / states best interest.

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## Pete

Looks like things have stabilized at Chesapeake:

Chesapeake touts fiscal discipline as earnings rise | News OK




> Lawler said the company will exercise greater fiscal discipline by bringing its capital expenditures in line with its cash flow.
> 
> He said ongoing asset sales have raised enough money to fund all of Chesapeake's planned capital expenditures this year, but additional sales still are possible.

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## Teo9969

CHK is up almost 7% today. $24.89...haven't seen $25 since the start of the 2012 descent. Hasn't seen $30 since 2011

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## pw405

I've heard rumors of layoffs swirling about... anybody know if there is truth to those? Sounds like the new CEO has helped boost investor confidence, which is only good for OKC!

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## BillyOcean

The "Bobs" will be done with their evaluation in October. Expect heads to roll then. I am shocked at how long they have held off with major layoffs.

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## mugofbeer

> I've heard rumors of layoffs swirling about... anybody know if there is truth to those? Sounds like the new CEO has helped boost investor confidence, which is only good for OKC!


Per relative who works for CHK, there are definitely layoff rumors going around.

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## Pete

I'm curious to know how many employees they have now, as they've sold off lots of assets and their entire midstream entity.

The last reported 3,200 in OKC but I'm sure that number is down considerably.

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## ljbab728

This speaks well to Chesapeake's stability.

http://www.oklahoman.com/article/3869354?embargo=1

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## warreng88

Wow. Just wow...

_Four top Chesapeake Energy Corp. executives are leaving the company, as part of an ongoing reorganization effort, CEO Doug Lawler said Monday.

Steve Dixon, chief operating officer and executive vice president of operations and geosciences; Jeff Fisher, executive vice president of production; Steve Miller, senior vice president of drilling and Martha Burger, senior vice president of human and corporate resources “are leaving the company to pursue other opportunities,” Lawler wrote in an email to company employees Monday afternoon._

Four executives leaving Chesapeake Energy Corp. | News OK

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## coov23

Is this the beginning of the end for Chesapeake?

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## warreng88

> Is this the beginning of the end for Chesapeake?


I hope not, but it kind of sounds like it. Maybe they are just trying to shed those seven figure salaries and pump some new blood in there. At least that is what I keep telling myself.

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## HangryHippo

> Is this the beginning of the end for Chesapeake?


Sure looks that way.

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## PWitty

> Sure looks that way.


You can look at it from a lot of different perspectives, but those four are the last remaining VP's and Executives who were at Aubrey's side as he grew the company to what it is today. IMO Doug is just continuing along with what the new board had already been doing which was distance the company as far away from Aubrey as possible to make the shareholders happy. It's not uncommon for a new CEO to bring in his own guys. It's no different than a head basketball/football coach bringing in his own staff. I mean did anyone honestly expect all the VP's from Aubrey's tenure to remain??

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## PhiAlpha

> Sure looks that way.


Ok doomsday squad...this is not the end of CHK, but a salary dump as well as a play for Lawler to hire more of his people. Martha Burger was making a 7 figure salary as the VP of HR... which is very atypical of most normal oil and gas companies. I'm sure the others had overly inflated salaries as well. They can replace them with equally qualified employees and pay them much less. I had been hearing rumors that at least Steve Dixon and Martha Burger would be departing since Aubrey announced his resignation. 

Stop looking at every single change as if it's the end of CHK, there are going to be a lot of them as they try to slim down and refocus, so fasten your seatbelt. There will likely be layoffs and more executives departing at both CHK and Sandridge. It sucks but that's what happens when new CEOs take over poorly performing, oversized companies.

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## Rover

Out with the old cronies, in with the new ones.

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## BillyOcean

> Ok doomsday squad...this is not the end of CHK, but a salary dump as well as a play for Lawler to hire more of his people. Martha Burger was making a 7 figure salary as the VP of HR... which is very atypical of most normal oil and gas companies. I'm sure the others had overly inflated salaries as well. They can replace them with equally qualified employees and pay them much less. I had been hearing rumors that at least Steve Dixon and Martha Burger would be departing since Aubrey announced his resignation. 
> 
> Stop looking at every single change as if it's the end of CHK, there are going to be a lot of them as they try to slim down and refocus, so fasten your seatbelt. There will likely be layoffs and more executives departing at both CHK and Sandridge. It sucks but that's what happens when new CEOs take over poorly performing, oversized companies.


Absolutely spot on except for SD comment.  They have already had the turnover with execs. All new group that was selected by Bennett who was also added to the board today.

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## Pete

Yes, by changing out those four people alone, CHK can save millions a year.  When you're paying your HR person over a million a year (!!!) in Oklahoma City, you've pulled into crazy town.  What do you suppose she was paid by her previous employer??  And the others were all paid more, I believe.

Plus, I'm sure this is in advance of a major re-org with some layoffs.

The salaries -- at least at and near the top -- are absolutely insane and thus low-hanging fruit for a new CEO who has been mandated to get costs under control.

I'm sure some good people are going to lose their jobs in this process and that always stinks, but this is no doubt the best thing for the company overall and what OKC needs is CHK to stabilize and continue to employ thousands for a very long time.  All the steps thus far seem to be in that direction.

----------


## tomokc

If it continued, Chesapeake's uncontrolled spending would have killed the company. It was weakened to the point that Carl Icahn saw the potential of gaining control and breaking the company into pieces and selling them off. THAT would have been the end. That's when true changes began, and they continue. 

The restructuring has a long way to go. CHK has too many employees, they are overpaid when compared with their industry peers, and they have significant high-profile real estate that needs to be divested (NHP, CC and others). It will be scary watching the layoffs, cutbacks and property sales, but they will result in a stronger, leaner, better-managed company that will survive. 

This is good news.

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## Pete

The changes and sell-offs seem to be happening at a measured rate, which means there shouldn't be any large jolts to the local economy.

It's pretty common knowledge that they want to sell NH Plaza and a lot of the non-business property but they haven't dumped them all on the market, merely putting the woed out in the real estate community and entertaining offers.

I actually look forward to some of their properties getting into the hands of someone that will have to move things forward.

----------


## Easy180

> If it continued, Chesapeake's uncontrolled spending would have killed the company. It was weakened to the point that Carl Icahn saw the potential of gaining control and breaking the company into pieces and selling them off. THAT would have been the end. That's when true changes began, and they continue. 
> 
> The restructuring has a long way to go. CHK has too many employees, they are overpaid when compared with their industry peers, and they have significant high-profile real estate that needs to be divested (NHP, CC and others). It will be scary watching the layoffs, cutbacks and property sales, but they will result in a stronger, leaner, better-managed company that will survive. 
> 
> This is good news.


This is good news...Paying 22 year olds with freshly printed Business Management degrees $70k+ is a recipe for non success

----------


## warreng88

> CHK has too many employees, they are overpaid when compared with their industry peers.


I am going to have to disagree with the last part of this statement to a certain extent. I worked at CHK and although I didn't leave to go to another O&G company, I know plenty of people who did and they all said they could get paid 20% more at other competing O&G companies. Now, this was in the land department so maybe the geologists and landmen got paid too much, but I think the lower level employees were paid about right if not a little low.

----------


## tomokc

Warren - I believe it was a Reuters article in the past year (perhaps there's a link in this thread) that used several metrics to compare Chesapeake to others in the energy sector. I recall that CHK employees were overpaid and under-produced when compared with their peers. I'm not saying that they don't work their rear ends off over there, I'm just recalling that as a workforce they were overpaid and underperforming when compared with those from other companies.

----------


## warreng88

> Warren - I believe it was a Reuters article in the past year (perhaps there's a link in this thread) that used several metrics to compare Chesapeake to others in the energy sector. I recall that CHK employees were overpaid and under-produced when compared with their peers. I'm not saying that they don't work their rear ends off over there, I'm just recalling that as a workforce they were overpaid and underperforming when compared with those from other companies.


I see your point. I knew several people at other companies who had the same title as I did and did about 50% more work. CHK had two people doing what one person should be doing and that was a big problem. That is probably where the overpaid part comes in. They were overpaid for doing just the work they were doing, but would be considered underpaid if they were doing what the peers at other companies were doing. Not sure if that make sense or not.

----------


## Just the facts

If the choice is between paying an HR person a $1 million a year in OKC, or some already rich investor in NYC gets and another 3 cents in his dividend check, I'll take the $1 million in OKC salary.

----------


## Bellaboo

> If the choice is between paying an HR person a $1 million a year in OKC, or some already rich investor in NYC gets and another 3 cents in his dividend check, I'll take the $1 million in OKC salary.


If they don't get the operational costs in order, there won't be another 3 cents for anyone.

----------


## PhiAlpha

> This is good news...Paying 22 year olds with freshly printed Business Management degrees $70k+ is a recipe for non success


Paying 22 year olds with Business Degrees (at least Energy Management Degrees) $70k is actually about $5k below the industry average for newly graduated in-house landmen, and anywhere between $65k and $90k would probably be considered reasonable. Paying them $90to $100k+ right out of school and the crazy stock options they hand out in the benefits package there (for some,not all) is a little ridiculous, especially considering how overstaffed they are/how little work some of them are doing. I can't speak to other business degree focuses.

----------


## PhiAlpha

> If the choice is between paying an HR person a $1 million a year in OKC, or some already rich investor in NYC gets and another 3 cents in his dividend check, I'll take the $1 million in OKC salary.


Regardless of the salary dump, these officers came in with Aubrey and had been there since not long after the company was founded. They probably weren't keen on hanging around anyway and I'm sure Lawler wants his own staff. It's just a benefit that he can hire them much cheaper. Also, as an SVP she was likely paid well over $1 million, especially when it comes to bonuses and stock.

----------


## PhiAlpha

> Absolutely spot on except for SD comment.  They have already had the turnover with execs. All new group that was selected by Bennett who was also added to the board today.


Didn't realize Sandridge had already rotated out all their execs that they were planning to. Thanks for the info.

----------


## simbaokc

How many Anadarko people have turned in their resignations to take those spots and others upcoming?

----------


## Just the facts

I guess the good news is American Energy Partners is hiring.

----------


## tomokc

> If the choice is between paying an HR person a $1 million a year in OKC, or some already rich investor in NYC gets and another 3 cents in his dividend check, I'll take the $1 million in OKC salary.


If CHK is like most companies, then its typical shareholder is the owner of a mutual fund or IRA, not a "rich investor in NYC."

----------


## Just the facts

Yes, but typically mutual funds are not activist investors such as the case with Chesapeake and Sandridge.  Carl Icahn doesn't give a crap about someones Fidelity 401K account.  He cares about the few extra dollars in his own account.  So once again, given the choice between a 7 figure HR salary or some extra dollars for Carl, I prefer the 7 figure local salary.

----------


## PhiAlpha

> How many Anadarko people have turned in their resignations to take those spots and others upcoming?


They wouldn't have to be from Anadarko. The guy has been in the industry 20-30 years, I'm sure has connections to people at many companies in the industry.

----------


## onthestrip

Why is CHK involved in every article about shady energy industry practices?

Unfair Share: How Oil and Gas Drillers Avoid Paying Royalties - ProPublica

----------


## Bellaboo

> Why is CHK involved in every article about shady energy industry practices?
> 
> Unfair Share: How Oil and Gas Drillers Avoid Paying Royalties - ProPublica


I actually owned an interest in a couple of CHK wells. This very same thing happened to those 2 wells. I got a settlement check out of the deal.... Probably 10 years ago or so.

----------


## BillyOcean

CHK  started another round of layoffs yesterday with more to come I'm sure.

----------


## DoctorTaco

> CHK  started another round of layoffs yesterday with more to come I'm sure.


Which positions are they laying off?

----------


## BillyOcean

> Which positions are they laying off?


Yes.

----------


## MWCGuy

I predict both Chesapeake and Sandridge will probably be a thing of the past in a few more years. Not to worry Aubrey will probably have his private company alive and well to at least take over where Chesapeake once was.

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## Teo9969

SD maybe...CHK, not a chance.

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## dankrutka

> I predict both Chesapeake and Sandridge will probably be a thing of the past in a few more years. Not to worry Aubrey will probably have his private company alive and well to at least take over where Chesapeake once was.


I have no clue what will happen, but I think you're underestimating how difficult it would be for Aubrey to rebuild a company the size of Chesapeake. If those two companies relocated it would be a huge blow to OKC.

----------


## bchris02

> I have no clue what will happen, but I think you're underestimating how difficult it would be for Aubrey to rebuild a company the size of Chesapeake. If those two companies relocated it would be a huge blow to OKC.


I think OKC could absorb the loss of Sandridge but losing Chesapeake would send the local economy back to the 1980s in my opinion.

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## tomokc

I wouldn't want to bet against SD & CHK being here a long time. 

I also wouldn't want to bet against a guy who founded a company, grew it, and when the stock fell below $1.00, RE-GREW it to around $70/# before the global financial collapse. 

Say what negative things you will about Aubrey, but remember that it was his aggressive application of fracking & horizontal drilling that produced so much natgas, and in turn drove down prices.

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## Pete

It seems Chesapeake is now on pretty firm footing and I'm not too worried about them.

SandRidge is a different matter and could easily be acquired.  But they also employ only a fraction of the people.  I would hate to lose them but if that came to pass I don't think it would have much of an effect on the local economy.

----------


## PhiAlpha

> I predict both Chesapeake and Sandridge will probably be a thing of the past in a few more years. Not to worry Aubrey will probably have his private company alive and well to at least take over where Chesapeake once was.


You obviously aren't very involved in the oil and gas industry if you think CHK will be a "thing of the past". I've seen nothing to indicate that selling out completely is their intention, not to mention they are finally turning things around and their largest shareholder has moved from active to passive. All of the doomsday predictors fail to realize the extent of and value in their massive asset base which they've finally begun to effectively develop over the last year or two.

Sandridge would be more likely to follow that path but they seem to have righted the ship. At any rate, a change of control at either company wouldn't mean that they were definitely leaving OKC.

----------


## soonerguru

> I wouldn't want to bet against SD & CHK being here a long time. 
> 
> I also wouldn't want to bet against a guy who founded a company, grew it, and when the stock fell below $1.00, RE-GREW it to around $70/# before the global financial collapse. 
> 
> *Say what negative things you will about Aubrey, but remember that it was his aggressive application of fracking & horizontal drilling that produced so much natgas, and in turn drove down prices.*


So he should be credited for screwing himself by over-producing his commodity so much his company nearly bankrupted itself when the commodity price dropped to unsustainably cheap levels?

----------


## tomokc

I chose to say it in a less obnoxious way than you, but to each his own.

----------


## PWitty

Double post

----------


## PWitty

> So he should be credited for screwing himself by over-producing his commodity so much his company nearly bankrupted itself when the commodity price dropped to unsustainably cheap levels?


He produced so much gas because he wanted to show the US and the world how abundant US natural gas was. He truly believed that when it became obvious how abundant natural gas was in the US, that US policy and the market would aggressively shift and increase the consumption of natural gas enough to compensate for the increased supply. That aggressive shift just never came to fruition.

----------


## PhiAlpha

> He produced so much gas because he wanted to show the US and the world how abundant US natural gas was. He truly believed that when it became obvious how abundant natural gas was in the US, that US policy and the market would aggressively shift and increase the consumption of natural gas enough to compensate for the increased supply. That aggressive shift just never came to fruition.


The shift is definitely happening but you're right, not as aggressively as once hoped

----------


## Teo9969

To be sure, of course he hoped it would.

Had the shift already occurred, CHK would be on the path to laughing its way past Target, Microsoft, Wells Fargo, Proctor & Gamble, and Bank of American into a Top 20 revenue company in the US.

...I don't think people fathom what Aubrey was building, and had he had the sway to rapidly push NG to the next level, he would have made the 400% he paid for everything look like diced up pennies.

But he gambled, and he did not win.

----------


## Just the facts

> He produced so much gas because he wanted to show the US and the world how abundant US natural gas was. He truly believed that when it became obvious how abundant natural gas was in the US, that US policy and the market would aggressively shift and increase the consumption of natural gas enough to compensate for the increased supply. That aggressive shift just never came to fruition.


That is because the national focus is on walkability, mass transit, and removing the need for any type of fuel.  A cheap fuel is counter productive to those efforts (which have a much broader agenda) so CNG isn't seen by a lot of people as a solution, but an extension of the problem.  The same goes for electric cars.

----------


## tomokc

> To be sure, of course he hoped it would.
> 
> Had the shift already occurred, CHK would be on the path to laughing its way past Target, Microsoft, Wells Fargo, Proctor & Gamble, and Bank of American into a Top 20 revenue company in the US.
> 
> ...I don't think people fathom what Aubrey was building, and had he had the sway to rapidly push NG to the next level, he would have made the 400% he paid for everything look like diced up pennies.
> 
> But he gambled, and he did not win.


Teo - The company was built by paying too much for people, production and property. It was only a matter of time for a collapse to occur. New leadership is laying off people (so say the rumors), they are paying reasonable prices for leases, and selling non-core real estate.

----------


## Rover

Most people are not visionaries and avoid risk.  They would run companies according to the least common denominator.  That is why most companies struggle to be just like every other company.  Love him or hate him, AM shook up the industry and created a very large company with huge assets which predatory investors will now feed off.  Thousands and thousands of other oil companies have come and gone since he started building Chesapeake.  Whatever the ultimate size it will still be one of the major gas companies in the US while others played it safe and are already gone.

----------


## HangryHippo

> Teo - The company was built by paying too much for people, production and property. It was only a matter of time for a collapse to occur. *New leadership is laying off people (so say the rumors)*, they are paying reasonable prices for leases, and selling non-core real estate.


The rumors are fact.  There were layoffs last week and more are coming.

----------


## Teo9969

> Teo - The company was built by paying too much for people, production and property. It was only a matter of time for a collapse to occur. New leadership is laying off people (so say the rumors), they are paying reasonable prices for leases, and selling non-core real estate.


Let me restate:

Aubrey McClendon gambled, and he did not win.

Had he won, all his paying too much would have looked like diced up pennies.

There's a reason CHK still has the chance to be a strong company, and that's because CHK, under the direction of McClendon, bought up more acreage than any company in the world save the Perennial Top 5 largest company in the world, Exxon.

It's actually pretty impressive that a company as "poorly" run as CHK was can sell off tens of billions of dollars worth of assets and still have anything left to run a business

...well, they have a TON left to run a business.

Now, imagine NG prices never dropped below $7.50...

----------


## Pete

Wanted to pass on something I heard this weekend about Chesapeake...

I have a good friend who is very, very well connected in the oil & gas industry who was in from Texas for my class reunion.  Almost daily, he's dealing with Devon, CHK, SandRidge and many others -- and dealing at the highest levels.  Knows LN, AKM personally.  And I know he's not a BSer because I've known him a long time and am very familiar with his business track record, which frankly always makes me feel a bit envious.

He told me a long time ago that he was extremely worried about Chesapeake, and this was before there was any signs of real trouble.  He partners with these companies in drilling wells and drills on behalf of his own companies and has repeatedly said that no one else in the industry could justify what CHK was paying for these wells...  That essentially they had been paying about twice the going market everywhere.  This in addition to all their corporate excess that has now been so well documented.

So this weekend he told me -- unsolicited -- that he is still very worried about CHK and he still thinks they do not have a sustainable business model.  They simply have too much in these properties and wells to ever make real profit.

I truly hope this doesn't prove to be the case but I can assure you that he knows what he's talking about.  I tried to talk him into a sunnier outlook, reminding him of the new CEO, corporate changes, etc.  But he simply said they have too much money in, so they lose massively when they sell anything (this has certainly proven to be true) and will never make enough on their assets to sustain themselves and reminded me they typically carry tremendous debt on their assets, often more than what they have proven to be worth.  So, no matter what they do, such as selling assets, it actually costs them money.


As everyone knows, I hate to be negative but this shook me up a bit.  I hope the new CEO can work some magic.

----------


## ou48A

For many years CHK's best bet has been to become as oily as they can and to reduce debt.

I had numerous conversations with people who know LN , AKM, TW  and others 10-12 years ago about the poor business practices of CHK only to be told that things would fine. Having seen the oil bust of the 80's I knew that similar high flying companys who became too over extended did not make it. The lessons of the oil bust were out there for anyone familiar with the business and they were not that long before. The SD story sounds very similar.  These guys should have known better but they were to smart to learn the lesson of the oil bust of the 1980's

I would be likely be looking for another job if I worked in the SD or CHK corporate offices.

----------


## rlewis

I don't think things are as dire as they may seem.  If you look at their latest financial statements, their financial fundamentals look much better.  Their operational cash flow is strong, and their debt service does not look overwhelming.  If gas prices remain stable, they will likely be able to work their way out of the bind that they got into.  

There are some positive signs from Chesapeake insiders as well.  Carl Icahn is continuing to add shares, even though the stock prices are up 50% from last year.  Also the new CEO just bought a $3.275M mansion in Edmond from PGA golfer Bob Tway two weeks ago.  That doesn't tell me that there is panic in the highest ranks of the company.  

The layoffs and the property sales are an unwinding of some of the excesses and inefficiencies put into place by the previous regime.  There is a short-term downside to the OKC market because of this (and I feel bad for all of those affected by the layoffs); but I think that in the big picture of things, Chesapeake staying afloat is the most important thing for the local economy.

----------


## PhiAlpha

> I don't think things are as dire as they may seem.  If you look at their latest financial statements, their financial fundamentals look much better.  Their operational cash flow is strong, and their debt service does not look overwhelming.  If gas prices remain stable, they will likely be able to work their way out of the bind that they got into.  
> 
> There are some positive signs from Chesapeake insiders as well.  Carl Icahn is continuing to add shares, even though the stock prices are up 50% from last year.  Also the new CEO just bought a $3.275M mansion in Edmond from PGA golfer Bob Tway two weeks ago.  That doesn't tell me that there is panic in the highest ranks of the company.  
> 
> The layoffs and the property sales are an unwinding of some of the excesses and inefficiencies put into place by the previous regime.  There is a short-term downside to the OKC market because of this (and I feel bad for all of those affected by the layoffs); but I think that in the big picture of things, Chesapeake staying afloat is the most important thing for the local economy.


I certainly hope Pete's source is overstating the conditions there. They do seem to be dramatically improving. Rome wasn't built in a day (of course it didn't fall in a day either).

----------


## onthestrip

> I don't think things are as dire as they may seem.  If you look at their latest financial statements, their financial fundamentals look much better.  Their operational cash flow is strong, and their debt service does not look overwhelming.  If gas prices remain stable, they will likely be able to work their way out of the bind that they got into.  
> 
> There are some positive signs from Chesapeake insiders as well.  Carl Icahn is continuing to add shares, even though the stock prices are up 50% from last year.  *Also the new CEO just bought a $3.275M mansion in Edmond from PGA golfer Bob Tway two weeks ago.  That doesn't tell me that there is panic in the highest ranks of the company.*
> 
> The layoffs and the property sales are an unwinding of some of the excesses and inefficiencies put into place by the previous regime.  There is a short-term downside to the OKC market because of this (and I feel bad for all of those affected by the layoffs); but I think that in the big picture of things, Chesapeake staying afloat is the most important thing for the local economy.


You make some good points but this isnt one of them. The new CEO buying a big, pricey house tells us nothing. I mean, the CEO is making out like a bandit from day one on the job. Not to mention he has probably done well in his past occupations.

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## rlewis

> You make some good points but this isnt one of them. The new CEO buying a big, pricey house tells us nothing. I mean, the CEO is making out like a bandit from day one on the job. Not to mention he has probably done well in his past occupations.


What I meant by that statement is that people with an uncertain financial picture don't spend that kind of money if they are the captain of a sinking ship.  If you felt like you might be laid off in the near future, would you go out and buy an expensive house?  I seriously doubt it--even if you were making a lot of money right now.  

CEOs' personal behaviors are some of the best ways to truly gauge the business conditions within a company.  They are privy to much more financial information than just about anyone.  There are some ignorant CEOs out there (like we saw during the financial crisis), but Doug Lawler doesn't come across as one of them.

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## soonerguru

> You make some good points but this isnt one of them. The new CEO buying a big, pricey house tells us nothing. I mean, the CEO is making out like a bandit from day one on the job. Not to mention he has probably done well in his past occupations.


And not to mention he'll make out like a bandit win or lose. Sometimes it pays better to get fired in corporate America. I'm sure he'll be able to handle the house payment. Also, depending upon his employment contract, it's likely that Chesapeake will have to take a hit on his house if it loses equity or something. This is the way things are done, so no matter what the CEO does / buys, his rear end is covered by the corporation.

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## pw405

> I certainly hope Pete's source is overstating the conditions there. They do seem to be dramatically improving. Rome wasn't built in a day (of course it didn't fall in a day either).


My experience in the industry is that somebody who is active in drilling (knows the about well creation costs) isn't active or knowledgable in geology, production, or geophysics which may ultimately determine a if the cost of a well is recouped.  Chks last press release stated they are running about 70 rigs now, down from about 200 a few years back.  Rigs costs over around $50k a day to run if not more, so they are certainly cutting costs there.  Perhaps more important, is that the drillers and rig workers often wait a long time between completing a well, and knowing production figures.  It isn't uncommon to have many wells waiting on completion, and the wells can produce for a long time after they start.  Unless he was a chk employee and had direct access to all of their production figures, selling prices and exact well costs, I think it would be pretty hard to determine if their wells were profitable or not.

----------


## Pete

> My experience in the industry is that somebody who is active in drilling (knows the about well creation costs) isn't active or knowledgable in geology, production, or geophysics which may ultimately determine a if the cost of a well is recouped.  Chks last press release stated they are running about 70 rigs now, down from about 200 a few years back.  Rigs costs over around $50k a day to run if not more, so they are certainly cutting costs there.  Perhaps more important, is that the drillers and rig workers often wait a long time between completing a well, and knowing production figures.  It isn't uncommon to have many wells waiting on completion, and the wells can produce for a long time after they start.  Unless he was a chk employee and had direct access to all of their production figures, selling prices and exact well costs, I think it would be pretty hard to determine if their wells were profitable or not.


That's great info -- thanks for sharing.


To counteract any worry I will state that these oil guys are competitive and always sure THEY are right and everyone else is wrong.  That may be playing into this.

I also know my friend has never liked Aubrey personally and that may very have colored his opinions.

----------


## pw405

> That's great info -- thanks for sharing.
> 
> 
> To counteract any worry I will state that these oil guys are competitive and always sure THEY are right and everyone else is wrong.  That may be playing into this.
> 
> I also know my friend has never liked Aubrey personally and that may very have colored his opinions.


This is merely an educated guess, but I would think that production figures for specific wells are highly guarded company secrets, as you don't want your competitors to know where the pay dirt is.

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## ou48A

:Wink: .

----------


## ou48A

Guarding the secret's of well production numbers is normal.... This is often done to buy addition near by drilling (leases) locations at cheaper prices.

But in most cases a state will eventually make a company publish the well results after a period of time.
 For many decades you have been able to read the well results in Oklahoma newspapers.

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## PhiAlpha

> This is merely an educated guess, but I would think that production figures for specific wells are highly guarded company secrets, as you don't want your competitors to know where the pay dirt is.


Whatever the case, the market seems to like what CHK is doing. The stock is at at least a 52 week high.

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## PWitty

I can guarantee you that any wells they are drilling right now are going to be generating a nice return on the initial capex.

Pete, I think what your friend was referring to was the assets that CHK is SELLING, not developing. Obviously when they sell they are not able to recoup the cost they paid to obtain a lot of the acreage they have because they bought in at a time when prices were high. Now demand is much lower and CHK doesn't have much leverage when buyers know they need to sell. So yes, in all their asset sales they are losing large amounts of money based on what they purchased it for. But now that their funding gap has been closed, that isn't as important as it used to be. That is entirely separate from the return they are generating off of their well production. Like I said, now that rig counts are down and they aren't having to drill like crazy to try and hold leases, they are focusing in areas where they are generating a very nice return.

Of course all this is in their investor presentations if you look.

Edit: I didn't mean the last sentence in an insulting way, just pointing out that a lot of this is detailed in their investor presentation on their website if anyone is curious. The August presentation even has a graph showing their company wide return on the wells they drill based off of their initial capex and the current production. The previous few months presentations even showed the average rate of return in all their main fields, but they seem to have taken that out in the current one.

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## pw405

Interesting find:  layoffs happening already out of state:  Chesapeake Energy Corp. Layoffs.

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## LuccaBrasi

I talked with a CHK mid level management person this week who told me there is growing fear of some substantial local layoffs very soon. Additionally, the CEO released a new organizational structure just today, and the internal word is he has a definite new focus of where to take the business and anything outside of that core focus will soon be reduced or eliminated. Their comment to me was "more cleaning house". Also, they mentioned the internal word is a huge scale back of philanthropic support, and some of the buzz now is will there be Xmas lights this year since they usually start at the end of August putting those up. I'm guess there will not be any more lights, or if so, greatly scaled back from before. That all being said, they mentioned that once the CEO is done with the complete reorg, the company will be a big time cash cow, therefore the stock will continue to do well. In this person's opinion, they will one day be very ripe to be bought out once some their debt is reduced, but their thought now is just hoping to survive the cuts that are feared to come very soon.

I'm sure Pete or someone can look this up and verify, but I heard a rumor yesterday that Aubrey filed for a PUD this week on the land he owns along the Broadway Extension. Maybe this has been mentioned before and I've missed it, but just throwing it out there.

----------


## Pete

CHK has to report annually to the OKC Economic Development Trust as they receive incentive payments for job creation.

Just saw that in January of this year they had 4,722 (!!) employees in OKC.

I'm sure that number is smaller now, but that is massive amount of jobs.

----------


## soonerguru

Is the Oklahoman reporting at all on the layoffs? I haven't seen anything at all except discussions about share price and the new CEO.

----------


## adaniel

> CHK has to report annually to the OKC Economic Development Trust as they receive incentive payments for job creation.
> 
> Just saw that in January of this year they had 4,722 (!!) employees in OKC.
> 
> I'm sure that number is smaller now, but that is massive amount of jobs.


I wonder if that was before or after the Access Midstream spinoff? Also, CHK employes a lot of contractors.

I don't want to scare anyone, but in light of LuccaBrasi's post, I can confirm I've heard the same thing, and that big layoffs could be coming as soon as next month. 

The handful of people I know that work in land there are very concerned. One girl I went to OU with thinks they will be cutting about 40% of their land staff when its all said and done. Remember that CHK is one of the most land-heavy companies out there (about half of their total employees), so this is a pretty significant amount of people.

----------


## HangryHippo

> I wonder if that was before or after the Access Midstream spinoff? Also, CHK employes a lot of contractors.
> 
> I don't want to scare anyone, but in light of LuccaBrasi's post, I can confirm I've heard the same thing, and that big layoffs could be coming as soon as next month. 
> 
> The handful of people I know that work in land there are very concerned. One girl I went to OU with thinks they will be cutting about 40% of their land staff when its all said and done. Remember that CHK is one of the most land-heavy companies out there (about half of their total employees), so this is a pretty significant amount of people.


I've been saying this was coming for awhile now.  Layoffs have been happening and more are coming, next week I think.  Lucca brought up their charitable giving - it's already taken a huge hit and is going to be reduced substantially again before the end of the year.

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## Pete

> I wonder if that was before or after the Access Midstream spinoff? Also, CHK employes a lot of contractors.


The Midstream spin-off was long before this update so I'm sure it did not include those jobs.

Also, the report only counts full-time employees, not part-time or contractors.


It could very well be that Chesapeake will lay off a ton of people and still have thousands employed in OKC.

----------


## PWitty

I heard that, as of about a month ago, there was around 5,000 full time employees located in and around the OKC campus. So that is pretty current. 

As for the person above that said half of the full time employees are in land, that is a little exaggerated. CHK has more land employees than most everyone else, but not half the workforce. That would mean that CHK employs 6K+ land employees, because company wide there is around 12K+. 

Also, as has been mentioned, most of the layoffs were with positions relating to all of CHK's extracurriculars outside of their O&G operations. This falls in line with what Doug said about letting go of all the business units that are unrelated to E&P operations. Doug also made clear that CHK is now transitioning from asset acquisition to asset development, which means CHK doesn't have the extreme demand for all the land men that they have required in the past. I'll add that most land work is usually contracted out, but since CHK was always in acquisition mode it saved them money to just employ them all. Now that's obviously not the case. This sucks for CHK's land employees, but that's just how it goes.

I'll note that I also think that these layoffs have nothing to do with the corporate restructuring, and are all still going back to Doug's initial comments about cutting CHK's extracurricular projects. He has mentioned that the reorganization studies will be done by October, so I think the real restructuring from the upper management down will begin then.

Edit: Not saying I know how many land employees there are and you're wrong, that just seems like an absurdly high amount.

----------


## micesu

> The Midstream spin-off was long before this update so I'm sure it did not include those jobs.
> 
> Also, the report only counts full-time employees, not part-time or contractors.
> 
> 
> It could very well be that Chesapeake will lay off a ton of people and still have thousands employed in OKC.


A few guys I know who do have the title attorney/landman title told me that they are going to start doing layoffs in their department just anytime. They hired a lot of these guys right out of OU Law School and the legal market is pretty tough right now. I was in Las Vegas last week and went by the Fontainebleau a number of times. For those of you who don't know it's the $3 billion dollar resort in Vegas that never was completed because of the economic downturn in 2008. Carl Ican bought it for pennies on the dollar and it has sat abandoned ever since. It did make me think about what was going to happen to Chesapeake.

----------


## PhiAlpha

> A few guys I know who do have the title attorney/landman title told me that they are going to start doing layoffs in their department just anytime. They hired a lot of these guys right out of OU Law School and the legal market is pretty tough right now. I was in Las Vegas last week and went by the Fontainebleau a number of times. For those of you who don't know it's the $3 billion dollar resort in Vegas that never was completed because of the economic downturn in 2008. Carl Ican bought it for pennies on the dollar and it has sat abandoned ever since. It did make me think about what was going to happen to Chesapeake.


I understand what you're saying but there is a big difference between Carl Ichan buying and sitting on a failed development in one of the industries and cities hardest hit by the recession and buying stock in a $20 Billion corporation. I don't think that is a good indication of what is "going to happen" a CHK. Ichan added to his position in CHK because he believes its stock is undervalued and that the price will increase with the new leadership as it has already shown that it will.

----------


## Teo9969

> I understand what you're saying but there is a big difference between Carl Ichan buying and sitting on a failed development in one of the industries and cities hardest hit by the recession and buying stock in a $20 Billion corporation. I don't think that is a good indication of what is "going to happen" a CHK. Ichan added to his position in CHK because he believes its stock is undervalued and that the price will increase with the new leadership as it has already shown that it will.


He said "what *was* going to happen to CHK"

----------


## Rover

> A few guys I know who do have the title attorney/landman title told me that they are going to start doing layoffs in their department just anytime. They hired a lot of these guys right out of OU Law School and the legal market is pretty tough right now. I was in Las Vegas last week and went by the Fontainebleau a number of times. For those of you who don't know it's the $3 billion dollar resort in Vegas that never was completed because of the economic downturn in 2008. Carl Ican bought it for pennies on the dollar and it has sat abandoned ever since. It did make me think about what was going to happen to Chesapeake.


I was involved up close and personal with the Fontainebleau Vegas and it's situation wasn't anything like Chesapeake's.

----------


## pw405

Reminds me of that song lyric: "everybody's waiting for judgement day so I can say told you so".

If you work in OKC and compare chk to other employers, it is easy to despise them.  Many talented employees leave companies to work for them since hey seem willing to hire people with no industry experience, and they pay higher than average salaries compared to many OKC companies.  Many people left my job to work for them and I fell victim to this mentality of secretly hoping they fail.  

However, when one compares them to their peer companies, they have problems of retaining employees:  Turnover rates by company: How Amazon, Google, and others stack up.

In my opinion, this is because the culture the company seemed to culminate.  They toot their own horn, they brag about themselves in their commercials, they sell a flashy lifestyle and appear to those on the outside to be a cult. My hope is that under the new CEO, the current culture will evolve in to a more down to earth, focused company who doesn't market themselves as gods gift to America's energy over consumption. 

People will get laid off this year, the company will change a bit, but they aren't going out of business.  The long term prospects for their industry are great.  While they layoffs will stink, I honestly think the shake ups of late are going to be good for OKC in the long term .  With Aubrey's new business starting up, there are more employment opportunities springing up, and if he can manage to grow the company (something he seems good at), I can see AEP employing a few hundred people in a year or so.

----------


## bradh

The good news is, the new CEO is a science guy and not a finance guy.  They're going to expand outside of what they've done, they'll go offshore, and they'll do what they can to find resources and rebuild.  

My CHK friends I know say if they make it through the fall they're excited for the future.

----------


## PWitty

> The good news is, the new CEO is a science guy and not a finance guy.  They're going to expand outside of what they've done, they'll go offshore, and they'll do what they can to find resources and rebuild.  
> 
> My CHK friends I know say if they make it through the fall they're excited for the future.


I will add to that and say that I have heard Doug LOVES offshore projects, and that he isn't ready to move CHK into that area yet but he sees it as an area of growth in the future. This is a HUGE difference from Aubrey, who wanted to do everything possible to stay away from international and offshore projects. 

I'll also comment on the turnover rate that was mentioned above and point out that CHK hires a lot of consultants who supervise the ops they have going on at all their wellsites, which is much more than anyone else in the onshore US (at least in number of drilling rigs and wells completed). Also, with the shortage of engineering talent it is also hard for any company to retain their engineers. Most experienced guys get calls monthly if not weekly from headhunters trying to draw them away. At least that is what I hear. It may not be like that everywhere.

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## pw405

The consultants are essentially contractors, so they don't count as turnover right?

----------


## PWitty

I'm honestly not sure, so you may be right. I just know that sometimes they are hired on long term, but their role is still as a Drilling Consultant, Completions Consultant, etc. But even though they are there long term they get paid as a consultant (A LOT more than a normal employee) but aren't eligible for benefits and such.

----------


## blangtang

To cut natural gas costs, Chesapeake pumps up royalty deductions

Insight: To cut natural gas costs, Chesapeake pumps up royalty deductions | Reuters

this reuters team just keeps pumping out stories on CHK

----------


## Libbymin

We've been using this recruiting firm in OKC to hire someone and someone from their office heard from a couple of different people that layoffs were imminent, like, within days.

----------


## bradh

they slashed like 50 or so communications folks last week I heard (some may have been marketing, not sure)

----------


## PhiAlpha

> We've been using this recruiting firm in OKC to hire someone and someone from their office heard from a couple of different people that layoffs were imminent, like, within days.


I've heard that Friday is the day, not sure what departments or how many but it sounds as though there will definitely be layoffs.

----------


## Libbymin

> I've heard that Friday is the day, not sure what departments or how many but it sounds as though there will definitely be layoffs.


Surely some of their Land and Land Admin Dept. will be trimmed down a bit. I texted a friend of mine who works in the Land Dept. at CHK that I had heard some ugly rumors about CHK today and he said "Yep. Me too."

----------


## PhiAlpha

> Surely some of their Land and Land Admin Dept. will be trimmed down a bit. I texted a friend of mine who works in the Land Dept. at CHK that I had heard some ugly rumors about CHK today and he said "Yep. Me too."


That was my assumption as well, just didn't want to say it without knowing for sure. Nervous for some of my friends over there and for any large layoff of Landmen will do to our already saturated job market.

----------


## UnclePete

Can we expect a name change to "Anadarko" if not a move to Houston?

----------


## PhiAlpha

> Can we expect a name change to "Anadarko" if not a move to Houston?


Is that a serious question?

----------


## UnclePete

Just curious.  What other former Oklahoma companies have moved to Houston?




> Is that a serious question?

----------


## PhiAlpha

A lot 30 years ago. Very few since. It wouldn't make any sense to relocate them to Houston anyway. The only way that would happen is by someone purchasing them and even if that happened, there it's more likely that they stay here than move. There was an article the other day on NewsOK about how mergers are becoming much less appealing to large companies due to all the recent shareholder revolts.

----------


## Garin

The campus could always be used for public housing if something ever happened to them.

----------


## Antler dad

> The campus could always be used for public housing if something ever happened to them.


Sure!  That would be an equal trade!  Thousands of jobs for public housing.  I haven't read many of your posts but this one and your "tort reform would help" with health care costs suggest a talking points/ non-reality view point

----------


## Garin

> Sure!  That would be an equal trade!  Thousands of jobs for public housing.  I haven't read many of your posts but this one and your "tort reform would help" with health care costs suggest a talking points/ non-reality view point



Why would tort reform not help?  Do you at least agree with cures solving the problem?

----------


## betts

Actually tort reform could have helped with health care costs, but its probably too late. An entire generation of doctors has "grown up" with lawsuit phobia, and an entire generation of people has grown up thinking if something bad happens, you might be able to get a big pot of money out of it.  So now we over order every test, admit people to the hospital who aren't that sick, and generally practice CYA medicine.

As far as Chesapeake becoming low income housing, I suspect that was tongue in cheek.  If the good folk of Nichols Hills could stop Whole Foods from being built in Nichols Hills Plaza ( an incredibly short-sighted move on their part), I can only imagine the kind of uproar that would generate.

----------


## king183

Just heard from a friend at Chesapeake in a department that would be at the forefront of these developments that the latest rumor circulating up there is 1500 layoffs are imminent.  

That seems like a mighty high number to me.  Even if it is an exaggerated number, rumors like that must be hell on morale.

----------


## Bunty

> Just heard from a friend at Chesapeake in a department that would be at the forefront of these developments that the latest rumor circulating up there is 1500 layoffs are imminent.  
> 
> That seems like a mighty high number to me.  Even if it is an exaggerated number, rumors like that must be hell on morale.


Hard to believe that with the price of oil going over $100 a barrel.

----------


## adaniel

> Just heard from a friend at Chesapeake in a department that would be at the forefront of these developments that the latest rumor circulating up there is 1500 layoffs are imminent.  
> 
> That seems like a mighty high number to me.  Even if it is an exaggerated number, rumors like that must be hell on morale.


Heard the same thing although that is likely companywide.

----------


## pw405

Accordng to the rumors at thelayoff.com, layoffs will start this week and are scheduled to be complete by 9/20.  Once again.. No official confirmation on this, but somebody is claiming HR stayed all weekend preparing the paperwork to get the process started.

----------


## Pete

Layoffs usually happen on Fridays.

Don't be surprised if this process starts tomorrow.

----------


## bradh

I had heard from land department guys they weren't supposed to start until October.

I know a bunch of marketing/PR types have already been let go, like 50 or so, but that was like 2 weeks ago.

----------


## onthestrip

> *I had heard from land department guys they weren't supposed to start until October.*
> 
> I know a bunch of marketing/PR types have already been let go, like 50 or so, but that was like 2 weeks ago.


This is what I was told by a CHK employee.

----------


## adaniel

No reason to drag this out. CHK should just rip the bandaid off, give these folks their severance packages, and let them get on with their lives.

----------


## Pete

They may want to take the severance write-offs in the last quarter, which starts Oct. 1.

They've strung together some nice results under the new CEO and they may want to get one more good quarter under their belts.

Layoffs are very expensive in the short-term.

----------


## Bellaboo

When Hertz did their layoffs in 2008, They had them monthly from May 9th until Sep 30th.

----------


## Libbymin

> Hard to believe that with the price of oil going over $100 a barrel.


With the asset sales they've done and their strategy to get out of certain plays, it's only logical that layoffs are occurring soon. The question is how many. Honestly, I'm not sure why they've waited so long already to do this.

----------


## PWitty

I'll add that from what I have heard CHK is still actively hiring engineers, so I would assume these layoffs are localized to certain departments and not a company wide downsizing.

----------


## ou48A

> They may want to take the severance write-offs in the last quarter, which starts Oct. 1.
> 
> They've strung together some nice results under the new CEO and they may want to get one more good quarter under their belts.
> 
> Layoffs are very expensive in the short-term.


From my observations October is not an unusual time of the year for layoffs.

----------


## ou48A

> I'll add that from what I have heard CHK is still actively hiring engineers, so I would assume these layoffs are localized to certain departments and not a company wide downsizing.


Engineers are in such high demand that hiring them should be a priority even if there isn’t if there isn't a lot of work for them right now.

----------


## Garin

They just aren't buying anymore land so no need for the landmen

----------


## Libbymin

Generally speaking, I think the geologists, geophysicists, and engineers are pretty safe. The Land department not so much.

----------


## PhiAlpha

> They just aren't buying anymore land so no need for the landmen


Still need landmen and a lot of them if they are drilling a lot of wells. Landmen do nearly all the title, curative, and regulatory prep work for wells. All surface damage and right of way work. The majority of communications with partners when drilling wells or really for anything. Communications with land owners, lease maintenance, any small scale leasing they might do,  and a slew of other random things. They just don't need the factory of title landmen or as many in-house landmen now that they are doing a ton of large scale leasing.

----------


## Libbymin

> Still need landmen and a lot of them if they are drilling a lot of wells. Landmen do nearly all the title, curative, and regulatory prep work for wells. All surface damage and right of way work. The majority of communications with partners when drilling wells or really for anything. Communications with land owners, lease maintenance, any small scale leasing they might do,  and a slew of other random things. They just don't need the factory of title landmen or as many in-house landmen now that they are doing a ton of large scale leasing.


That's just it though. A friend of mine who used to work there said they went from running 160 rigs a year to about 68 now. That's a lot of Land people that you don't need anymore.

----------


## CCOKC

I get an email every Friday advertising accounting jobs across the country. Chesapeake is on that list a lot including yesterday.

----------


## PhiAlpha

> That's just it though. A friend of mine who used to work there said they went from running 160 rigs a year to about 68 now. That's a lot of Land people that you don't need anymore.


True but that's also a lot of engineers and geologists that you don't need anymore either. If they plan to keep that small of drilling program there will be layoffs across the board.

----------


## PWitty

> True but that's also a lot of engineers and geologists that you don't need anymore either. If they plan to keep that small of drilling program there will be layoffs across the board.


I don't see how that is true. The drilling engineers may not be needed as much as previously, but the production/completion engineers, reservoir engineers, and geologists still have plenty to do even with the drop in rig count. Now instead of churning out new wells assembly line style, and all the engineers and geologists needing to be on board to keep up with that schedule, they can have those same engineers and geologists start looking at efficiency studies and analyzing new formations in tracts of land they already own. Such as the optimal number of frac stages to maximize production, amount or type of proppant used, optimal well spacing, potential for production in nearby zones/formations, continually updating reserve estimates, etc. There is a lot more that goes on than just drilling wells on the engineering/geology side. 

And I'll point out that CHK's planned drilling program is by no means small. It may be a lot smaller than it used to be, but they still have one of the largest drilling programs in the US. 

I have a friend who works for ConocoPhillips down in Houston and he was telling me about how crazy busy things have been for the engineers working in the eagleford, which is the area he is working in. He said they had 8 rigs running down there at the time. Even with CHK's dropped rig count they still have about 20 rigs running in the eagleford, according to one of their last investor presentations. Just some perspective.

----------


## WilliamTell

Landmen arent a real technical trades like engineers and geologist, thats why companies hold onto those positions during downturns. Landmen are salesmen, where you have a couple of all stars but most are interchangeable with the next guy in line. I know people who got hired as landmen who failed out of college or went on to graduate in hotel and restaurant hospitality from OSU.

----------


## PhiAlpha

> Landmen arent a real technical trades like engineers and geologist, thats why companies hold onto those positions during downturns. Landmen are salesmen, where you have a couple of all stars but most are interchangeable with the next guy in line. I know people who got hired as landmen who failed out of college or went on to graduate in hotel and restaurant hospitality from OSU.


Whoa there tiger, it depends on the type landman. They may not be technical employees, but they are not salesmen and most do not function in that capacity in-house. The sales portion, leasing, is usually taken care of by contracted field landmen that do not need a degree or any relevant experience to start a career and are more or less interchangeable. Field landmen that specialize in title are far less interchangeable as a working knowledge of state laws for any state youre working in is required, especailly by those in a supervisor role. Inhouse landmen, especailly those with 5 or more years experience are not anymore interchangeable than engineers and geologist. It may not be a technical knowledge, but a very detailed understanding of state laws and regulations is required for every entity you have to work with, whether that be states, BLM, Native American lands, etc. You can't just drop a random person into a position like that and say go. It's also important to have a very detailed knowledge of and good relationship with other companies, attorneys and landowners you have to deal with on a daily basis. Landmen are the PR face of the company with these entities. A working knowledge of the geology, GIS and engineering processes involved in the area you're working is also very important, it sometimes takes years to build up that kind of knowledge. So while landmen don't have a technical role, they do play a crucial part in every oil and gas company and a good one, just like a good engineer or geologist, is not interchangeable with someone hired off the street or without the experience to fill the role. There is a reason company landmen are paid nearly as well as (or in some cases much more than) geologists and engineers (I have seen company wide salary sheets and starting salary stats that back that statement up), it is far from easy work and requires a different type of skill to do it. 

CHK's problem is that they hired way too many landmen in proportion to everything else to manage all of the field people they were hiring during the land grab, and the huge amount of wells they were drilling among other things. They also divided out the tasks that one landman may do for a small company into many different positions that people are pidgeon holed into. My friends that work for Devon would always joke about CHK saying that they had twice the assets (at least as reflected in their market caps) and half the employees...that is the core of CHK's overemployment issue. Too many people that are doing work that one person is handling elsewhere.

----------


## PhiAlpha

> I don't see how that is true. The drilling engineers may not be needed as much as previously, but the production/completion engineers, reservoir engineers, and geologists still have plenty to do even with the drop in rig count. Now instead of churning out new wells assembly line style, and all the engineers and geologists needing to be on board to keep up with that schedule, they can have those same engineers and geologists start looking at efficiency studies and analyzing new formations in tracts of land they already own. Such as the optimal number of frac stages to maximize production, amount or type of proppant used, optimal well spacing, potential for production in nearby zones/formations, continually updating reserve estimates, etc. There is a lot more that goes on than just drilling wells on the engineering/geology side. 
> 
> And I'll point out that CHK's planned drilling program is by no means small. It may be a lot smaller than it used to be, but they still have one of the largest drilling programs in the US. 
> 
> I have a friend who works for ConocoPhillips down in Houston and he was telling me about how crazy busy things have been for the engineers working in the eagleford, which is the area he is working in. He said they had 8 rigs running down there at the time. Even with CHK's dropped rig count they still have about 20 rigs running in the eagleford, according to one of their last investor presentations. Just some perspective.


It takes just as many or more landmen as it does geologists and production/operations engineers to handle an district, even one that isn't that active. There are many maintainence tasks on the land side as well for producing properties. Generally fewer reservoir and drilling engineers  are needed as they often work across districts. I still stand by what I said, you don't need as many drilling or reservoir engineers in general, but you don't need as many production/operations engineers or geologists if you are drilling far fewer wells. These are generalizations based on how all the companies I've worked with are set up but it generally holds true.

The issues for land start when companies like CHK try to vertically integrate every aspect of the land business and hire way too many In house land people to handle an tasks in an aquisition period and splitting off tasks that one person could handle thus creating new, sometimes unnesessary positions.

I will add that I agree with you, a 68 rig drilling program is still massive. At an average drilling time of a month per well(give or take) that figures out to be around 850 wells a year, which is still a ton of wells.

----------


## PWitty

> It takes just as many or more landmen as it does geologists and production/operations engineers to handle an district, even one that isn't that active. There are many maintainence tasks on the land side as well for producing properties. Generally fewer reservoir and drilling engineers  are needed as they often work across districts. I still stand by what I said, you don't need as many drilling or reservoir engineers in general, but you don't need as many production/operations engineers or geologists if you are drilling far fewer wells. These are generalizations based on how all the companies I've worked with are set up but it generally holds true.
> 
> The issues for land start when companies like CHK try to vertically integrate every aspect of the land business and hire way too many In house land people to handle an tasks in an aquisition period and splitting off tasks that one person could handle thus creating new, sometimes unnesessary positions.
> 
> I will add that I agree with you, a 68 rig drilling program is still massive. At an average drilling time of a month per well(give or take) that figures out to be around 850 wells a year, which is still a ton of wells.


CHK seems to be a unique situation though, because asset wise they have some of the best assets in the business. The problem is/was that when Aubrey was there they devoted all their money to buying up new land and drilling a HUGE number of wells, even though they didn't have the cash to pay for it, so they could hold all their new acreage with production. Because of this they never even really got a chance to begin DEVELOPING their acreage in the way that most E&P companies do. My point was that now that the development phase is underway, even if they are drilling less wells, this is when the engineering positions are actually put to good use. 

Like I said earlier in the thread, I've also heard that they are still actively hiring new engineers. This is another reason I have a hard time seeing any significant reduction in the number of engineering positions. It would just seem counter intuitive for them to hire new engineers if they know they're about to let engineers go.

----------


## Libbymin

> Whoa there tiger, it depends on the type landman. They may not be technical employees, but they are not salesmen and most do not function in that capacity in-house. The sales portion, leasing, is usually taken care of by contracted field landmen that do not need a degree or any relevant experience to start a career and are more or less interchangeable. Field landmen that specialize in title are far less interchangeable as a working knowledge of state laws for any state youre working in is required, especailly by those in a supervisor role. Inhouse landmen, especailly those with 5 or more years experience are not anymore interchangeable than engineers and geologist. It may not be a technical knowledge, but a very detailed understanding of state laws and regulations is required for every entity you have to work with, whether that be states, BLM, Native American lands, etc. You can't just drop a random person into a position like that and say go. It's also important to have a very detailed knowledge of and good relationship with other companies, attorneys and landowners you have to deal with on a daily basis. Landmen are the PR face of the company with these entities. A working knowledge of the geology, GIS and engineering processes involved in the area you're working is also very important, it sometimes takes years to build up that kind of knowledge. So while landmen don't have a technical role, they do play a crucial part in every oil and gas company and a good one, just like a good engineer or geologist, is not interchangeable with someone hired off the street or without the experience to fill the role. There is a reason company landmen are paid nearly as well as (or in some cases much more than) geologists and engineers (I have seen company wide salary sheets and starting salary stats that back that statement up), it is far from easy work and requires a different type of skill to do it. 
> 
> CHK's problem is that they hired way too many landmen in proportion to everything else to manage all of the field people they were hiring during the land grab, and the huge amount of wells they were drilling among other things. They also divided out the tasks that one landman may do for a small company into many different positions that people are pidgeon holed into. My friends that work for Devon would always joke about CHK saying that they had twice the assets (at least as reflected in their market caps) and half the employees...that is the core of CHK's overemployment issue. Too many people that are doing work that one person is handling elsewhere.


I've heard this too from people who work there who ended up leaving. Other people think you'd have to be crazy to leave a place like CHK where the pay is so good and the benefits are so great (seriously, that 401k match is just ridiculous) but you can get pigeon-holed doing the same thing very easily in that company. And with the number of people they had employed, it's kinda hard to move on to something more challenging or with more responsibility.

----------


## WilliamTell

I agree that a broad amount of people and skills fall under the title of landmen, and given the right dditude t and a few years experincr someone.can become a valuable asset. Ill leave it at that since a lot of people in okc are going through trying times and I have no dog in this fight.

----------


## PhiAlpha

> I agree that a broad amount of people and skills fall under the title of landmen, *and given the right dditude t and a few years experincr someone.can become a valuable asset*. Ill leave it at that since a lot of people in okc are going through trying times and I have no dog in this fight.


That's true of all jobs in Energy or any other Industry.

----------


## warreng88

I have a friend at CHK and he said every VP in the Land Department just got let go. Doesn't surprise me since middle management is the first to get let go.

----------


## Pete

> I have a friend at CHK and he said every VP in the Land Department just got let go. Doesn't surprise me since middle management is the first to get let go.


Is this happening today?

----------


## PhiAlpha

> I have a friend at CHK and he said every VP in the Land Department just got let go. Doesn't surprise me since middle management is the first to get let go.


Just heard this as well, but from my source, several engineering and Land Administration managers were also included. I wont mention any names but they were more key people that had been there a long time.

----------


## warreng88

> Is this happening today?


Yep.

----------


## CuatrodeMayo

I just found out an acquaintance and their department were all laid off.

----------


## okc_bel_air

What department?  Is this in OKC or out of state?  I have been reading thelayoff.com and trying to decipher what is fact and fiction over there.

----------


## Pete

The tough things about these situations is that companies never release numbers to the press or even talk about this sort of thing at all...  So you never really know how many have been impacted.

I know when I've been part of layoffs even the employees themselves really had no idea how many people were cut; just anecdotal information such as being shared here.

----------


## adaniel

My friend who works there says 30 VPs have been let go, the vast majority in land/leasing. But it sounds like there may be more than that.

----------


## bradh

Have a friend who is in land (not sure what division, and he's been there 7 years so he's got some time in), lost his VP but he's still there.

----------


## ctchandler

Adaniel,
Why does a company have thirty VPs?  I have worked for a bigger company than CHK and they didn't have 30 VPs.  Just curious.
C. T.


> My friend who works there says 30 VPs have been let go, the vast majority in land/leasing. But it sounds like there may be more than that.

----------


## Pete

> Adaniel,
> Why does a company have thirty VPs?  I have worked for a bigger company than CHK and they didn't have 30 VPs.  Just curious.
> C. T.


In many companies -- especially in energy and financial services -- a VP is a middle manager and there are hundreds of them.

Usually it starts with Associate VP (many sit in a cubicle and don't manage people), then VP (usually manage a team but it could even be a small one), then Senior VP, Executive VP, Managing Director, etc., etc.

I was a Senior VP and still several layers down in the org. chart.

----------


## CuatrodeMayo



----------


## warreng88

From the Oklahoman:

Chesapeake reorganizes amid layoff reports

The company would not confirm it was cutting jobs, but email accounts of several employees are no longer active.

BY JAY F. MARKS 
Business Writer jmarks@opubco.com • Modified: September 10, 2013 at 2:18 pm • Published: September 10, 2013 

Chesapeake Energy Corp. laid out a new organizational structure Tuesday amid multiple reports of layoffs at the Oklahoma City-based oil and natural gas company.

Chesapeake has declined to comment on possible layoffs, but email accounts for several company employees are no longer active.

Spokesman Gordon Pennoyer issued a statement Tuesday afternoon that did not address the layoff reports.

“Chesapeake is transitioning key leadership positions and making adjustments to its organization to properly align resources, reduce expenses, and improve its operating and competitive performance,” he said. “The company's focus remains on financial discipline and profitable and efficient growth from captured resources. We look forward to realizing Chesapeake's full potential for our shareholders and employees.”

Asked about specific managers, Pennoyer said, “We will have no comment beyond what I sent you.”

CEO Doug Lawler told employees that additional organizational changes are expected in the coming weeks.

“During this time, it is imperative that each of us maintain our focus on safety and execute our day-to-day duties in an operationally prudent manner,” Lawler wrote in an email to employees Tuesday afternoon. “We thank you for your patience and dedication as we work together to transform our company.”

Chesapeake had more than 4,700 employees in Oklahoma City as of Jan. 31, according to a report it provided to the city in March.

Chairman Archie Dunham hinted at possible job reductions last summer after he was tabbed to replace co-founder Aubrey McClendon at the head of the company's board.

He said Chesapeake's cost structure should be on par with peers like Devon Energy Corp. and Anadarko Petroleum Corp.

Both companies had about half as many employees as Chesapeake last year, despite much larger market capitalizations.

In the company's Aug. 1 earnings call with analysts, Lawler said he had launched a “comprehensive review” of Chesapeake's assets and organization. He said he planned to work with senior management to help Chesapeake realize its full potential.

Four senior executives, including former interim CEO Steve Dixon, were fired Aug. 12 as part of the company's reorganization effort.

“This is a business decision resulting from Chesapeake's continuing transformation to where we want to be as a top performing company,” Lawler told The Oklahoman when the moves were announced.

Chesapeake reorganizes amid layoff reports | News OK

----------


## ctchandler

Pete,
I worked for Hertz and I believe they had about 20 VPs.  None that worked in a cubicle, and all had directors reporting to them.  All the directors had managers and all the managers had supervisors/people working for them.  Obviously, the oil business does things differently.  
C. T.


> In many companies -- especially in energy and financial services -- a VP is a middle manager and there are hundreds of them.
> 
> Usually it starts with Associate VP (many sit in a cubicle and don't manage people), then VP (usually manage a team but it could even be a small one), then Senior VP, Executive VP, Managing Director, etc., etc.
> 
> I was a Senior VP and still several layers down in the org. chart.

----------


## Pete

> Pete,
> I worked for Hertz and I believe they had about 20 VPs.  None that worked in a cubicle, and all had directors reporting to them.  All the directors had managers and all the managers had supervisors/people working for them.  Obviously, the oil business does things differently.  
> C. T.


Yes, absolutely there is a big difference between industries.

At any large bank, there are literally hundreds -- and sometimes thousands -- of people with VP in their title.


In the end, it's just a title that means very little.

----------


## warreng88

> Yes, absolutely there is a big difference between industries.
> 
> At any large bank, there are literally hundreds -- and sometimes thousands -- of people with VP in their title.
> 
> 
> In the end, it's just a title that means very little.


At a bank I worked at in NWOKC, there were 75 people. There was One President and CEO, One Executive VP over Operations, One Chief Lending Officer and SVP, Four SVP (three were loan officers and one was the head of the credit department), 15 VP's (ten loan officers, one customer service, two in operations and two in new accounts) and about 5 AVP's. So, with 75 people, 22 or 29% had a title of VP or higher. The rest were us minions...

----------


## adaniel

Just my best guess, but in an energy company, VPs are usually in charge of some department over a specific geographic region or major play. So a VP of Land at Chesapeake may be over a big area (ex: Cana Play or Granite Wash in OK), and under them would be junior landmen, land techs, division order analysts, and the like.

----------


## Plutonic Panda

''Executive Positions Cut At Chesapeake Energy

Posted: Sep 10, 2013 12:12 PM CDT
Updated: Sep 10, 2013 1:56 PM CDT
By News9.com - email


OKLAHOMA CITY - Oklahoma City-based Chesapeake Energy has made another round of personnel cuts, as part of an ongoing effort to right-size the company.
Sources told News 9 that numerous high level employees – vice presidents – were informed today that their positions had been cut.  A statement from Chesapeake confirms that it is "transitioning key leadership positions and making adjustments to its organization to properly align resources, reduce expenses, and improve its operating and competitive performance."

The company would not reveal the exact number of positions cut.  Chesapeake currently employs 12,000 people in more than a dozen states.

Last month, the company announced the departures of several of the executive V.P.s who had served for years under co-founder and former CEO Aubrey McClendon, who left Chesapeake in April.

In an email to all employees this afternoon, current CEO Doug Lawler said these moves support the company's "new strategies of financial discipline and profitable and efficient growth from captured resources."

Lawler went on to say, "We are confident this structure will help Chesapeake successfully achieve our goal of becoming a top performing E&P company."

Additionally, Lawler told employees that more organizational changes should be anticipated in the coming weeks.

Here is the entire statement from Chesapeake regarding its latest personnel moves:

"*Chesapeake is transitioning key leadership positions and making adjustments to its  organization to properly align resources, reduce expenses, and improve its operating and competitive performance.  The company's focus remains on financial discipline and profitable and efficient growth from captured resources.  We look forward to realizing Chesapeake's full potential for our shareholders and employees.*"

- Executive Positions Cut At Chesapeake Energy - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |

----------


## Pete

> Lawler told employees that more organizational changes should be anticipated in the coming weeks.


Ugh.

Waiting / not knowing is so hard...  Wonder why they are dragging this out.

----------


## PhiAlpha

> Just my best guess, but in an energy company, VPs are usually in charge of some department over a specific geographic region or major play. So a VP of Land at Chesapeake may be over a big area (ex: Cana Play or Granite Wash in OK), and under them would be junior landmen, land techs, division order analysts, and the like.


It's set up differently everywhere, it just depends on the company. CHK's Land VP's and SVPs usually had pretty high level responsibilities over regions with a lot of people under them (From what I remember, in Land at CHK, it went - SVP (Henry Hood) - Regional VPs (several) - Division Managers - Land Supervisors - District Landmen, that may not be exactly right but it was something like that).  My company had SVPs, VPs, AVPs, and Managers. The SVPs were the only ones whose responsibilities were fundamentally different. VP, AVP, and Manager were basically interchangeable terms, as far as responsibility (departments, employees, etc), with different salaries and financial approval levels for each higher designation.

----------


## bradh

another round coming today, this time at the level below the VP's cut yesterday.

probably drags out because they're trying to make sure they don't cut everyone and then have operations left out there that no one knows what the hell is going on

----------


## Libbymin

> another round coming today, this time at the level below the VP's cut yesterday.
> 
> probably drags out because they're trying to make sure they don't cut everyone and then have operations left out there that no one knows what the hell is going on


That's gotta be agony if you're in the lower level positions waiting to get the axe.

----------


## BG918

The people I know there are actively looking at other options, both in OKC and other energy cities.  They say it is looking pretty grim and the not knowing what/who is next is the hardest part.

----------


## Pete

At least Continental, Devon, Enable Midstream and other local energy companies are in expansion mode.

----------


## bradh

Most folks I know at CHK have had feelers out for almost a year

----------


## Richard at Remax

3 chaplains and a beekeeper got let go today. A beekeeper. SMH.

----------


## Pete

> 3 chaplains and a beekeeper got let go today. A beekeeper. SMH.


Seriously??

Of course, they were employing grocery store managers as well.

----------


## Richard at Remax

Exactly. I think we are seeing that there is a lot more fat to trim there than we think. Hell, they probably have more cooks that your average small business.

----------


## Pete

Where did you hear this about the beekeeper??

----------


## Richard at Remax

Wife works there. So while I make sure she still has her job, I ask her what layoffs did happen that day. I guess word spreads fast

----------


## Pete

I see.

I did find in an article about Aubrey they mentioned a beekeeper as part of their landscaping department.

And THREE chaplains??


At some point, the great excesses of this company and the way it was operated will make a great book.

----------


## Libbymin

> Most folks I know at CHK have had feelers out for almost a year


This is true. I have friends who used to work there who decided not to wait around and went ahead and looked for other jobs. That and the fact that they were getting bored being pigeon-holed into doing a smaller scope of responsibilities (a common problem heard among employees there).

----------


## betts

I like the idea of a beekeeper though.  We need to do everything we can to keep our honeybees alive and well.  The Waldorf Astoria and other big hotels in NYC keep bees on the roof.  Off topic, but I was thrilled to see a hummingbird on the flowers in front of my house and a toad in my front flower bed.  I've had honeybees on the flowers all summer.  Downtown wildlife.  We're pesticide free and enjoying the results.

----------


## jn1780

Well we know all the campus security officers jobs are safe for a few months. Someone has to walk all future layoffs off campus.

----------


## PWitty

> This is true. I have friends who used to work there who decided not to wait around and went ahead and looked for other jobs. That and the fact that they were getting bored being pigeon-holed into doing a smaller scope of responsibilities (a common problem heard among employees there).


What departments were your friends in? From the people I know in the engineering department, it's totally opposite. They all told me the reason they came to CHK from other majors or large independents is because at CHK they are able to have their hand in everything and be a part of the entire well's life cycle, and at the larger companies they were getting stuck replicating the same small piece of the larger design over and over. 

Also, DL gave a presentation in NY today at the Barclays Conference and outlined where he sees the company going and how they can cut costs. There was one slide in particular that showed their overall capex per year and broke it down into Drilling & Completions, Land, and Other. He repeatedly pointed out how from 2010-2012 only ~50% of their spending was actually on drilling and completions, while the rest was on Land and Other. One year the Land budget was even more than the Drilling and Completions budget, which is crazy for an E&P company.

----------


## warreng88

I would be curious to know if any of the people working at the restaurants or the sea of personal trainers at the fitness center will get the boot? I went to the fitness center about 3-4 times a week and there was one receptionist and at least five others there on some level all the time, Monday through Friday, 5:00am to 8:00pm, 8-4 on Saturday and 1-5 on Sunday. As nice as it was to have them there, it was a little overkill.

----------


## Libbymin

> What departments were your friends in? From the people I know in the engineering department, it's totally opposite. They all told me the reason they came to CHK from other majors or large independents is because at CHK they are able to have their hand in everything and be a part of the entire well's life cycle, and at the larger companies they were getting stuck replicating the same small piece of the larger design over and over. 
> 
> Also, DL gave a presentation in NY today at the Barclays Conference and outlined where he sees the company going and how they can cut costs. There was one slide in particular that showed their overall capex per year and broke it down into Drilling & Completions, Land, and Other. He repeatedly pointed out how from 2010-2012 only ~50% of their spending was actually on drilling and completions, while the rest was on Land and Other. One year the Land budget was even more than the Drilling and Completions budget, which is crazy for an E&P company.


I think any of the science-based departments are pretty good places to be (engineering, geology, geoscience, etc). But in the Land Dept and in particular, the Land Admin Dept, you find a lot of people specializing in particular duties of a landman. Whereas, in a smaller O&G company, a landman does a little bit of everything. Over the years there are good people that have left CHK for that very reason.

----------


## PhiAlpha

> I think any of the science-based departments are pretty good places to be (engineering, geology, geoscience, etc). But in the Land Dept and in particular, the Land Admin Dept, you find a lot of people specializing in particular duties of a landman. Whereas, in a smaller O&G company, a landman does a little bit of everything. Over the years there are good people that have left CHK for that very reason.


Yep...agree, same thing I've seen.

----------


## PWitty

> Yep...agree, same thing I've seen.


That's interesting. The only people I know are in engineering or geology so I guess I just assumed it was the same across the board.

----------


## Libbymin

OK I have to ask. Chesapeake really employed a beekeeper? Seriously?

----------


## Richard at Remax

I wouldn't be surprised if they have a barbershop quartet that goes around and boosts morale

----------


## Just the facts

> OK I have to ask. Chesapeake really employed a beekeeper? Seriously?


Why does that surprise you?  They have an extensive garden spread across a large land area and the plants don't pollinate themselves (well, some do but it isn't good for the plant).  I guess now they will probably outsource the work to a local beekeeper business (maybe even the same guy but who will now be a contractor making 2X as much).

----------


## Pete

> OK I have to ask. Chesapeake really employed a beekeeper? Seriously?


Yes.

I found reference to that position in an article about Aubrey a few years ago, where there was the inevitable discussion about their elaborate campus and landscaping.


The new CEO certainly has plenty of low-hanging fruit to harvest in his mission to cut and control spending.

----------


## Just the facts

> The new CEO certainly has plenty of low-hanging fruit to harvest in his mission to cut and control spending.


He can cut the job, but he can't cut the work.  The bees still need to perform their function unless he plans to also get rid of the landscaping.  Someone has to care after the bees.

Didn't Chesapeake also have a large greenhouse and community garden?

----------


## Libbymin

> Why does that surprise you?  They have an extensive garden spread across a large land area and the plants don't pollinate themselves (well, some do but it isn't good for the plant).  I guess now they will probably outsource the work to a local beekeeper business (maybe even the same guy but who will now be a contractor making 2X as much).


Uhh it surprises me because they're a company looking to cut a major portion of their workforce and they had cut upper level executives and then over a dozen VP positions _before_they let a beekeeper go. Now I think having a beekeeper would be kinda cool actually, but it's not exactly essential to an oil and gas company.

----------


## Pete

There is a wide range of efficiency in which any work can be performed.

It has been noted that CHK has nearly twice as many employees as Devon, although the latter has a much high market capitalization.

Their new chairman has stated he wanted to get the CHK numbers much more in line with industry best practices.

----------


## Just the facts

> Uhh it surprises me because they're a company looking to cut a major portion of their workforce and they had cut upper level executives and then over a dozen VP positions _before_they let a beekeeper go. Now I think having a beekeeper would be kinda cool actually, but it's not exactly essential to an oil and gas company.


Okay, I see what you mean.  Usually the cuts work their way down from the top.  I used to work for international container shipping company and we had 24 broccoli pickers in a field in Mexico.  We didn't even know we had these employees until we were implanting a new HR system.  What was really funny (sad) is that when we started we thought we had 2500 employees but by the time we got done putting everyone in the new system we had 4500 employees, so what didn't management do - they started laying people off to get to the 2500 level we though we had.  We were out of business 36 months later.

Also, maybe this beekeeper's name was Clarence Beeks.

----------


## Plutonic Panda

> Why does that surprise you?  They have an extensive garden spread across a large land area and the plants don't pollinate themselves (*well, some do but it isn't good for the plant*).  I guess now they will probably outsource the work to a local beekeeper business (maybe even the same guy but who will now be a contractor making 2X as much).


How is that?

----------


## Just the facts

> How is that?


How is what?  How do they self pollinate or why is it not good for them?

Self-pollination - Wikipedia, the free encyclopedia

----------


## Pete

Let's please not turn this into a thread about bees and plant pollination.

Thanks.

----------


## bchris02

According to CNBC, they are letting 2,000 people go. This may be quite a blow.

----------


## Pete

This is from CNBC.

However, the 2,000 number is probably out f 12,000 overall employees.  Only 5,000 work in OKC:



Layoffs at Chesapeake Energy rattle employees

The Oklahoma City television station K-FOR-TV reports that sources say as many as 2,000 jobs may be cut. Chesapeake has about 12,000 employees.

This week's layoffs occurred in the creative department and corporate development, according to a person at the company who spoke on the condition of anonymity. The person also said that there were layoffs in the government relations department two weeks ago.

Lawler's email hinted that there may be more layoffs to come.
"Additional organizational changes are anticipated in the coming weeks. During this time, it is imperative that each of us maintain our focus on safety and execute our day-to-day duties in an operationally prudent manner. We thank you for your patience and dedication as we work together to transform our company," Lawler wrote. 

Chesapeake shares are up by more than 61 percent year-to-date.

Employees have been rattled by the layoffs.

"Morale is low and as a result productivity is low," one person at the company said. "A lot of people wish they would just rip off the band aid."

Perks at the company are being cut back. *The community garden has been shut down—and the gardeners have been let go. The monthly concerts on the company campus are no longer happening. The annual Halloween party, which was a fundraiser for United Way, is also rumored to be cancelled*, according to a person at the company.

----------


## warreng88

> Perks at the company are being cut back. *The community garden has been shut down—and the gardeners have been let go. The monthly concerts on the company campus are no longer happening. The annual Halloween party, which was a fundraiser for United Way, is also rumored to be cancelled*, according to a person at the company.


None of this surprises me at all. I am curious if they will shut down any of the restaurants or start charging more for the food. I heard they operated at a 50% loss.

----------


## zookeeper

> This is from CNBC.
> 
> However, the 2,000 number is probably out f 12,000 overall employees.  *Only 5,000 work in OKC*:
> 
> 
> 
> Layoffs at Chesapeake Energy rattle employees
> 
> The Oklahoma City television station K-FOR-TV reports that sources say as many as 2,000 jobs may be cut. Chesapeake has about 12,000 employees.
> ...


Good point, but I wouldn't be surprised if the headquarters doesn't take the brunt of the layoffs. It's a damned if you do, damned if you don't thing for OKC. We don't need the layoffs, but we also need a healthy Chesapeake.

----------


## Pete

They just opened the expansive Skyline restaurant, with multiple different concepts on the very top of Building #14.

I know they only let employees eat at all their restaurants and heavily discount the prices.

Seems like an easy solution would be to charge full price and make them open to everyone, like Devon does with their restaurants.  The perk of having good, easily-accessible dining options is plenty good enough.


The CHK stock is up 61% since the first of the year and they are just now really starting to get costs under control, so you would expect further improvement.

It stinks for the people losing their jobs but it sounds like OKC will still have about 4,000 well-paid employees when the dust settles and that their future employment will be much more secure.

----------


## adaniel

At the risk of sounding cold, I can't see how anyone there didn't see this coming.

My small company has been bombarded by resumes from Chesapeake land staff for about a year now. Unfortunately none of them know anything about BLM/Indian stuff, so they really can't help me.

----------


## Pete

I think they all saw it coming but many were willing to hang on because they have better pay and perks than they could find elsewhere.


I wonder if salary adjustments might be coming as well.  At the very least, raises and bonuses may be curtailed until they bring people more in line with the market.

----------


## PWitty

> This is from CNBC.
> 
> However, the 2,000 number is probably out f 12,000 overall employees.  Only 5,000 work in OKC:
> 
> 
> 
> Layoffs at Chesapeake Energy rattle employees
> 
> The Oklahoma City television station K-FOR-TV reports that sources say as many as 2,000 jobs may be cut. Chesapeake has about 12,000 employees.
> ...


Taking away some of those perks, like the summer concerts and Halloween party, just doesn't make sense to me. I don't see how the costs that are saved from cancelling events like those can make any real impact to overall spending for a company that spends almost $8 billion a year. And events like those are what gave CHK a fun and welcoming culture that made so many people, especially college graduates from out of state, want to work there. I'm curious to see how many people will leave voluntarily, after all the organizational changes have been made, if there is any more significant changes in the perks and benefits. I know that if there was much of a change at all to the 401k that A LOT of those same people from out of state would start prepping their resumes and be ready to move.

----------


## Richard at Remax

I wonder if they are going to part ways with some of the thunder tickets they have

----------


## Libbymin

> I think they all saw it coming but many were willing to hang on because they have better pay and perks than they could find elsewhere.
> 
> 
> I wonder if salary adjustments might be coming as well.  At the very least, raises and bonuses may be curtailed until they bring people more in line with the market.


I have friends at CHK who haven't been as vigilant in looking for jobs as they probably should be but I think you're right. When you're paid that handsomely and get those kinds of benefits, it's harder than you think to willingly leave a cushy job like that if you think there's a chance you may live through the round of layoffs.

----------


## PWitty

> I have friends at CHK who haven't been as vigilant in looking for jobs as they probably should be but I think you're right. When you're paid that handsomely and get those kinds of benefits, it's harder than you think to willingly leave a cushy job like that if you think there's a chance you may live through the round of layoffs.


The bright side is that if you are unfortunate enough to be on the wrong side of the layoffs and you hadn't already been planning ahead, the rest of the O&G biz is still booming and there is plenty of jobs available. They're just not all in OKC.

----------


## soonerguru

It's sad, but we all knew this day was coming. 2000 lost jobs will leave a mark in OKC. Coulda been worse I guess.

----------


## Bellaboo

The employees lost a perk last year as well. Instead of getting Thunder tickets for free, an employee had to buy them, albeit at discount.

----------


## LuccaBrasi

Speaking of all the community cuts, I was told they will still be doing the Christmas lights, but only about half what they did last year. I'm not sure I buy that even the source is very reliable. I think if they are laying off that many people, the Xmas light tradition, even at a reduced scale, is over.

----------


## bchris02

This is pretty bad.  Perhaps the GE research center, along with the other recent economic developments, will help offset the shock to the local economy by this.  Hopefully Chesapeake will be able to get back on stable ground again as well.

----------


## CuatrodeMayo

I can't help but think these cuts (except the layoffs) are mostly for "show" for investors.

Given the scale of the company, the items being cut amounts to less than pocket change.

----------


## Pete

Pennies make pounds.

And it's part of a big shift in spending philosophy and not only does it add up, it sends a message to all remaining employees that they need to change their ways as well.  It's a cultural shift that is long over due.


As for the Christmas lights, I bet they just scale them back.  The last couple of years they had extended them all the way through Classen Curve and Nichols Hills Plaza.

----------


## Boomer3791

I think it will be very interesting to see what impact these cuts have in the long term on all the non-profite that CHK supports. One in particular that could be hit very hard is the Oklahoma City Boathouse Foundation. CHK was responsible for about 80% of OKCBF's annual operating expenses, including salaries and bonuses, which total more than $3M/yr. I know that OKCBF has broght the Chickasaw Nation in as a donor, but I can't imagine that between the Chickasaws and their other big donors, they'll be able to keep the organization running as it has been if CHK cuts their annual contributions back substantially. Ultimately, that could have a huge impact on the ongoing development of the Boathouse District.

----------


## Pete

They have already said they were cutting way back on philanthropy.

Of course they will still be giving, just not at such a ridiculous rate.

----------


## Garin

They still play ultimate frisbee on the front lawn with referees and all.... I would love to have a job like that!

----------


## RedDollar

> They still play ultimate frisbee on the front lawn with referees and all.... I would love to have a job like that!


Yeah, we can't have this frisbee chit ......................  why can't they have company sponsored bowling leagues like every one else  ????

Huh ??

Don't they know that bowlin is the thing to do in OKC  ???

Mowrons

----------


## RedDollar

Chit ........... and they too damn gud to have company sponsored bass fishin tournyments.

Rich mofos ............ cheeeit  !!

----------


## DoctorTaco

> They still play ultimate frisbee on the front lawn with referees and all.... I would love to have a job like that!


The weirdest thing about this is that Ultimate, even at the elite, "Professional" level, does not involve referees. It is a self-policed sport, with players calling their own fouls.

But I digress.

----------


## liirogue

I'm hearing consistent rumors that One Grand has been sold,  with Two Grand not far behind. County assessor's website doesn't show anything yet. Has anyone else heard this?

----------


## PWitty

> I'm hearing consistent rumors that One Grand has been sold,  with Two Grand not far behind. County assessor's website doesn't show anything yet. Has anyone else heard this?


I've heard that as well, but not from anyone I would count as reliable. It was mostly just rumor talk. But I have heard they were selling all their outlying properties, so it would make sense that they sell One and Two Grand. I just didn't know if those would be included or not since CHK had a restaurant in One Grand.

----------


## PhiAlpha

> I've heard that as well, but not from anyone I would count as reliable. It was mostly just rumor talk. But I have heard they were selling all their outlying properties, so it would make sense that they sell One and Two Grand. I just didn't know if those would be included or not since CHK had a restaurant in One Grand.


Pete mentioned this in another thread. Sold to midfirst.

----------


## Libbymin

> I've heard that as well, but not from anyone I would count as reliable. It was mostly just rumor talk. But I have heard they were selling all their outlying properties, so it would make sense that they sell One and Two Grand. I just didn't know if those would be included or not since CHK had a restaurant in One Grand.


That's a LOT of office space they'd be getting rid of and, thus, a lot of people without office space...

----------


## PhiAlpha

> That's a LOT of office space they'd be getting rid of and, thus, a lot of people without office space...


They just opened up two massive buildings on campus.

----------


## Boomer3791

From The Lost Ogle this morning regaring pending CHK layoffs. According to this leaked email, big layoffs may be coming to Chesapeake Energy | The Lost Ogle

----------


## Pete

> I'm hearing consistent rumors that One Grand has been sold,  with Two Grand not far behind. County assessor's website doesn't show anything yet. Has anyone else heard this?


http://www.okctalk.com/suburban-deve...tml#post687147


Scroll up in that thread for tons more information about the properties they own and are developing.

----------


## liirogue

Thanks Pete, I missed the update in that thread. Guess there's a good reason the rumors are flying!

----------


## Pete

CHK is basically doubling the square footage on their main campus with all the buildings they are opening this year.

This, at a time where they are selling off assets and laying off what appears to be significant numbers.

I don't think we'll see any new construction start there for quite some time and I would expect the majority of their ancillary properties will be sold within a year.


Fortunately, the real estate market is very strong right now in OKC so there shouldn't be a big impact to the community overall.

----------


## Plutonic Panda

''Chesapeake dismisses its natural gas vehicle team
By Jay F. Marks Published: September 17, 2013
Chesapeake Energy Corp. has eliminated its natural gas vehicle team as part of its ongoing corporate reorganization.

The seven-member team had been responsible for part of the Oklahoma City-based oil and natural gas company’s efforts to develop additional markets for gas usage.


A Chesapeake bus powered by compressed natural gas. April 1, 2009. Photo by JIM BECKEL, THE OKLAHOMAN ORG
Chesapeake has declined to address specifics of its restructuring, but natural gas vehicle advocates don’t expect to lose much momentum.

Rich Kolodziej, president of advocacy group Natural Gas Vehicles for America, said Chesapeake has been an important player in growing the natural gas vehicle market, but other companies and organizations have taken on that role now''

Read much more here: Chesapeake dismisses its natural gas vehicle team | News OK

----------


## Plutonic Panda

Chesapeake, GE deal not affected | News OK

----------


## bradh

I'm hearing a lot of good managers got let go today

----------


## Libbymin

In the midst of layoffs, Chesapeake Energy Corp. Chairman Archie Dunham on Thursday praised CEO Doug Lawler for his efforts to streamline the company.

“It's clearly the situation where we have way too many people, we have way too many members of management, we have too many layers of management and too narrow spans of control,” Dunham said.

http://newsok.com/chesapeake-chairma...rticle/3884666

----------


## Pete

That article also says that if/when they reach 500 in total OKC layoffs, they have to do an official filing, which hasn't happened yet.

Pretty sure they will reach that threshold before this restructuring wraps up by Nov. 1.

But, it also says they started with 4,700 employees, so they should still have around 4,000 when the dust settles.

----------


## Libbymin

> That article also says that if/when they reach 500 in total OKC layoffs, they have to do an official filing, which hasn't happened yet.
> 
> Pretty sure they will reach that threshold before this restructuring wraps up by Nov. 1.
> 
> But, it also says they started with 4,700 employees, so they should still have around 4,000 when the dust settles.


500-700 would still be a significant number either way though.

----------


## PhiAlpha

> 500-700 would still be a significant number either way though.


To put it into perspective, it would be like Continental in its entirety or Sandridge's downtown presence being wiped off the map.

----------


## venture

KWTV reporting more layoffs happening today. I guess the Lost Ogle nailed this a week or two ago.

----------


## bradh

> KWTV reporting more layoffs happening today. I guess the Lost Ogle nailed this a week or two ago.


Their chest beating was pretty lame if you ask me.  Local TV stations were reporting on layoffs the week before.  All they did was post excerpts from an email someone sent them from the inside.

My take was this, damn near everyone in OKC knows at least one person that works at CHK.  CHK employees have known loooooooong before the WARN that layoffs were coming, therefore, most of the city knew it as well.  Lost Ogle posted that as if they were reporting a cure for cancer.

----------


## Pete

We knew all about this here long before TLO.

----------


## ou48A

The makings of this could be seen more  than 10 years ago from their methods of operation..
During much of this time CHK was like watching a case of military victory disease. Many in OKC fell under its spell.

----------


## venture

> *Their chest beating was pretty lame if you ask me.* Local TV stations were reporting on layoffs the week before. All they did was post excerpts from an email someone sent them from the inside.
> 
> My take was this, damn near everyone in OKC knows at least one person that works at CHK. CHK employees have known loooooooong before the WARN that layoffs were coming, therefore, most of the city knew it as well. Lost Ogle posted that as if they were reporting a cure for cancer.


Indeed.  :Smile: 




> We knew all about this here long before TLO.


Oh I know...this was a case of me forgetting to put this little guy ->  :Roll Eyes (Sarcastic): 

Oops. LOL

----------


## adaniel

> We knew all about this here long before TLO.


On a slightly related note, I'm starting to fall out of love with TLO. Its great for a funny read while at work but not much more. They have an over inflated sense of self-importance that rubs me the wrong way.

I remember them tweeting very nasty things at Sam Anderson, the NY Times writer, because they felt he had ripped something off of them in regards to the Gary England story. When it was clarified that he had in fact not, no apology.

----------


## bradh

> On a slightly related note, I'm starting to fall out of love with TLO. Its great for a funny read while at work but not much more. They have an over inflated sense of self-importance that rubs me the wrong way.
> 
> I remember them tweeting very nasty things at Sam Anderson, the NY Times writer, because they felt he had ripped something off of them in regards to the Gary England story. When it was clarified that he had in fact not, no apology.


I stopped reading their blog about a year or so ago.  It's a shame because some of it was great, but it just got old and their arrogance of being the only "media" who gets scoops in OKC was tiresome.

----------


## Pete

TLO has become pretty belligerent of late and seems to be creating lots of enemies.

It's great to speak your mind and provide local satire but OKC is a pretty tightly-knit community.


There is a way to poke fun and provide contrary views without being completely abrasive and hateful.

----------


## OKCTalker

Finally the public acknowledgement: Chesapeake lays off 86 employees | News OK 

_Chesapeake Energy Corp. laid off 86 employees Tuesday as it moves forward with an ongoing overhaul under new CEO Doug Lawler.

Lawler notified employees of the latest changes to Chesapeake's organizational structure Tuesday in an email. Eighty-six people in a number of departments lost their jobs at the Oklahoma City oil and natural gas producer.

“These individuals have played an important role in the growth of our company, and we worked hard to ensure that each was treated with integrity and respect throughout this process,” he said.

Lawler said Chesapeake remains on track to complete its reorganization by Nov. 1.

“I fully recognize the difficulty and stress associated with the transformation process,” he wrote in his email to employees. “I assure you that we are working as quickly as possible to improve and position Chesapeake for future success.”_

It should make for an interesting annual Halloween party, coming after five weeks of substantial employee terminations.

----------


## soonerguru

God what a nightmare to work there wondering if you're the next in line to be cut. There will be a lot of sweating between now and Nov. 1.

----------


## MWCGuy

> God what a nightmare to work there wondering if you're the next in line to be cut. There will be a lot of sweating between now and Nov. 1.


That's exactly what I was thinking when I heard the news. The rumors had to been flying for sometime. Then you have Archie Dunham shooting his mouth off to the media about having too many employees. As soon as I heard that I thought, "We wonder why, so many people hate Corporate America?"  That may be true, he does not need to say that in the media especially with the holidays around the corner. I can only imagine the fear in many Chesapeake employees minds. To top it off this chowder head is saying "Tsk Tsk... your jobs are not needed but, mine sure is."

----------


## Richard at Remax

At least Christmas lights are going up today!....SMH

----------


## pickles

> Their chest beating was pretty lame if you ask me.  Local TV stations were reporting on layoffs the week before.  All they did was post excerpts from an email someone sent them from the inside.
> 
> My take was this, damn near everyone in OKC knows at least one person that works at CHK.  CHK employees have known loooooooong before the WARN that layoffs were coming, therefore, most of the city knew it as well.  Lost Ogle posted that as if they were reporting a cure for cancer.


Their take me seriously/don't take me seriously routine is just one part of why they've become irritating.  A larger factor is that the site is making it increasingly clear that they are not a good faith critic.

----------


## Midtowner

> There is a way to poke fun and provide contrary views without being completely abrasive and hateful.


That way would be a lot less entertaining to read. 

And it's tough to refer to TLO as "they."  I don't know how much editorial control is maintained over their writers.

----------


## tomokc

I have created a thread specific to The Lost Ogle: http://www.okctalk.com/arts-entertai...tml#post689618 

Now back to Chesapeake business practices...

----------


## PhiAlpha

These are RUMORS from an anonymous source inside CHK from 2 emails I received yesterday. If someone can confirm or deny any of this, please do. I deleted any information mentioning names and anything that has been confirmed by news coverage. Again most of these points are just rumors right now so other than 86 people being let go, I can't confirm any of it:




> Have a friend in IT and he said they are letting 60% of IT go.
> 
> I also heard anyone with 5 years or better would get a better severance package.  Did hear the stock that wasn't currently vested would not vest.





> Anyone with 25+ years exp…. gone.  86 people laid off today, so far.
> 
> The gym will be opened up to the public, Gold’s Gym will operate it.  All the restaurants will go contract too, so those employees will lose their CHK benefits. 
> 
> IT supposed to be hit today, too. Most of the regular joe employees are saying they only got 2 months’ severance pay, Cobra and NO vesting of stock that wasn’t already vested previous.
> 
> Some managers got 3 months sev. and some VP’s supposedly getting 6 months sev

----------


## Richard at Remax

Interesting since the place hasn't been open for 25 years. will be next year so maybe they are thinking that

----------


## Pete

Interesting about the gym and restaurants -- makes perfect sense.

Wonder if the restaurants will open to the public?

----------


## PhiAlpha

> Interesting since the place hasn't been open for 25 years. will be next year so maybe they are thinking that


25 years work experience, not CHK experience.

----------


## Richard at Remax

Ahh gotcha. makes sense now

----------


## Pete

I believe this link has been posted before and there is lots of junk in it, but it does have some good information:

Chesapeake Energy Corp. Layoffs

----------


## tomokc

Gold's Gym? With CHK's community ties I could've seen them spinning this off to the YMCA (and maybe that discussion was held), but not Gold's.

----------


## kevinpate

> God what a nightmare to work there wondering if you're the next in line to be cut. There will be a lot of sweating between now and Nov. 1.


They should meet with state employees who have survived multi day per month furloughs and full on RIFs on numerous occasions over the last two decades, as well as with those who are now elsewhere.

----------


## pw405

> These are RUMORS from an anonymous source inside CHK from 2 emails I received yesterday. If someone can confirm or deny any of this, please do. I deleted any information mentioning names and anything that has been confirmed by news coverage. Again most of these points are just rumors right now so other than 86 people being let go, I can't confirm any of it:


Not sure if that is good info, somebody posted that exact thing on site that Pete linked to, thelayoff.com  Asked a friends who work for them and there has not been any email mentioning this.

----------


## Garin

And their still in the front yard playing ultimate frisbee......

----------


## PhiAlpha

> Not sure if that is good info, somebody posted that exact thing on site that Pete linked to, thelayoff.com  Asked a friends who work for them and there has not been any email mentioning this.


There wasn't any public email or official email. These came from one employee currently at CHK and one that took the severence package back in February and have been forwarded around through several of my energy industry channels. They were sent to me by a former employee of CHK. Again, they are rumors.

----------


## soonerguru

> Interesting about the gym and restaurants -- makes perfect sense.
> 
> Wonder if the restaurants will open to the public?


It will be so pleasant dining in a former commissary that looks like a 21st Century recreation of a mental institution.

----------


## soonerguru

> They should meet with state employees who have survived multi day per month furloughs and full on RIFs on numerous occasions over the last two decades, as well as with those who are now elsewhere.


You left out "state employees, who haven't had a pay raise since 2006 and are constantly told every day that they are burdensome leeches to the 'job creators' and taxpayers" by our governator.

----------


## Pete

> It will be so pleasant dining in a former commissary that looks like a 21st Century recreation of a mental institution.


They have several restaurants and they all look very nice to me, especially the two newest:  Skyline and Creekside.

----------


## bradh

If they make their running track public I'd be there running several times a week.

----------


## Pete

Here are the five (!) Chesapeake restaurants:

----------


## Pete

> If they make their running track public I'd be there running several times a week.


It's not locked up, at least when I've been there.

----------


## warreng88

> If they make their running track public I'd be there running several times a week.


Yeah, it was never locked up when I was there and I would go running around it Saturday morning and a lot of times after work. There are some other calisthenics type of machines there were people can workout without weights.

----------


## bradh

good to know, i never knew that.  didn't want to be the lone non-CHK guy just wandering on to get a few sprints in

----------


## warreng88

> good to know, i never knew that.  didn't want to be the lone non-CHK guy just wandering on to get a few sprints in


There were so many people there that I wouldn't know who was and wasn't a CHK employee. You don't have to check in at the receptionist's desk to work out on the track so it wouldn't surprise me if there were non-CHK people out there. I would guess Nichols Hills has some people who go to it every once in a while.

----------


## Easy180

> Here are the five (!) Chesapeake restaurants:


Just a tad over the top. Guessing they will be scaling these down to a couple of delis and vending machines

----------


## Libbymin

Talked to a friend of mine over there who said the morale sucks right now and no one is being productive at all. Land Title Dept. will probably be cut altogether. The rumor is that the layoffs are being done every other Tuesday to coincide with the pay periods. Since there was one last Tuesday, there will probably be a big one next Tuesday. This time with all of the worker bees. 

The bad thing, from CHK's standpoint, is that they're going to lose some of the good people who would be worth keeping. Some of those guys are throwing out resumes to other companies already.

----------


## bradh

It's a tough position to be in, leave now and lose a potential severance package (but get to other employers before others) or wait it out, pass on other potential offers, and maybe get left looking around after everyone else who lost a job has been picked up.

----------


## PhiAlpha

> Talked to a friend of mine over there who said the morale sucks right now and no one is being productive at all. Land Title Dept. will probably be cut altogether. The rumor is that the layoffs are being done every other Tuesday to coincide with the pay periods. Since there was one last Tuesday, there will probably be a big one next Tuesday. This time with all of the worker bees. 
> 
> The bad thing, from CHK's standpoint, is that they're going to lose some of the good people who would be worth keeping. Some of those guys are throwing out resumes to other companies already.


A lot of guys over there have been throwing out resumes for a few years now.

----------


## Libbymin

> A lot of guys over there have been throwing out resumes for a few years now.


True, but I think that has definitely accelerated within the last few months. The bad thing about coming from the Land or Land Admin Dept at CHK is that they have a reputation for specializing everyone over there. So when Landmen try to move from CHK to another company, prospective employers will say "well this candidate isn't really a Landman, he's a 'Title Specialist'".

----------


## PWitty

I saw Jeff Mobley said the other day during a presentation that CHK has roughly 6,000 employees that fall directly under the CHK umbrella and work for the actual E&P division of the company. That means the other 6,000 of the total 12,000 employees are all employed by the various service companies CHK owns, which seems about right. Using the E&P employment numbers puts them a lot closer to their competition than I think most people would realize. For instance Devon is listed as having 5,700 employees, only 300 less than CHK's E&P totals. But most people will point to CHK's 12,000 total when they compare the two, which isn't necessarily fair since Devon doesn't have all the extra affiliates that bulk up their employment numbers (at least not that I know of).

----------


## Bellaboo

One of my wife's girlfriends just resigned from CHK. Said she was bored to death, had been there a year and hardly did anything. She told her that two others in her section had quit earlier, but they replaced their positions with just one person.

----------


## kelroy55

> One of my wife's girlfriends just resigned from CHK. Said she was bored to death, had been there a year and hardly did anything. She told her that two others in her section had quit earlier, but they replaced their positions with just one person.


I hope she had a new job to go to before she quit.

----------


## Bellaboo

> I hope she had a new job to go to before she quit.


She does, but it was all about moving to be closer to her boyfriend.....

----------


## Libbymin

> One of my wife's girlfriends just resigned from CHK. Said she was bored to death, had been there a year and hardly did anything. She told her that two others in her section had quit earlier, but they replaced their positions with just one person.


There are two common complaints you hear from employees at that company. On one side you have those who are overworked. On the other side, you have a lot of people (particularly in Land) doing the same thing. Not only that, but they have a much narrower scope of responsibilities than a normal Landman. 

I've heard people say that they think it's crazy for anyone to leave a company with the kinds of benefits they have (or had), but sometimes it's just not worth it if you have to spend 8 hours a day staring at your screen and looking for something to do.

----------


## onthestrip

> There are two common complaints you hear from employees at that company. On one side you have those who are overworked. On the other side, you have a lot of people (particularly in Land) doing the same thing. Not only that, but they have a much narrower scope of responsibilities than a normal Landman. 
> 
> I've heard people say that they think it's crazy for anyone to leave a company with the kinds of benefits they have (or had), but sometimes it's just not worth it if you have to spend 8 hours a day staring at your screen and looking for something to do.


Heard the same. I know someone who quit a few months ago for this reason, there was nothing to do. You can only have so much water cooler talk before your work life gets too boring. And on the opposite end, I know some in accounting that work through lunch and put in extra hours because of the workload.

----------


## lasomeday

I heard from quite a few friends this week that work at CHK, that there will be more layoffs next week.  Most of the layoffs so far have been management and above and this layoff will be the first to hit the ones that don't have any direct reports.... so it could be massive.

----------


## BG918

> Heard the same. I know someone who quit a few months ago for this reason, there was nothing to do. You can only have so much water cooler talk before your work life gets too boring. And on the opposite end, I know some in accounting that work through lunch and put in extra hours because of the workload.


Yep, I know someone there who works in Land.  They all have "areas" that they focus on, and if there is not any activity in that area they literally do nothing for months at a time.  She would come to work, play on the internet, work out at the fitness center, and then leave early everyday.  She has some work now but maybe a couple hours a day of actual work.  All the while pulling in 65K a year..

----------


## MadMonk

I know a guy that works there, but hasn't been directly affected yet.  According to him, the mood is quite grim as you can imagine.

----------


## Libbymin

> I heard from quite a few friends this week that work at CHK, that there will be more layoffs next week.  Most of the layoffs so far have been management and above and this layoff will be the first to hit the ones that don't have any direct reports.... so it could be massive.


A friend in Land at CHK told me that Tuesday is expected to be the big day when all of the "worker bees" get let go. Supposedly a lot of conference rooms are booked for that day. The idea is that they want everyone to be situated with their new groups and positions by November 1.

----------


## Easy180

> A friend in Land at CHK told me that Tuesday is expected to be the big day when all of the "worker bees" get let go. Supposedly a lot of conference rooms are booked for that day. The idea is that they want everyone to be situated with their new groups and positions by November 1.


I was part of a have to let you go party in a conference room a few years back...The douche led off with a joke

----------


## ctchandler

Easy180,
Now, that's sick.  A few years ago (early 90's) Hertz laid off a lot of folks and they were rounded up like cattle and told about it.  Our employee relations manager resigned because of it.  He had class.
C. T.


> I was part of a have to let you go party in a conference room a few years back...The douche led off with a joke

----------


## soonerguru

> I was part of a have to let you go party in a conference room a few years back...The douche led off with a joke


Was it George Clooney?

----------


## ou48A

Is Chesapeake Really Serious About Financial Discipline? (CHK)

"Chesapeake is allocating the bulk of its capital to its highest-quality and most profitable projects. At the same time, it will continue to raise additional cash through its ongoing asset sale program, while also reducing its financial and operational risk and complexity."

----------


## sooner88

Just got a text message from a current employee saying "And so it begins..."

----------


## ereid

I saw a post from someone on FB that 5 on her husband's floor were let go.

----------


## MGintheBLC

Entire departments/groups are being let go in large group meetings.  some updates over at Chesapeake Energy Corp. Layoffs

----------


## okc_bel_air

You can't trust everything on the thelayoff.com forum.  Most people on there are trolls.  But yes, I have also heard they are now moving on to the average employee and groups.  I have some friends that work there and so far they are safe but very worried.  I am keeping in touch with them today and will pass along any info.

They are in Land, Finance, and Accounting departments.

----------


## warreng88

I have a friend in the land dept and she got laid off 15 minutes ago. I asked how many people were in the room with her and she said a bunch but she couldn't say more because she wanted to keep her severance package.

----------


## Just the facts

Just like clock work - the second layoffs were confirmed today the stock started climbing.  Carl should be happy.  He just pocketed another few hundred grand.

CHK Stock Quote - Chesapeake Energy Corp. Stock Price Today (CHK:NYSE) - MarketWatch

----------


## Richard at Remax

Doubtful since it is down $.02 right now

But even if he does make money, why should it bother you if the stocks go up? I am an investor with them. I will be disappointed that people lost their job but if the market favors it then it shows it was the right thing to do.

*also like to say my wife works in exploration over there and her landman along with a few others got the axe this morning too

----------


## okc_bel_air

20+ in accounting just got let go.

----------


## Just the facts

> Doubtful since it is down $.02 right now
> 
> But even if he does make money, why should it bother you if the stocks go up? I am an investor with them. I will be disappointed that people lost their job but if the market favors it then it shows it was the right thing to do.
> 
> *also like to say my wife works in exploration over there and her landman along with a few others got the axe this morning too


From the second the layoffs were confirmed the stock is up.  Also, it was the right thing to do for whom?

----------


## Richard at Remax

For the future of the company these layoffs were necessary. It had become unsustainable. And yes when the stocks go up the people at the top shares go up. along with every other stockholder of the company. I usually agree with you on stuff but I don't understand why you are trying to make the point that the CEO should be happy. He is there cleaning up aubreys mess. Plus He answers to the board so don't make it seem like it was just him. This is what needed to happen. Its hard to take emotion out of it but its what needed to happen. Cause if they were to continue in the direction they were going it probably would end up a lot worse.

----------


## Just the facts

The situation as Chesapeake has nothing to do with the company being financially stable.  That is what gets lost in all this.  The situation with Chesapeake and Sandridge was that the Wall Street investors didn't think they were getting enough money.  At no time was Chesapeake in danger of going out of business.  At the end of each year AM had a pile of profits to do something with - he chose to spend on himself, his employees, his campus, and OKC in general and not give it all to the Wall Street investors.  We saw where that got him.

----------


## bradh

Even the people that I am friends with that work at CHK acknowledge what's happening is needed for the company to survive long term.

----------


## Libbymin

They've definitely been overstaffed for a while so some changes were needed. But it sounds like they're making these cuts with a hatchet instead of selectively picking the ones who were underperforming. I have a friend in Land Title who was just let go. He's been there for several years and a very competent guy. He was just in the wrong place at the wrong time I guess. That whole department may have gotten the axe.

----------


## PhiAlpha

> The situation as Chesapeake has nothing to do with the company being financially stable.  That is what gets lost in all this.  The situation with Chesapeake and Sandridge was that the Wall Street investors didn't think they were getting enough money.  At no time was Chesapeake in danger of going out of business.  At the end of each year AM had a pile of profits to do something with - he chose to spend on himself, his employees, his campus, and OKC in general and not give it all to the Wall Street investors.  We saw where that got him.


With all of his crazy acreage purchases, there was not a pile of money left over at the end of any year. Hence the constant borrowing of funds and increased debt. The campus and real estate purchases add to it, but that is nothing compared to what they were spending on operations. They are scaling back operations and have a bunch of employees that don't or won't have anything to do. The layoffs suck but they are extremely necessary to the future of the company.

----------


## Just the facts

Well Carl Icahn disagrees with your friends.  He didn't invest billions in a company that might go out of business.  He buys into companies that he thinks are hoarding profits, switches out the board and CEO, and rakes in the profits for himself.  It is what he does.  Icahn is Zielinski, Chesapeake was Callahan Auto, and AM was Big Tom.  This country needs more Big Tom's and less Zielinski's.

As for the future of Chesapeake (the supposed outcome of the rescue), we'll see what happens after all the 'shareholder value' has been transferred.

BTW - Icahn just bought 61 million shares of Talisman Energy.

http://www.forbes.com/sites/christop...lisman-energy/




> His full tweet: “Disclosed approx 61 million share position in Talisman Energy. May have conversations with mgmt re strategic alternatives, board seats, etc

----------


## PhiAlpha

> They've definitely been overstaffed for a while so some changes were needed. But it sounds like they're making these cuts with a hatchet instead of selectively picking the ones who were underperforming. I have a friend in Land Title who was just let go. He's been there for several years and a very competent guy. He was just in the wrong place at the wrong time I guess. That whole department may have gotten the axe.


If he's in land title, they are just going to start outsourcing that work like every other oil and gas company does. It's cheaper and they don't have to pay for benefits, bonuses, etc.

----------


## bradh

Nice Tommy Boy reference, you will get props for that anytime  :Smile:

----------


## OklahomaNick

Just confirmed that 95% the legal division of the Land Title department was let go this morning. They kept about 10 of 175 employees. Most of these had law degrees. Lots of attorneys will be looking for jobs. 

Its a blood bath over there at 63rd & Western today..

----------


## PhiAlpha

> Just confirmed that 95% the legal division of the Land Title department was let go this morning. They kept about 10 of 175 employees. Most of these had law degrees. Lots of attorneys will be looking for jobs. 
> 
> Its a blood bath over there at 63rd & Western today..


They will definitely be outsourcing all of it. I'm sure they are holding into those 10 to manage contractors or move them into he legal department.

----------


## Paseofreak

Does it strike anyone as odd that DOK/Mewsok has no mention of this?

----------


## Libbymin

Yeah my buddy in Land Title said that practically his whole department was let go.

----------


## Libbymin

> Does it strike anyone as odd that DOK/Mewsok has no mention of this?


Oh they will for sure, they may wait until it's finalized before they actually publish something though.

----------


## bradh

> Does it strike anyone as odd that DOK/Mewsok has no mention of this?


It's not always about the scoop but more about having correct and pertinent information to report.

----------


## Libbymin

> It's not always about the scoop but more about having correct and pertinent information to report.


Completely agree. If there's one thing that drives me crazy about the news these days (and the 24 hour networks are particularly bad about this), it's that they tend to report anything and everything they hear in the hopes that they be the first to release the scoop. Then they end up releasing bad info and peoples' names get dragged through the mud publicly.

----------


## Pete

> Does it strike anyone as odd that DOK/Mewsok has no mention of this?


Brianna Bailey has been covering this and is on top of it.

Brianna came over from the Journal Record and does a great job.

I'm sure it's just waiting for the dust to settle a bit and preferring to have someone at CHK go on the record, which will almost certainly not happen until things have largely been wrapped-up.

----------


## Just the facts

What is there even to report?  They company will offer a press release how this is good for the company to ensure future survival and the people let go are sworn to secrecy under penalty of losing there severance package.

----------


## warreng88

> Entire departments/groups are being let go in large group meetings.  some updates over at Chesapeake Energy Corp. Layoffs


Looks like there was so much traffic, they shut down. This is the message I got when I clicked the link:

Over Quota
This application is temporarily over its serving quota. Please try again later.

----------


## zookeeper

If the newspaper industry wants to stay relevant in this digital age, and I think it's important for them to do so, they need to do more than open a digital desk and link to silly videos and TMZ like stories. It needs to be AHEAD of "official" announcements if they have information from company emails, laid off employees, etc. They can fill in the blanks and details later. It sounds, to me, like they want to write it in such a way that Chesapeake Energy gets to frame the story.

----------


## Just the facts

> If the newspaper industry wants to stay relevant in this digital age, and I think it's important for them to do so, they need to do more than open a digital desk and link to silly videos and TMZ like stories. It needs to be AHEAD of "official" announcements if they have information from company emails, laid off employees, etc. They can fill in the blanks and details later. It sounds, to me, like they want to write it in such a way that Chesapeake Energy gets to frame the story.


The problem is that doing that jeopardizes access to other news stories.  I think at one point Sandridge told the Oklahoma to go take a hike.

----------


## zookeeper

> The problem is that doing that jeopardizes access to other news stories.  I think at one point Sandridge told the Oklahoma to go take a hike.


That's a risk. But I think the greater risk is on Chesapeake. They don't want to be on the wrong side of the newspaper. If as many people are being laid off, as we speak (write), I think you report the story as a HUGE breaking story. If Chesapeake is upset The Oklahoman didn't wait for *their* press release, well, that's the way it is. Newspapers have to change and be aggressive to stay relevant. I don't think they should report rumors and such, but there's much more than that now.

----------


## adaniel

> If the newspaper industry wants to stay relevant in this digital age, and I think it's important for them to do so, they need to do more than open a digital desk and link to silly videos and TMZ like stories. It needs to be AHEAD of "official" announcements if they have information from company emails, laid off employees, etc. They can fill in the blanks and details later. It sounds, to me, like they want to write it in such a way that Chesapeake Energy gets to frame the story.


This is a terrible strategy. Being first should never take precedence over being right. And people lie, ya know. I certainly wouldn't take anything that someone says at face value when their own economic security is at risk.

----------


## zookeeper

Just like what Channel 9 is doing: Some Chesapeake Employees Confirm Another Round Of Layoffs - News9.com - Oklahoma City, OK - News, Weather, Video and Sports | 
They obviously know the rules of the game these days.

----------


## zookeeper

> This is a terrible strategy. Being first should never take precedence over being right. And people lie, ya know. I certainly wouldn't take anything that someone says at face value when their own economic security is at risk.


Terrible strategy? If journalists were to wait until confirmation from corporations, government, whatever - there wouldn't be any real journalism going on. They're not just typesetters to publish corporate press releases, Journalism means getting it right, but it also means - in this day and age - getting it to people sooner rather than later.

By the way, does your last sentence apply to the corporation's economic security as well?

----------


## bradh

There is nothing wrong with what channel 9 posted, and in terms of what zookeeper is proposing he's right there.

But as far as some in depth story, those should be left until more facts are available.

----------


## PWitty

> Terrible strategy? If journalists were to wait until confirmation from corporations, government, whatever - there wouldn't be any real journalism going on. They're not just typesetters to publish corporate press releases, Journalism means getting it right, but it also means - in this day and age - getting it to people sooner rather than later.
> 
> By the way, does your last sentence apply to the corporation's economic security as well?


You must be confusing REAL reporting with blogging. Being sure that your sources are solid and all your facts are checked before you publish a story is what journalists are supposed to do. You can't just publish a story without anyone willing to go on record with the facts. That's how you lose your job.

----------


## zookeeper

> You must be confusing REAL reporting with blogging. Being sure that your sources are solid and all your facts are checked before you publish a story is what journalists are supposed to do. You can't just publish a story without anyone willing to go on record with the facts. That's how you lose your job.


You're an O&G guy, I understand your loyalties. I'm curious, would you expect the same kind of reporting (or lack thereof) when it comes to government actions?

And Padz had it right, I'm not talking about a huge story - just an acknowledgment as to what's happening in our city! Right now!

----------


## PWitty

> The situation as Chesapeake has nothing to do with the company being financially stable.  That is what gets lost in all this.  The situation with Chesapeake and Sandridge was that the Wall Street investors didn't think they were getting enough money.  At no time was Chesapeake in danger of going out of business.  At the end of each year AM had a pile of profits to do something with - he chose to spend on himself, his employees, his campus, and OKC in general and not give it all to the Wall Street investors.  We saw where that got him.


You do realize that CHK has been operating in the red for a handful of years in a row now don't you? The only reason they came out cash flow positive was because of their annual asset sales. The main reasons were an overly aggressive land campaign and too many "extracurricular" activities. And the new organizational structure that has been implemented is how the structure of the company should have been all along. It's never good when people lose their jobs, but you're crazy if you don't think this makes the company a lot more efficient.

----------


## bradh

> You're an O&G guy, I understand your loyalties. I'm curious, would you expect the same kind of reporting (or lack thereof) when it comes to government actions?


Don't mind if I step in here, but that's the problem with the media and the government, they're all in a race to be first or so concerned with their own slant, no one reports worth a crap.

Journalism in general is CF right now

----------


## PWitty

> You're an O&G guy, I understand your loyalties. I'm curious, would you expect the same kind of reporting (or lack thereof) when it comes to government actions?
> 
> And Padz had it right, I'm not talking about a huge story - just an acknowledgment as to what's happening in our city! Right now!


Doesn't reporting like that qualify as a conspiracy theory?

----------


## adaniel

> Terrible strategy? If journalists were to wait until confirmation from corporations, government, whatever - there wouldn't be any real journalism going on.


Separating facts from BS is real journalism. Yeah it takes time to confirm everything. That probably doesn't do well in our world of instant gratification but it needs to happen nonetheless. 

As far as this situation is concerned, there are probably far fewer "sources" out there than you think. If you had to go through the shock of getting laid off, are you going to first pick up the phone and blab to reporter? Doubtful. In fact, I'm sure the severance packages these folks are getting have some pretty ironclad privacy clauses. I don't think any laid off employee is going to go on record with a journalist if it is going to get in the way of their ability to put food on the table.

----------


## Steve

> You must be confusing REAL reporting with blogging. Being sure that your sources are solid and all your facts are checked before you publish a story is what journalists are supposed to do. You can't just publish a story without anyone willing to go on record with the facts. That's how you lose your job.


WIN^^^^^
Typing rumors onto a website is easy. Confirming information, getting reaction, putting it into context is work.

----------


## zookeeper

> WIN^^^^^
> Typing rumors onto a website is easy. Confirming information, getting reaction, putting it into context is work.


Steve, I love 'ya, I think you are great. (You knew there was a 'but' coming). What's happening now is more than rumors. You know that. I know that. The people actually laid off know that. Did channel 9 just report rumors or did they just let the city know that layoffs are happening and they'll have more details as they become available?

For the main story, with all the facts, etc, should obviously be as you described. I just don't think anybody should coddle Chesapeake Energy, and wait for their narrative, before reporting that layoffs. Are. Happening. As we speak. Details to follow. 

There's nothing wrong with that. I'm sure glad to see you back on this site and don't let the bas%a#@ get you down.

----------


## Libbymin

> You do realize that CHK has been operating in the red for a handful of years in a row now don't you? The only reason they came out cash flow positive was because of their annual asset sales. The main reasons were an overly aggressive land campaign and too many "extracurricular" activities. And the new organizational structure that has been implemented is how the structure of the company should have been all along. It's never good when people lose their jobs, but you're crazy if you don't think this makes the company a lot more efficient.


More efficient yes, but the work environment will be a total sweat shop now. I think the concern after the layoffs will be that they whittle the company down to nothing and then sell it off. So much for being a recession proof city.

----------


## PWitty

> More efficient yes, but the work environment will be a total sweat shop now. I think the concern after the layoffs will be that they whittle the company down to nothing and then sell it off. So much for being a recession proof city.


I think that is a little exaggerated, but time will tell. Anadarko is a good company to work for as well, and CHK seems to be getting more and more like Anadarko organizationally.

----------


## Teo9969

> More efficient yes, but the work environment will be a total sweat shop now. I think the concern after the layoffs will be that they whittle the company down to nothing and then sell it off. *So much for being a recession proof city.*


This had nothing to do with the recession...

----------


## CuatrodeMayo

> More efficient yes, but the work environment will be a total sweat shop now.


It's not like CHK wasn't the opposite of a sweat shop before.

God forbid CHK employees actually have to earn their living.

----------


## Pete

Unless they are also slashing salaries of those who made the cut, they will still be paid well over market.

----------


## Libbymin

> It's not like CHK wasn't the opposite of a sweat shop before.
> 
> God forbid CHK employees actually have to earn their living.


They work their employees pretty well over there but they also had top-notch benefits, perks, and above-average pay. Say what you want about Aubrey being overly aggressive or greedy, but he treated his employees very well. 

I doubt they'll be taking pay cuts or anything like that, but I don't think CHK will be making any Forbes Top (insert number) places to work lists any time soon.

----------


## Anonymous.

So this is happening every Tuesday or what? 

Know someone who was laid off today. They admittedly did hardly anything and was way overpaid.

Wonder what that severance package looks like?

----------


## Libbymin

> So this is happening every Tuesday or what? 
> 
> Know someone who was laid off today. They admittedly did hardly anything and was way overpaid.
> 
> Wonder what that severance package looks like?


I think today and possibly tomorrow will be the last of it. Their severance will probably be favorable, but it'll be tough for some of those people to get jobs now.

----------


## PhiAlpha

> More efficient yes, but the work environment will be a total sweat shop now. I think the concern after the layoffs will be that they whittle the company down to nothing and then sell it off. So much for being a recession proof city.


That's not happening, just they are reducing staff doesn't mean they're trying to sell. CHK had way more employees than it needed, trimming it down from 13,000 to 10,000 is hardly whittling it down to sell it off. Devon, Anadarko, and Continental are not sweatshops and that is what CHK is aiming to be.

----------


## PhiAlpha

> They work their employees pretty well over there but they also had top-notch benefits, perks, and above-average pay. Say what you want about Aubrey being overly aggressive or greedy, but he treated his employees very well. 
> 
> I doubt they'll be taking pay cuts or anything like that, but I don't think CHK will be making any Forbes Top (insert number) places to work lists any time soon.


Devon routinely makes it every year and doesn't spend in excess on employee benefits but still has very good ones. CHK will not offer the same benefit packages to new employees but will still have very good benefits compared to most industries...and they will still have a gym, and on campus restaurants etc. They won't be on the list this year due to the layoffs but I guarantee they'll be back on it in a year or two.

----------


## adaniel

640 laid off today.

Chesapeake lays off 640 employees in OKC | News OK

----------


## PhiAlpha

> 640 laid off today.
> 
> Chesapeake lays off 640 employees in OKC | News OK


Looks like they decided to finish ripping off the bandaid. 

"Tuesday's announcement ends the monthslong changes that have led about 1,200 people to leave the company since the first of the year."

"After Tuesday's cuts, Chesapeake has about 11,000 employees nationwide, including about 6,000 in Oklahoma — 3,500 at its Oklahoma City headquarters."

----------


## Libbymin

> That's not happening, just they are reducing staff doesn't mean they're trying to sell. CHK had way more employees than it needed, trimming it down from 13,000 to 10,000 is hardly whittling it down to sell it off. Devon, Anadarko, and Continental are not sweatshops and that is what CHK is aiming to be.


I wouldn't be so sure with Icahn over there. He has a reputation for doing that sort of thing. That's not to say it would happen anytime soon necessarily, but long term it could very well be the plan.

----------


## Just the facts

Next up - local asset sales.  Someone is going to pick up suburban properties on the cheap.

----------


## adaniel

This whole ordeal should be "How to NOT do a layoff 101". Layoffs are painful and should not be dragged out to the extent this was. The non-land people should find jobs fairly quickly. Its the land staff that I'm worried about. 

But it looks like it's over. With a headcount of 3,500 that is still a significant number of people.

----------


## Libbymin

> This whole ordeal should be "How to NOT do a layoff 101". Layoffs are painful and should not be dragged out to the extent this was. The non-land people should find jobs fairly quickly. Its the land staff that I'm worried about. 
> 
> But it looks like it's over. With a headcount of 3,500 that is still a significant number of people.


I spoke to someone in our HR dept at my company about the way they were dragging this out and she was saying that it's not that uncommon for big companies to drag it out like this. You have to start from the top layer and move your way down.

----------


## PWitty

> Looks like they decided to finish ripping off the bandaid. 
> 
> "Tuesday's announcement ends the monthslong changes that have led about 1,200 people to leave the company since the first of the year."
> 
> "After Tuesday's cuts, Chesapeake has about 11,000 employees nationwide, including about 6,000 in Oklahoma — 3,500 at its Oklahoma City headquarters."


I'd point out that the 11,000 number puts the E&P branch of CHK right at around 5,000 employees, excluding all of the CHK Oilfield Service affiliates which account for around 6,000, which is right in line with its peers.

----------


## DoctorTaco

> That's not happening, just they are reducing staff doesn't mean they're trying to sell. CHK had way more employees than it needed, trimming it down from 13,000 to 10,000 is hardly whittling it down to sell it off. Devon, Anadarko, and Continental are not sweatshops and that is what CHK is aiming to be.


Ironically, withing the O&G community Chesapeake was always called "Stressapeake" for how much of a sweatshop it was. I know it sounds weird, considering how bloated they were. But that was the impression, at least mong technical people. Land and administrativer staff may have had a different experience.

----------


## OKCTalker

So what will today be called? Black Tuesday? Bloody Tuesday?

----------


## Lazio85

AP - Chesapeake Energy to lay off 800 workers

"About 1,200 people have left jobs with Chesapeake since the start of 2013." 

Chesapeake Energy to lay off 800 workers | Wichita Eagle

----------


## Anonymous.

> So what will today be called? Black Tuesday? Bloody Tuesday?


LosepayTuesday?

----------


## Steve

In 2011, when this thread was started, some folks really trashed MikeOKC for predicting this downfall. Let's look back, shall we?

"He's treated like a God here in Oklahoma City, but McClendon deserves the boot from the board. And he's not the only one, that board is loaded with McClendon lackeys. His compensation package is so far askew from reality that it should be derided by all that care about the future of CHK. The big question - will stockholders or the SEC bring down Aubrey McClendon first? CHK is rogue and out of control."

----------


## OKVision4U

> In 2011, when this thread was started, some folks really trashed MikeOKC for predicting this downfall. Let's look back, shall we?
> 
> "He's treated like a God here in Oklahoma City, but McClendon deserves the boot from the board. And he's not the only one, that board is loaded with McClendon lackeys. His compensation package is so far askew from reality that it should be derided by all that care about the future of CHK. The big question - will stockholders or the SEC bring down Aubrey McClendon first? CHK is rogue and out of control."


This is not a dowfall, but a Financial Pruining.  Pioneering CEO's are what is needed to "get things going, and make things happen".  I'm sure in the next 50 years, there will be a few more CEO's placed at the helm that will be a mix of conservative vs. "rogue".  You need both or a company will become stagnant.

Aubrey will build another company down the street and build it to 8,000 - 10,000 employees and keep even more Oklahomans employeed for a long time.  Plus the ones still at CHK.  That's not a bad thing, it has been great for OKLAHOMA.  There is only ONE true God, and Aubrey is not it, but I'm sure glad he loves OKlahoma too.

----------


## Teo9969

> This is not a dowfall, but a Financial Pruining.  Pioneering CEO's are what is needed to "get things going, and make things happen".  I'm sure in the next 50 years, there will be a few more CEO's placed at the helm that will be a mix of conservative vs. "rogue".  You need both or a company will become stagnant.
> 
> Aubrey will build another company down the street and build it to 8,000 - 10,000 employees and keep even more Oklahomans employeed for a long time.  Plus the ones still at CHK.  That's not a bad thing, it has been great for OKLAHOMA.  There is only ONE true God, and Aubrey is not it, but I'm sure glad he loves OKlahoma too.


Equivocation

----------


## Boomer3791

I worked closely with Aubrey and can honestly say that I appreciated his generosity and vision. From a business standpoint however, his leadership obviously left much to be desired. Today's layoffs were long overdue and will in all likelyhood, save the company from financial downfall. I suspect that although we may have seen the end of the large-scale cuts of CHK employees, the newly reduced workforce will have a trickle-down affect that will impact many others in OKC. Think about the jobs and income that will be reduced across the city and state, from the daycare center on CHK's own campus, to the businesses that are patronized by CHK's employees, to the non-profits that have come to rely so heavily on CHK's generosity. The cumulative impact of all of those losses may not be clear for some time. But I can't help but imagine that it will be signifigant. Yes, it will be a boon for contractors who will surely see an increase in their businesses as CHK moves more of it's land acquisition and other services out-of-house. But how many of those folks live in the metro? This is a very big deal for the local economy. And it will only get worse as those former CHK employees are forced to move elsewhere to find jobs.

----------


## soonerguru

> 640 laid off today.
> 
> Chesapeake lays off 640 employees in OKC | News OK


Wow. That's a lot of folks.

----------


## PhiAlpha

> I worked closely with Aubrey and can honestly say that I appreciated his generosity and vision. From a business standpoint however, his leadership obviously left much to be desired. Today's layoffs were long overdue and will in all likelyhood, save the company from financial downfall. I suspect that although we may have seen the end of the large-scale cuts of CHK employees, the newly reduced workforce will have a trickle-down affect that will impact many others in OKC. Think about the jobs and income that will be reduced across the city and state, from the daycare center on CHK's own campus, to the businesses that are patronized by CHK's employees, to the non-profits that have come to rely so heavily on CHK's generosity. The cumulative impact of all of those losses may not be clear for some time. But I can't help but imagine that it will be signifigant. Yes, it will be a boon for contractors who will surely see an increase in their businesses as CHK moves more of it's land acquisition and other services out-of-house. But how many of those folks live in the metro? This is a very big deal for the local economy. And it will only get worse as those former CHK employees are forced to move elsewhere to find jobs.


The majority of their land contractors that they currently use are based out of OKC.

----------


## Just the facts

In a world of 'profits first' I am glad people like AM exist.  We have enough people trying to grab every penny for themselves.

----------


## ou48A

> I worked closely with Aubrey and can honestly say that I appreciated his generosity and vision. From a business standpoint however, his leadership obviously left much to be desired. Today's layoffs were long overdue and will in all likelyhood, save the company from financial downfall. I suspect that although we may have seen the end of the large-scale cuts of CHK employees, the newly reduced workforce will have a trickle-down affect that will impact many others in OKC. Think about the jobs and income that will be reduced across the city and state, from the daycare center on CHK's own campus, to the businesses that are patronized by CHK's employees, to the non-profits that have come to rely so heavily on CHK's generosity. The cumulative impact of all of those losses may not be clear for some time. But I can't help but imagine that it will be signifigant. Yes, it will be a boon for contractors who will surely see an increase in their businesses as CHK moves more of it's land acquisition and other services out-of-house. But how many of those folks live in the metro? This is a very big deal for the local economy. And it will only get worse as those former CHK employees are forced to move elsewhere to find jobs.


As painful as this is for the individual, company and the community the very best thing that could happen is for a well managed company who is fiscally responsible to emerge from this....

A well managed CHK is a greater benefit to the community than a flash in the pan poorly managed company.

----------


## zookeeper

> *In a world of 'profits first' I am glad people like AM exist.  We have enough people trying to grab every penny for themselves.*


Yeah, in a world of slutty singers I am glad people like Miley Cyrus exist. We have enough girls trying to be sexpot singers.

Some way or another, JTF, you got things turned around in a bad way. Are you giving a try at parody?

----------


## bradh

> In a world of 'profits first' I am glad people like AM exist.  We have enough people trying to grab every penny for themselves.


Not to discount what Aubrey has done for this city, but you don't think for one bit that he maaaaaaybe did some of it for breaks elsewhere (like taxes)?

----------


## bchris02

Maybe dragging this out was to encourage people to voluntarily leave?  In addition to the recent layoffs, I am sure attrition at Chesapeake has been very high.

Nonetheless, this isn't good for OKC in the short term.  In the long term, a healthy Chesapeake though is much better than the unthinkable of them going bankrupt.

----------


## BG918

How many of these CHK employees will be absorbed into other OKC companies and how many will move to Houston, Tulsa, DFW or Denver?  That is the big question.

----------


## bluedogok

> I wouldn't be so sure with Icahn over there. He has a reputation for doing that sort of thing. That's not to say it would happen anytime soon necessarily, but long term it could very well be the plan.


That is what Icahn and his ilk (like Pickens) specialize in, sucking everything they can out of a company and leave nothing but a shell. Guys like Icahn don't build companies, they dismantle them and take anything of value out of them. Basically a business chop chop selling parts for more than the sum of the whole. THAT is his legacy. Aubrey may not have run the company according to Wall Street standards but how he did build and run Chesapeake is straight out of the old oily playbook, there is a a long list of companies whose rise and fall mirrors that, especially in the energy business. 

The downfall (not just in the case of CHK) seems to be going public and not retaining majority ownership to withstand the profit takers, the best thing you could do in that case is to craft an exit plan for after the IPO. His deals with with TWA and Kerr-McGee are prime examples of destroying companies while he himself profits. He is the master at acquiring shares then attempts a takeover or board shakeup with like Pavlov's Dog Wall Street reacts to driving his shares up and in many cases he bails out of the game since he just performed a pump and dump with his own shares. Guys like Icahn aren't business people, they are leeches on the business world. Take a look at his wiki page and look at all the companies that he has done this to, realize that many of them are no longer around or they were sold off to satisfy the debt load left after he acquired them and after he pulled his "profit" out of the company.

I know of one friend of mine who was laid off today after being there for six years, I can't remember what department she was in.

----------


## bchris02

> How many of these CHK employees will be absorbed into other OKC companies and how many will move to Houston, Tulsa, DFW or Denver?  That is the big question.


Some will probably stay while others will leave.  I don't see Tulsa absorbing too many of them though.  DFW or Houston maybe.

----------


## bluedogok

There is a lot of energy stuff going on up here, the Denver Business Journal has a blurb about growth in that industry a couple of time a week on average.

----------


## SouthsideSooner

So in the grand scheme of things, how much does all of this trace back to Aubrey losing his shares in the margin call?

----------


## PhiAlpha

> So in the grand scheme of things, how much does all of this trace back to Aubrey losing his shares in the margin call?


It's a lot harder to get kicked out of a company that you are he majority shareholder of. It was a stupid move, but you can blame the dive in natural gas prices as well. He made a big bet and lost huge. Had stayed the majority share holder and continued running the company like natural gas was at $12, he might have run the company into the ground anyway.

----------


## blangtang

(Reuters) - The chaplains and company gardener are gone now, along with *a weatherman who made more than a quarter million dollars a year*, as Chesapeake Energy Corp CEO Doug Lawler chops away at the high costs left behind by his free-spending predecessor, Aubrey McClendon.

New CEO cuts Chesapeake Energy's lifestyle largesse | Reuters

this was new to me:

"Even Joe McClendon, Aubrey McClendon's father and a former energy executive, had a job at Chesapeake when his son was CEO. Internal records from 2012 show he worked a few hours a week on "special projects" and reported directly to his son."

----------


## MWCGuy

You watch Aubrey will make a comeback but, this time he will keep the company private. I believe the stock market will either be a thing of the past or a mere shadow of its former self in another decade or so. I say that because today's investors do not understand the stock market. They think it should pay out like an ATM instead of operating like the casino it has been known to be by many investors over the years. 

The old school stock market players respected the fact that you don't see big payouts with every investment. Like a casino most payouts are modest at best and only once in a blue moon will you hit the jackpot. 

Due to the fact that today's stock market investors demand instant payouts I believe most companies will go private with recruited investors who will invest in the company with the condition that they get a piece of the profit or ownership in the company. I know of a few people that are out there with start up companies that have made such agreements. The banks won't finance them so they had to seek investors.

----------


## PWitty

> (Reuters) - The chaplains and company gardener are gone now, along with *a weatherman who made more than a quarter million dollars a year*, as Chesapeake Energy Corp CEO Doug Lawler chops away at the high costs left behind by his free-spending predecessor, Aubrey McClendon.
> 
> New CEO cuts Chesapeake Energy's lifestyle largesse | Reuters
> 
> this was new to me:
> 
> "Even Joe McClendon, Aubrey McClendon's father and a former energy executive, had a job at Chesapeake when his son was CEO. Internal records from 2012 show he worked a few hours a week on "special projects" and reported directly to his son."


The meteorologist had quite a bit of responsibility though. If I recall correctly he was the only one and he was responsible for keeping up with all the current and future weather patterns for all of CHK's operating areas and letting the people in the field know when and where to cut back or raise production.

----------


## ou48A

To a  major natural gas company a great meteorologist is worth their weight in gold.

----------


## PhiAlpha

> To a  major natural gas company a great meteorologist is worth their weight in gold.


Agreed, this point was driven into our skulls in college. We even had to take a few meteorology classes in order to get an energy management degree.

----------


## Pete

To do the math in terms of the numbers cut in OKC and how many local employees remain...

As of January of this year, CHK reported 4,722 OKC-based employees.

We know they cut 1,200 nationwide and 800 yesterday; of those shown the down yesterday 640 or 80% of the 800 were in OKC.

So, if you apply the same 80% to the 1,200, that's about 960 total OKC based employees that have been let go.

That would leave *3,762 still in OKC* -- a huge number and about what they had just a couple of years ago.

----------


## adaniel

Seems about right.

I don't want to sound like an insensitive jerk, but on a macro level I don't think this is the disaster that some have made it out to be. My heart goes out to the affected employees. But this is a company-specific downturn, not an industry one. I have a feeling most laid off employees will be absorbed into other companies here, while some will probably use this as a time to change careers. Only a handful will likely leave this area. It should be pointed out that the vast majority of the initial departure of 1,200 were people who left on their own, either through early retirement or to accept a position elsewhere.

The best thing for OKC is a strong Chesapeake. I am actually quite bullish on the future of the company from this point on.

----------


## GoThunder

> To do the math in terms of the numbers cut in OKC and how many local employees remain...
> 
> As of January of this year, CHK reported 4,722 OKC-based employees.
> 
> We know they cut 1,200 nationwide and 800 yesterday; of those shown the down yesterday 640 or 80% of the 800 were in OKC.
> 
> So, if you apply the same 80% to the 1,200, that's about 960 total OKC based employees that have been let go.
> 
> That would leave *3,762 still in OKC* -- a huge number and about what they had just a couple of years ago.


I don't think it is as bad as some are making it out to be.  The front page of the DOK's business section had a graphic featuring layoffs from GM, AOL, Bridgestone, and Celestica.  However, these companies shut down their entire operations here.  Chesapeake will hopefully be much more stable now and these folks should be able to find employment elsewhere.  If Mayor Mick isn't worried, I'm not worried.

----------


## LakeEffect

> The meteorologist had quite a bit of responsibility though. If I recall correctly he was the only one and he was responsible for keeping up with all the current and future weather patterns for all of CHK's operating areas and letting the people in the field know when and where to cut back or raise production.


True, but there are plenty of companies to outsource that to as well. AccuWeather offers professional service; StormPulse and Weather Decision Technologies and many do as well (WDT is based in Norman, I believe). AccuWeather Custom Weather Warnings and Analytics for the Energy Sector

----------


## Pete

> I don't think it is as bad as some are making it out to be.  The front page of the DOK's business section had a graphic featuring layoffs from GM, AOL, Bridgestone, and Celestica.  However, these companies shut down their entire operations here.  Chesapeake will hopefully be much more stable now and these folks should be able to find employment elsewhere.  If Mayor Mick isn't worried, I'm not worried.


Also, keep in mind they are merely cutting back to the numbers they employed just two years ago.


I don't mean to be insensitive but I put all this in the "it was fun while it lasted and everybody knew it was going to end" category, rather than the "OMG, OKC has been deprived of something it's relied on for decades and now what will we do??".

These layoffs also come at a time when lots of local O&G firms are hiring, it's a good time in the industry in general, and the unemployment rates in OKC and the entire area are near the best in the country.

----------


## Bellaboo

Another thing, a lot of times companies will make cut backs, and within a few months, they will hire some of them back, after they've realized they cut too deep to function.
I've seen that happen where I was previously employed.

----------


## micesu

Their land department was gutted and a lot of the people fired were landmen with law degrees. The problem with some of them is that they were recruited right out of law school and right now there is are more attorneys then the market can handle. 

I know talking to independent companies and landmen that a lot of them didn't like dealing with CHK because they put so many restrictions on them that it made it difficult to work for them. With the inhouse landmen gone, I'm guessing that they will start to farm out their title/landman work more. I guess it's cheaper to pay a independent contractor then have a inhouse staff.

----------


## Garin

I can tell you this the new CEO bought bob tways old house in oak tree and for the last three weeks he has had four armed security guards patrolling his house 24/7. Not a very popular man at the moment....

----------


## Plutonic Panda

> In a world of 'profits first' I am glad people like AM exist.  We have enough people trying to grab every penny for themselves.


I agree with you.

----------


## Plutonic Panda

> Yeah, in a world of slutty singers I am glad people like Miley Cyrus exist. We have enough girls trying to be sexpot singers.
> 
> Some way or another, JTF, you got things turned around in a bad way. Are you giving a try at parody?


Comparing a music artist to a multi billionaire founder and ceo of a major energy company..... ok.

----------


## blangtang

MARKET REPORT: Oil majors eye fracking giant Chesapeake Energy

Dealers on both sides of the Atlantic are convinced that the man who began his career as a Wall Street stockbroker in 1961 is confident that the second largest natural gas producer in the US, which is heavily into fracking, will soon attract a foreign cash bid in the region of $40 a share.

Dealers heard that *BP* (1.85p easier at 443.9p) and *Royal Dutch Shell* (20.5p off at 2039.5p) could both be running the slide-rule over the Oklahoma-based company whose shares yesterday touched a 52-week peak of $27.67.


MARKET REPORT: Oil majors eye fracking giant Chesapeake Energy | Mail Online

----------


## Dubya61

> MARKET REPORT: Oil majors eye fracking giant Chesapeake Energy
> 
> Dealers on both sides of the Atlantic are convinced that the man who began his career as a Wall Street stockbroker in 1961 is confident that the second largest natural gas producer in the US, which is heavily into fracking, will soon attract a foreign cash bid in the region of $40 a share.
> 
> Dealers heard that *BP* (1.85p easier at 443.9p) and *Royal Dutch Shell* (20.5p off at 2039.5p) could both be running the slide-rule over the Oklahoma-based company whose shares yesterday touched a 52-week peak of $27.67.
> 
> 
> MARKET REPORT: Oil majors eye fracking giant Chesapeake Energy | Mail Online


Why is that a great deal for them?  Is fracking a skill that Chesapeake has mastered? or is Chesapeake just a good acquisition?

----------


## PhiAlpha

Given BP's issues right now and how much of their US assets they've been selling off, I don't see it happening. She'll is a little more intriguing and I suppose it could be viewed one of two ways. They just announced that they are abandoning the Mississippi play in Kansas and haven't had a ton of success with their US assets did to lack of experience here (at least recently): so you could either think it isn't going to happen because they haven't had success here and are extremely gassy as a company or they are interested and, like Exxon with XTO, want to buy them as a subsidiary for their experience and position in the US. The market hasn't been greatly kind to Exxon regarding the XTO acquisition though (Exxon is big enough not to care, but it suppressed their stock price for awhile and shareholders have complained), and because of that, the same business analysts that have said CHK could be an acquisition target have said that acquisitions and mergers have been suppressed because of the results of the Exxon/XTO deal, recent spree of shareholder activism, and the industry trend of disintegrating and spinning off separate units of their companies (ex. The Conoco Upstream, Phillips 66 downstream split). CHK owns several operations subsidiaries so when buying CHK, you're not just getting a ton of properties but a drilling company, a frac tech company, several other subsidiaries, and a ton of debt. Will be interesting to see if CHK spins those off, and if someone buys them out at that point or they continue on as an independent.

----------


## ou48A

One of the things that is making CHK more desirable is that they are becoming more oily and less gassy.
 Slashing unneeded cost should also mean improving profit margins for CHK.

Of all the majors I would hate it most if BP bought CHK.....

----------


## HangryHippo

What might be expected by okc if chk is bought by one of these majors?

----------


## warreng88

> One of the things that is making CHK more desirable is that they are becoming *more oily and less gassy.*


Too many ten year old fart jokes could be made over this statement...

----------


## PhiAlpha

> What might be expected by okc if chk is bought by one of these majors?


Depends on a lot of factors, but as a possible good outcome, look at XTO in Fort Worth. It actually worked out pretty well for those guys (though like I said, the market didn't like it for Exxon for awhile). XTO was strapped for cash after the natural gas price cratered a few years ago and were more or less looking for a white knight to pull them out of it. Exxon bought them, runs them as their domestic operations subsidiary based out of Ft. Worth, has moved a lot of their domestic exploration employees (at least in land) to Ft. Worth to manager those assets, and it now has the richest oil company in the US funding their operations. People don't seem to enjoy working there as much as when they were an independent, much more red tape to deal with, but it's still good employer in FTW and is still adding employees.

----------


## lasomeday

I am fairly anti Chesapeake and I feel their stock is only going to go up.  Theses layoffs were needed and the changes have been justified.

----------


## HangryHippo

> Depends on a lot of factors, but as a possible good outcome, look at XTO in Fort Worth. It actually worked out pretty well for those guys (though like I said, the market didn't like it for Exxon for awhile). XTO was strapped for cash after the natural gas price cratered a few years ago and were more or less looking for a white knight to pull them out of it. Exxon bought them, runs them as their domestic operations subsidiary based out of Ft. Worth, has moved a lot of their domestic exploration employees (at least in land) to Ft. Worth to manager those assets, and it now has the richest oil company in the US funding their operations. People don't seem to enjoy working there as much as when they were an independent, much more red tape to deal with, but it's still good employer in FTW and is still adding employees.


Thanks for the insight.  So what do you see happening?  Do you think CHK gets bought out by Shell or BP (or someone else entirely) or do you see it making on its own?

----------


## PWitty

> Thanks for the insight.  So what do you see happening?  Do you think CHK gets bought out by Shell or BP (or someone else entirely) or do you see it making on its own?


I think PhiAlpha has been spot on with what he said. I will add that a buyout offer would need to be significantly above their current stock price, I would think. Their largest shareholders have been very defendant of CHK in the past and they look at the company as something that is worth multiples of what the stock currently trades at. But, an immediate payday might be tempting enough to get them to sell. It would be interesting. I don't think that would happen while CHK still owns all of its subsidiaries though. Of course I guess Shell or BP could buy them and then sell the subsidiaries themselves if they really really wanted CHK's assets.

----------


## ou48A

> I think PhiAlpha has been spot on with what he said. I will add that a buyout offer would need to be significantly above their current stock price, I would think. Their largest shareholders have been very defendant of CHK in the past and they look at the company as something that is worth multiples of what the stock currently trades at. But, an immediate payday might be tempting enough to get them to sell. It would be interesting. I don't think that would happen while CHK still owns all of its subsidiaries though.* Of course I guess Shell or BP could buy them and then sell the subsidiaries themselves if they really really wanted CHK's assets*.


That's often the case. They sell off the various subsidairys and keep the core of what they really want.
I once worked for a compnay who was bought out 3 times in about 4 years...
I was 100% invested in company stock. It was nice for the 401 K plan.

----------


## OKCTalker

The terminations continued. A friend got hers yesterday, although we didn't discuss how many people, which departments, etc. She was hired about six months ago in an administrative capacity, but I don't know which department. 

And there apparently won't be the big annual Halloween celebration as there has been since CHK was founded. There is no tent on the sports field on the west side of Western.

----------


## PWitty

> The terminations continued. A friend got hers yesterday, although we didn't discuss how many people, which departments, etc. She was hired about six months ago in an administrative capacity, but I don't know which department. 
> 
> And there apparently won't be the big annual Halloween celebration as there has been since CHK was founded. There is no tent on the sports field on the west side of Western.


Things could've changed, but I heard that DL said a couple weeks ago that the Halloween party was still on FWIW.

----------


## OKCTalker

If the party is on, it will be a very different one. Perhaps that's a good thing - CHK is becoming a very different company, and for the better. More mature & responsible, viable for the long-term, respected by its industry peers and others in the community. It used to be too much a "go-go" company like energy companies in the 1980s. It's a different world.

----------


## PWitty

I very much agree. The last couple years CHK has been more ridiculed by its peers in the industry than respected. With the improvements in the structuring and the budgeting process that DL has made I can't see anything but good things in the company's future.

----------


## Pete

Pretty dramatic stock price improvement since McClendon announced his resignation...

From $18.97 to $28.02 today.


That's a 48% return in 9 months.

----------


## Richard at Remax

And to think I was hesitant when I bought plenty of shares at $15

----------


## PhiAlpha

Sandridge has seen a similar improvement since Tom Ward left. It bottomed out at 4.67 a few days before he was ousted and has been flirting with $7.00 for the last few days. Not as big of improvement so far but it should continue to rise.

----------


## warreng88

Earlier this week I saw the Chesapeake signs being taken down off the Atrium Tower buildings north of 63rd and west of Hefner parkway. I forget, have these already been sold?

----------


## lasomeday

> Earlier this week I saw the Chesapeake signs being taken down off the Atrium Tower buildings north of 63rd and west of Hefner parkway. I forget, have these already been sold?


I don't know if they have been sold or they are leasing the office space, but a friend of mine that works for an IT firm has an office there now. The other building say Midland on it, so they may have been sold.

----------


## warreng88

> I don't know if they have been sold or they are leasing the office space, but a friend of mine that works for an IT firm has an office there now. The other building say Midland on it, so they may have been sold.


The Midland sign was always up on the north building on side facing the highway and if you were driving south, you could see there was a Chesapeake sign on the north side of that same building. Both of those and the Chesapeake sign on the southern building have been taken down.

----------


## TechArch

Midlands has moved part of their office to the IBC Bank building on NW Expressway.  I also heard that Love's might be moving some people to these buildings as well.

----------


## Pete

> Earlier this week I saw the Chesapeake signs being taken down off the Atrium Tower buildings north of 63rd and west of Hefner parkway. I forget, have these already been sold?


They have not yet been sold but I'm sure they will be once the few remaining buildings on the CHK campus are filled.

Soon to open:  Building #1, Data Center, Central Plant, Building #15 (the biggest yet) and Garage #3.  That's a ton of space combined with a 25% reduction of workforce.  You've got to think all the employees in satellite buildings will be consolidated sometime after the first of the year.

I've also noticed construction has moved pretty quickly on all those remaining structures.

----------


## RedDollar

> Pretty dramatic stock price improvement since McClendon announced his resignation...
> 
> From $18.97 to $28.02 today.
> 
> 
> That's a 48% return in 9 months.


And McClendon leaving had little to do with the rise in the price of the stock.    Its mostly occurred because of increase oil production from the Eagle Ford,  Q2 report showed a 41% increase in oil production year on year.    Earnings were much improved in Q2 due to top line growth, almost entirely.

New CEO and new company direction, had no impact on Q2 earnings and oil production.   That would've happened with McClendon at the company.

Other reasons for PPS increase have been mostly speculative,  like rumors of potential takeover, typical Wall Street BS.     And the latest layoffs did nothing for the stock price, its risen the past two weeks for what most think , will be a good earnings report released in the morning.     For Q3, there's also expected to be a large increase in oil production from the Eagle Ford.

Its all about the price of the underlying commodity(s) ,  and how quickly CHK can become more oil than NG.    Period.

----------


## Teo9969

Not that I disagree with you, but unless you go poll an adequate sample size of entities that invested in and out of this stock over the past 9 months, you have as much proof of your claims as the people saying just the opposite.

----------


## PWitty

> And McClendon leaving had little to do with the rise in the price of the stock.    Its mostly occurred because of increase oil production from the Eagle Ford,  Q2 report showed a 41% increase in oil production year on year.    Earnings were much improved in Q2 due to top line growth, almost entirely.
> 
> New CEO and new company direction, had no impact on Q2 earnings and oil production.   That would've happened with McClendon at the company.
> 
> Other reasons for PPS increase have been mostly speculative,  like rumors of potential takeover, typical Wall Street BS.     And the latest layoffs did nothing for the stock price, its risen the past two weeks for what most think , will be a good earnings report released in the morning.     For Q3, there's also expected to be a large increase in oil production from the Eagle Ford.
> 
> Its all about the price of the underlying commodity(s) ,  and how quickly CHK can become more oil than NG.    Period.


I'm confused by how you can see it that way. The new management has slashed the drilling budget and CHK is running half the rigs it was before AM left the company. Both of those have directly led to CHK's capital expenditures staying within it's income from production. That will lead to better profit margins in the future. People don't invest in a company because of what it has done or what it is currently doing, they invest in it for what they think will happen in the future. The changes in the company's future outlook and profit margins are directly tied to the new management IMO. 

People didn't want to invest in CHK because CHK had become so reliant on asset sales to fund operations. Now they will be able to fund everything internally. That is because of the new management, and would not have happened if AM was still there.

----------


## PhiAlpha

> I'm confused by how you can see it that way. The new management has slashed the drilling budget and CHK is running half the rigs it was before AM left the company. Both of those have directly led to CHK's capital expenditures staying within it's income from production. That will lead to better profit margins in the future. People don't invest in a company because of what it has done or what it is currently doing, they invest in it for what they think will happen in the future. The changes in the company's future outlook and profit margins are directly tied to the new management IMO. 
> 
> People didn't want to invest in CHK because CHK had become so reliant on asset sales to fund operations. Now they will be able to fund everything internally. That is because of the new management, and would not have happened if AM was still there.


It also didn't help that there was a new story in Reuters every other day with new "scandalous" accusations against AKM. While not the sole reason for the depressed stock price, months upon months of that kind of publicity couldn't have helped.

----------


## blangtang

> And McClendon leaving had little to do with the rise in the price of the stock.    Its mostly occurred because of increase oil production from the Eagle Ford,  Q2 report showed a 41% increase in oil production year on year.    Earnings were much improved in Q2 due to top line growth, almost entirely.
> 
> New CEO and new company direction, had no impact on Q2 earnings and oil production.   That would've happened with McClendon at the company.
> 
> Other reasons for PPS increase have been mostly speculative,  like rumors of potential takeover, typical Wall Street BS.     And the latest layoffs did nothing for the stock price, its risen the past two weeks for what most think , will be a good earnings report released in the morning.     For Q3, there's also expected to be a large increase in oil production from the Eagle Ford.
> 
> Its all about the price of the underlying commodity(s) ,  and how quickly CHK can become more oil than NG.    Period.



I can agree that the stock rallied ~ 10 % on the news that Aubrey resigned/quit.  on that single day.

That said, its true, for the most part, the whole energy sector has rallied in the last few months, CHK and all the rest included.  Energy stocks are hot.

----------


## RedDollar

> I can agree that the stock rallied ~ 10 % on the news that Aubrey resigned/quit.  on that single day.
> 
> That said, its true, for the most part, the whole energy sector has rallied in the last few months, CHK and all the rest included.  Energy stocks are hot.


It never really rallied,  it came back down in June.    With the investors who really matter,  the " Aubrey Discount " has never been a factor.

----------


## RedDollar

> I'm confused by how you can see it that way. The new management has slashed the drilling budget and CHK is running half the rigs it was before AM left the company. Both of those have directly led to CHK's capital expenditures staying within it's income from production. That will lead to better profit margins in the future. People don't invest in a company because of what it has done or what it is currently doing, they invest in it for what they think will happen in the future. The changes in the company's future outlook and profit margins are directly tied to the new management IMO. 
> 
> People didn't want to invest in CHK because CHK had become so reliant on asset sales to fund operations. Now they will be able to fund everything internally. That is because of the new management, and would not have happened if AM was still there.



Yes, they have cut cap-ex drastically,   which can be interpreted as a bad thing, if investor is looking for long term growth.    All the new owners are wanting to do, is drill in-fill wells.    And there is concern about depletion rates in shale plays.     If an investor is looking for a growth stock,  CHK is no longer on his list.     Just cutting cap-ex alone, will not drive the price of the stock.    Its about earnings and where the future price of NG and oil are headed.    And NG is going nowhere, as soon as it gets back up to near $5,  producers will open up curtailed wells and drive it back down.    There's nothing in the foreseeable future that will move NG much higher than it is now.

So the cut in cap-ex is good news/ bad news.

If you follow the stock on a daily basis, and have done this for a good period of time,  its very apparent the rise in the PPS ,  was primarily last July was in response to a good earnings report.     And the big item in the earnings report,  was the increase oil production from the EagleFord.    All one has to do, is look at quarterly financials for the past year,  and you will see the huge increase in revenue.

Just as this morning, there will be a huge increase in revenue. 

The increase in earnings, did not come from a reduction in spending.    Its easy to see from the income statement.

Also, there will be much made today, comparing earnings to the 3Q of 2012.    And last year, was when they wrote down reserves to reflect current NG prices.

So many McClendon critics, want it both ways.   They want to blame McClendon for the companies debt,  but they want to tout the great assets the company owns.   And that won't fly.    The only reason revenues are increasing greatly (  which the revenues in todays earnings announcement, will be way over estimates )  is because McClendon got the best acreage in the EagleFord.     Quite frankly,  the EagleFord is saving the company's bacon , right now.    That and the Utica to a degree.    And those assets would not exist,  if not for McClendon's " wild spending " .

Pete's analysis of PPS since McClendon announced he was leaving, is a bit shallow.    I believe the price in late May or early June , was below when McClendon left, if it not it was awfully close.  How does that support your theory that investors saw that event as good news for the future ?     It does not hold water.

I've followed this discussion about CHK here for quite a while, and honestly,  I think there's a lot of small minds at work.    People way too concerned about restaurants on the CHK campus and other trivia,  while having nothing to say about NG prices.    Its all about the price of the commodity.   Period.

----------


## RedDollar

> It also didn't help that there was a new story in Reuters every other day with new "scandalous" accusations against AKM. While not the sole reason for the depressed stock price, months upon months of that kind of publicity couldn't have helped.


Those were only " scandalous " , to anyone who can not recognize yellow journalism , when they see it.     All the scandal was in the headlines,  the stories actually provided very little meat.    

Even Icahn recognized that,  when he referred to " short sellers in the media " .

----------


## RedDollar

> It also didn't help that there was a new story in Reuters every other day with new "scandalous" accusations against AKM. While not the sole reason for the depressed stock price, months upon months of that kind of publicity couldn't have helped.


And BTW,  one of CHK's largest stockholders is a prominent WS hedge fund,   Black Rock.   Every time Reuters released a " scandalous " story about McClendon, they increased their holdings of CHK ( in retrospect, very wisely ) .    They now own close to 5% of the company.    These are the investors that matter.

And for McClendon to be such a snake , as Reuters painted a picture of him,  he has no problem getting very wealthy men to give him billions to start anew.

----------


## RedDollar

CHK down 2.5% at the open,   investors bought on the rumor and sold on the news.

Revenues up 64% over last year while NG prices have shown little increase.    That has nothing to with a cut in cap-ex spending,  in fact,  reduced cap-ex spending could've lowered that number.

----------


## PhiAlpha

> Those were only " scandalous " , to anyone who can not recognize yellow journalism , when they see it.     All the scandal was in the headlines,  the stories actually provided very little meat.    
> 
> Even Icahn recognized that,  when he referred to " short sellers in the media " .


That's why I put scandalous in quotations... I think most of the stories were of little substance, but people that couldn't tell there a** from a hole in the ground about the oil industry write them, and investors that are just as ignorant read them. It had an effect on the stock price, just not as much as the state of the industry and CHK's balance sheet did.

----------


## PhiAlpha

> And BTW,  one of CHK's largest stockholders is a prominent WS hedge fund,   Black Rock.   Every time Reuters released a " scandalous " story about McClendon, they increased their holdings of CHK ( in retrospect, very wisely ) .    They now own close to 5% of the company.    These are the investors that matter.
> 
> And for McClendon to be such a snake , as Reuters painted a picture of him,  he has no problem getting very wealthy men to give him billions to start anew.


I've generally been a huge supporter of AKM, so you don't have to prove anything to me. I think be did more good for the company then bad over his tenure there but he was much better at building the company than developing what he built and bet way too much on natural gas to be able to ride out the low prices as well as his competitors have. I just said all the negative press surrounding him, accurate or not, had an effect on the stock price and the general perception of the company and you back that up with this response. I would also say that Southwest Asset management and Carl Ichan are investors that matter and they led the charge to force Aubrey out. They also forced Aubrey and the board to make some of the changes that started righting the ship well before he stepped down (mass asset sales, etc). Still Lawler deserves some credit as he has made some moves that Aubrey may not have (necessarily), including the major staff reduction and scaling operations and extracurricular activities back to this extent.

----------


## Rover

It takes no great mind or great leadership to do what is being done at Chesapeake right now.  Cost cutting is a whole lot easier to do than actually building something.  The cash effects and short term earnings will be obvious now and the negative long term effects will be later...after this leadership is gone.  Short term investors won't care about long term value, just short term results that bump up stock prices.  There is a lot of very shallow analysis when it comes to CHK.

----------


## HangryHippo

> It takes no great mind or great leadership to do what is being done at Chesapeake right now.  Cost cutting is a whole lot easier to do than actually building something.  The cash effects and short term earnings will be obvious now and the negative long term effects will be later...after this leadership is gone.  Short term investors won't care about long term value, just short term results that bump up stock prices.  There is a lot of very shallow analysis when it comes to CHK.


And what negative long term effects are coming?  Can you share some of your analysis that isn't shallow?

----------


## bradh

> It takes no great mind or great leadership to do what is being done at Chesapeake right now.  Cost cutting is a whole lot easier to do than actually building something.  The cash effects and short term earnings will be obvious now and the negative long term effects will be later...after this leadership is gone.  Short term investors won't care about long term value, just short term results that bump up stock prices.  There is a lot of very shallow analysis when it comes to CHK.


If their new CEO wasn't an engineer and a financial guy, I'd tend to believe you, but I don't.

----------


## Pete

Almost everyone in the oil & gas industry knew Chesapeake was completely undisciplined in almost every aspect of their business.  Things like the highly-subsidized restaurants and wild spending in other areas (like real estate, parties, Christmas lights) were merely visible, easy to quantify and obvious.

But they are also very symptomatic of the general way that business was run and you can only grow your way out of that money-is-no-object mindset for so long before it ultimately catches up with you.

Aubrey is obviously a brilliant oil & gas mind and is incredibly driven.  But it's also possible -- even probable -- he is not skilled and/or interested in running a massive publicly-held company.


Most here have said all the way along that getting an experienced management team in at CHK while freeing up McClendon to build another company (this time, with ample lessons learned) would be a win/win for just about everyone involved, including the larger OKC community.

Seems like that is exactly what is unfolding.

----------


## PhiAlpha

> It takes no great mind or great leadership to do what is being done at Chesapeake right now.  Cost cutting is a whole lot easier to do than actually building something.  The cash effects and short term earnings will be obvious now and the negative long term effects will be later...after this leadership is gone.  Short term investors won't care about long term value, just short term results that bump up stock prices.  There is a lot of very shallow analysis when it comes to CHK.


Remove CHK and insert any high profile company you would like, especially in the energy industry. I agree that cost cutting is easier then building but you have to know what to cut, hopefully Lawler did. I do question cutting the majority of senior leadership within the company but it dropped the payroll significantly. Time will tell whether that was a good move. If Lawler can get the company to the position of an Anadarko, Devon, or EOG type company, I think he will deserve a lot of credit for that. Cutting is easy, transforming is not. They still have a ways to go.

----------


## Pete

I'm sure cutting a bunch of the senior leadership was not just due to cost reduction; in fact, I'm quite sure that was a minor consideration.

Every leader wants to build his/her own team and it's also very hard to change the culture when most the senior people are heavily invested in the old ways.

You basically take an inventory, cultivate those who are truly sharp and adaptable, and then replace the rest.  Happens almost every time there is a change at the top.


For years, I was a management consultant and most of the work was centered around the new guy reworking a department or entire company.

----------


## rlewis

Looks like the rumors of Chesapeake selling off some of it's off-campus buildings have finally come true.  Love's has made it official that they are buying 3 office buildings from Chesapeake at 63rd and Lake Hefner Parkway.  Here's the story:

OKLAHOMA CITY: Love?s Travel Stops Purchases Corporate Office Buildings for Expansion | Business Wire | Rock Hill Herald Online

----------


## Pete

Thanks for posting this!

Surprising it's Loves, as they just opened their new HQ in the Village near Penn & Hefner.


These transactions are not yet showing on the County Assessor's site.  Will be very interested to see what Chesapeake got for this property, as they bought all of it way over market then sunk in millions more.


I'm still hearing that MidFirst/Midland are looking to buy the former One and Two Grand Park Buildings from Chesapeake.

It's a good thing we have lots of strong companies in OKC to absorb what would otherwise be excess properties.

----------


## Pete

BTW, this brings to seven the number of office buildings Chesapeake has sold in the last year:

1. Harvey Parkway
2. Caliber Center
3. Central Park One
4. Central Park Two
5. Atrium Tower 1
6. Atrium Tower 2
7. Former Local Federal building (next to Atrium Towers)

----------


## jn1780

According to someone I know at Loves, In the immediate future they are only planning on using the old Chesapeake Land and title building(Local Federal building).  The Atrium Towers they plan on leasing out to others for the time being. 

It does seem like an odd purchase for Loves.  Hmmm, maybe there might be major expansion in Loves future?  Or this is just long term planning for more office space.

----------


## Pete

Yeah, I think one of the Atrium towers is pretty full with non-CHK employees...

I suppose Love's can just move tenants out when/if they need the space.

----------


## lasomeday

I wonder when they will finally sell the Nichols Hills Plaza and land they acquired on Grand that is empty.  They still have a lot of properties to divest.

----------


## Pete

Besides NH Plaza and Classen Curve, they still have hundreds of other properties that have absolutely nothing to do with their campus or core business.

----------


## tomokc

OKCBiz is reporting the sales price of these three buildings (no direct URL to the story so simply go to OKCBiz.com). Relevant text: 

_Love's Travel Stops & Country Stores purchased three office buildings in northwest Oklahoma City from Chesapeake Energy Corp. for $24.25 million, according to records from the Oklahoma County Clerk. Love's announced the purchase Nov. 11 but did not disclose the sale price.

The gas station and convenience store chain purchased Atrium Towers, 3501 and 3503 NW 63rd St., and a neighboring building at 3601 NW 63rd St. The 3601 building sold for $6.45 million, and Atrium Towers fetched $17.8 million. County records show the buildings were constructed in 1980._

Pete - I'll bet that you can quickly locate the purchase prices and building permit amounts for Chesapeake's renovations. I'd be curious what they recovered as a percentage of their hard costs in these three properties, and how that compares with the other buildings listed in your post #1595 above. Perhaps there would be enough data points to estimate the sales price of Classen Curve & Nichols Hills Plaza.

----------


## Pete

I have tracked all the building permits as well as the original purchase prices.

If those OKC.biz numbers are correct, then...

Chesapeake bought the Atrium Towers in 2011 for $17.3 million then spent at least $2 million on improvements to the south tower.  They also spent a ton of money completely tearing out the parking lot and landscaping and replacing with concrete, but those types of numbers are almost impossible to track through the permit system (which I confirmed with someone at the City).  So, they have in $19.3+ versus the $17.8 they just sold them for.

For 3601 NW 63rd, they bought it in 2006 for $7.7 million then spent another $2 million on improvements, not including parking and landscaping.  So, $9.7+ million versus the recent sales price of $6.45 million.


Also, keep in mind there are usually 5-6% broker fees involved in sales so their loss would be even greater.

I'll add all this up and summarize along with the other properties they sold this year, all at significant losses.

----------


## BillyOcean

nm

----------


## ljbab728

Another sale completed by Chesapeake.

http://www.oklahoman.com/article/3920049?embargo=1




> RESTAURATEUR Chris Lower and architect Ken Howell are feeling a bit more secure about the future of their businesses this week after buying Metro Center from their former landlord, Chesapeake Energy Corp.
> 
> Lower, owner of upscale restaurant The Metro Wine Bar and Bistro, and Howell, whose offices and art gallery both are marking a quarter century at 6418 N Western Ave., paid $2.25 million for the property, which was bought by the energy company in 2006 for $1.85 million.

----------


## Dubya61

> Another sale completed by Chesapeake.
> 
> http://www.oklahoman.com/article/3920049?embargo=1


Pete, does that make it a profitable sale for Chesapeake?

----------


## Pete

^

Looks like they made a little money but they bought it in 2006 before they went completely crazy.

As an example, they paid $3 million in 2011 for the .3 acre gas station directly across Western from this property.

----------


## tomokc

> Pete, does that make it a profitable sale for Chesapeake?


The "profit" gets skinnier for Chesapeake when you deduct what they paid for a new roof and HVAC equipment in the building, although some of that would have been paid by post-storm insurance proceeds. 

But as Chris Lower was quoted in the article, the "uncertainty" about the future has been removed now that he and Ken Howell control the property.

----------


## zookeeper

> ^
> 
> Looks like they made a little money but they bought it in 2006 *before they went completely crazy*.
> 
> As an example, they paid $3 million in 2011 for the .3 acre gas station directly across Western from this property.


Referring to the bolded part above...isn't that the truth? Some people still don't grasp how incredibly crazy it was.

----------


## Pete

I would suspect by the time you factor in improvements they paid for and broker's commission, they about broke even.

Will be very interesting to see what they get for NH Plaza and Classen Curve and the dozens of properties adjacent.

Also, it seems they are getting close to selling One and Two Grand Park, but again those were bought before they started paying 3 and 4 times market values.

----------


## Easy180

> Also, it seems they are getting close to selling One and Two Grand Park, but again those were bought before they started paying 3 and 4 times market values.


MidFirst I assume?

----------


## ljbab728

http://www.oklahoman.com/article/3930334




> Chesapeake Energy Corp.’s Classen Curve and Nichols Hills Plaza shopping centers are under contract to a partnership led by an Ohio-based real estate investment trust, Price Edwards & Co. said in a report.
> The shopping centers, which are situated about half a mile apart between N Grand and N Western — and much of the land between the properties — are under contract to a group led by Columbus-based Glimcher Realty Trust, Price Edwards said in a report on the local retail market.
> 
> The sale — for an undisclosed price — is still tentative, said Jim Parrack, senior vice president for retail for Price Edwards.
> 
> “Hopefully it all happens,” Parrack said. “Glimcher is a good company with good relationships with a lot of great tenants — they could really turn that whole area into something special.”

----------


## Pete

^

I've heard that Tom Blanton is also involved in that ownership group and that the sale is set to close by the end of February.

Blanton has been the leasing agent for Classen Curve and it's also my understanding that deals with Ruth's Chris for CC and Trader Joe's for NH Plaza are on hold until the sale is finalized.

----------


## blangtang

I saw this going around...not sure there's much new, just thought i'd pass it along...

Could Icahn force Chesapeake sale to an oil giant like Exxon? - Dallas Business Journal

----------


## ljbab728

Chesapeake to sell three shopping centers, land for $51.8 million | News OK




> An Ohio-based real estate investment trust is poised to buy Classen Curve, Nichols Hills Plaza, and Triangle @ Classen Curve shopping centers from Chesapeake Energy for $51.8 million, and also has plans for future development in Oklahoma City.
> The Columbus-based Glimcher Realty Trust said in a regulatory filing that it will likely complete the purchase of the three open-air shopping centers that include Oklahoma City’s only Whole Foods and Anthropologie stores during the first quarter of the year. Glimcher also has 12 adjacent acres of vacant land owned by Chesapeake under contract and wants to pursue development in the area that could include a hotel or housing, among other possibilities





> “With the markets of only Whole Foods, Anthropologie and Lululemon already in place, we see an opportunity to create a fully integrated shopping and entertainment district that would not only serve the immediate trade area but all of Oklahoma City,” Glimcher said during the call. “With respect to the development land, we will have the opportunity to add additional retail space along with possible mixed uses including residential, office and hospitality.”

----------


## warreng88

I wonder how far a Trader Joe's announcement is from happening now that the buildings have sold.

----------


## Pete

> I wonder how far a Trader Joe's announcement is from happening now that the buildings have sold.


I think it will follow almost immediately, as well as Ruth's Chris at Classen Curve.

----------


## warreng88

> I think it will follow almost immediately, as well as Ruth's Chris at Classen Curve.


So, end of the week?

----------


## PhiAlpha

> So, end of the week?


How could it be at the end of the week? Tulsa hasn't gotten either of these establishments yet.

----------


## Pete

> So, end of the week?


From what I've heard the closing won't be until near the end of March.

----------


## warreng88

> From what I've heard the closing won't be until near the end of March.


Gotcha. Do you think we could possibly hear an announcement before closing?

----------


## tomokc

You can't overstate the importance of this to that area. 

_With the markets of only Whole Foods, Anthropologie and Lululemon already in place, we see an opportunity to create a fully integrated shopping and entertainment district that would not only serve the immediate trade area but all of Oklahoma City, Glimcher said during the call. With respect to the development land, we will have the opportunity to add additional retail space along with possible mixed uses including residential, office and hospitality.

Glimcher plans to finance the purchase primarily with cash. As a whole, the shopping centers are about 75 percent leased. With its strong relationships with retailers, Glimcher expects to be able to lure more national retailers into the mix than Chesapeake was able to, Glimcher said in the conference call.

Were in the business of leasing retail space and leasing shopping centers and you have an energy company that was doing something that was ancillary to their business, Glimcher said. So it was not their primary focus and it was probably more of a distraction than anything else. Its a really unique opportunity. Whats been built  its been built with the utmost of quality. The quality of the dirt underneath there  the location is A-plus dirt. I think its the best dirt in the marketplace._

----------


## warreng88

> You can't overstate the importance of this to that area. 
> 
> _“With the markets of only Whole Foods, Anthropologie and Lululemon already in place, we see an opportunity to create a fully integrated shopping and entertainment district that would not only serve the immediate trade area but all of Oklahoma City,” Glimcher said during the call. “With respect to the development land, we will have the opportunity to add additional retail space along with possible mixed uses including residential, office and hospitality.”
> 
> Glimcher plans to finance the purchase primarily with cash. As a whole, the shopping centers are about 75 percent leased. With its strong relationships with retailers, Glimcher expects to be able to lure more national retailers into the mix than Chesapeake was able to, Glimcher said in the conference call.
> 
> “We’re in the business of leasing retail space and leasing shopping centers and you have an energy company that was doing something that was ancillary to their business,” Glimcher said. “So it was not their primary focus and it was probably more of a distraction than anything else. It’s a really unique opportunity. What’s been built — it’s been built with the utmost of quality. The quality of the dirt underneath there — the location is A-plus dirt. I think it’s the best dirt in the marketplace.”_


I could definitely see a Crate and Barrell, Container Store, Urban Outfitters, West Elm and Restoration Hardware fitting into this area.

----------


## ou48A

InPlay from Briefing.com - Yahoo Finance

7:10 am Chesapeake Energy misses by $0.12, beats on revs; Q4 daily production +2% YoY; (CHK) : Reports Q4 (Dec) earnings of $0.27 per share, $0.12 worse than the Capital IQ Consensus Estimate of $0.39; revenues rose 28.3% year/year to $4.54 bln vs the $4.4 bln consensus.*

For the 2013 fourth quarter Chesapeake reported adjusted EBITDA of $1.132 bln, an increase of 4% year over year. Operating cash flow was $995 mln, a decrease of 13% year over year.*

Production:*Chesapeake's daily production for the 2013 fourth quarter averaged ~665,100 boe, an increase of 2% from the 2012 fourth quarter and a 1% decrease from the 2013 third quarter. This decrease is primarily due to a planned reduction in well connections during the fourth quarter as the company completed most of its well inventory reduction initiatives in the 2013 second and third quarters. Severe weather also negatively impacted the company's production in October and December. Average daily production in the 2013 fourth quarter consisted of ~111,300 bbls of oil, 63,700 bbls of NGL and 2.9 bcf of natural gas.*

Asset Sales: 2013 asset sales total $4.4 billion;*In 2014 the company has already received $209 mln of net proceeds from the sale of its common equity ownership interest in Chaparral Energy, Inc. Additionally, in connection with certain asset sales in 2012 and 2013, the company believes that it will receive proceeds in excess of $150 mln during 2014 that were held back for title review or other purposes at the time of closing.

 Currently, Chesapeake is marketing or has under contract sales of certain real estate and other non-E&P assets, excluding its oilfield services division, Chesapeake Oilfield Services, which are expected to generate proceeds of ~$650 mln during 2014. Together, the items listed above are expected to generate proceeds of ~$1 bln, and the company believes the sale of these assets will have minimal impact on its 2014 operating cash flow guidance.*

Proved Reserves:*The company's December 31, 2013 proved reserves were 2.7 bln barrels of oil equivalent (bboe), a 2% increase from year-end 2012. During 2013 Chesapeake added 332 mln barrels of oil equivalent (mmboe) through extensions and discoveries, net of downward revisions primarily associated with the elimination of certain future proved undeveloped locations.

----------


## Pete

Man On Fire: Aubrey McClendon Raises Billions To Finance His Redemption - Forbes


So how is Chesapeake doing under new CEO Doug Lawler? Better. Sure, shares in the company sold off this week on quarterly profits that came in slightly lower than expected, but take a look at the full-year numbers and you’ll see that the company is in considerably better shape than it was a year ago.

Total net income for 2013 was $474 million, up from a loss of $940 million in 2012. The return to profitability has a lot to do with higher prices for natural gas, but that’s not the only thing. Lawler has begun slashing costs at the company. He laid off 800 last fall. And he’s dramatically curtailed Chesapeake’s wild spending on acquiring new acreage. Acquisition costs went from $7 billion in 2011 to $5.3 billion in 2012 to just $1.7 billion in 2013. Expenses per BOE (barrel of oil or equivalent gas) have come down considerably from $5.50 to $4.74.

Lawler is clearly focusing more on cash management than McClendon ever did. Total cash outlays in 2013 amounted to $11 billion, nearly half of the $21.6 billion that McClendon burned through in 2012 and $19.4 billion in 2011.

Under Lawler, investors in Chesapeake now have more reason to trust the company’s estimates of its oil and gas reserves. Under McClendon, the company had been booking undeveloped fields as containing more than 40% of its total proved reserves — a considerably higher proportion than similar companies like Devon Energy. Now, under Lawler, Chesapeake has revised its calculations, and now those undeveloped reserves only account for 32% of their 2.67 billion boe in proved reserves. This may seem overly technical, but it really makes a difference in regaining investors’ confidence.

Throughout the turmoil of the last year, Chesapeake’s oil and gas production has managed to hold steady at the equivalent of 668,000 bbl per day.

There are still a few wild cards that McClendon left behind at Chesapeake. There’s lawsuits stemming from McClendon’s lack of disclosure about the hundreds of millions in personal loans made to him by some of the company’s lenders. The Securities & Exchange Commission has had an open investigation into Chesapeake for more than a year now. And perhaps most concerning, there’s the Department of Justice’s criminal investigation into possible violations of antitrust law by McClendon tied to Chesapeake’s alleged collusion with rival Encana over their leasing of acreage in Michigan back in 2010. The companies are reportedly close to a settlement with Michigan authorities to settle the collusion charges. But the federal DOJ criminal probe continues. According to the DOJ, the maximum sentence under the Sherman Act for collusive acts like bid rigging is a $1 million fine and 10 years in prison.

----------


## ljbab728

More problems for Chesapeake.

Criminal charges filed against Chesapeake Energy in Michigan over alleged lease auction scheme | News OK




> Michigan authorities filed criminal antitrust charges Wednesday against Chesapeake Energy Corp. and Delaware-based Encana Oil and Gas USA for allegedly collaborating in 2010 to avoid bidding against each other for oil and gas leases.
> 
> Prosecutors claim Chesapeake and Encana executives conspired through a series of emails to divide up oil and gas leases in Michigan, and that the corporations crafted a draft agreement, according to the charges.

----------


## warreng88

On the Newsok energy chat yesterday, I asked what CHK plans to do with all the land they bought east of Classen to the RR, south of 63rd that had not been developed and they said we will probably see some of it sold off in the future. If I can find the chat transcript, I will post the exact question and answer.

----------


## HangryHippo

Looks like CHK has more problems in Pennsylvania where they're being accused of underpaying royalties.

----------


## Snowman

> Looks like CHK has more problems in Pennsylvania where they're being accused of underpaying royalties.


This one would probably be the least of their legal worries, ending up like most class action lawsuits where the lawyers get millions and the others get next to nothing.

----------


## bradh

Probably should worry about potential lawsuits locally from employees getting fired for some pretty unbelievable (as in "you can get fired for that?") stuff

----------


## tomokc

Oklahoma is an at-will employment state. You can fire an employee for any reason that isn't a violation of law such as gender, race, sexual orientation, marital status, etc. 

What have you heard?

----------


## DoctorTaco

This is a pretty damning, well-researched article:

Chesapeake Energy?s $5 Billion Shuffle - ProPublica

----------


## Easy180

> This is a pretty damning, well-researched article:
> 
> Chesapeake Energy?s $5 Billion Shuffle - ProPublica


That is damning and pretty sick...Not sure if Chesapeake's reputation could get any lower

----------


## PhiAlpha

> That is damning and pretty sick...Not sure if Chesapeake's reputation could get any lower


I'm not saying that what CHK is doing on this is right by any means, but there is a difference between ethically right and legal. it is the landowner's responsibility to negotiate the terms of their lease. If this guy or his attorney didn't negotiate a "Cost Free Royalty" clause into his lease or at least a clause that capped transportation expenses that could be deducted, that is on the landowner.  If that clause isn't included, the operator can deduct from their royalty whatever the costs are. This does draw some questions of monopolistic behavior since access was spun off from CHK, but the lease terms generally protect the operator if they exclude that provision. Again, not saying it's right, but I don't think what they are doing to this guy is completely illegal. Sketchy...yes. 

While I would be mad at CHK if I were in his position, I would also be mad at myself for failing to negotiate a good lease or failing to request proper help to do so. If you noticed, the article states that lessors who negotiated cost free or limited royalty clauses into their leases were not affected by the change in pricing. 


Sent from my iPhone using Tapatalk

----------


## Edgar

Blame the victim, popular with conservatives these days. 
Sure makes it hard to be fully behiund the Thunder tuning in and seeing that scoundrel courtside.

----------


## lasomeday

> Blame the victim, popular with conservatives these days. 
> Sure makes it hard to be fully behiund the Thunder tuning in and seeing that scoundrel courtside.


Edgar.  I don't think this has anything to do with anyone's political affiliation, but we know where you stand.  

You should always have legal council or someone with experience in that field review all contracts.  That is just being an adult 101 nothing to do with political affiliation.

----------


## Edgar

True that, especially when you're dealing with a greedy despicable human being like McClendon.

----------


## warreng88

> True that, especially when you're dealing with a greedy despicable human being like *Ed Shadid*.


Fixed it for you...

----------


## Bellaboo

> True that, especially when you're dealing with a* greedy* despicable human being like* McClendon*.


Yep, the same man who has given millions to the general public and universities in OKC and the surrounding metro area.

Again Edgar, you have no earthly clue.


The last big donation off the top was $5 million for the Finish Line tower in the Boathouse district. That greedy son of a gun, should have given $10 mil.

----------


## Plutonic Panda

> True that, especially when you're dealing with a greedy despicable human being like McClendon.


Ahhhhh, another person on here jealous of the upper class.... cute. I'll expect to see you standing on a street corner in branding yourself as a freelance hipster that does nothing but complain about rich people not giving enough to the poor.

While I don't necessarily agree with all of his business practices, Aubrey showed he really does care about the community and tried to do great things while building a wonderful campus for the OKC area. It is truly beautiful, if you get a chance, go have a look.

----------


## Plutonic Panda

> Yep, the same man who has given millions to the general public and universities in OKC and the surrounding metro area.
> 
> Again Edgar, you have no earthly clue.
> 
> 
> The last big donation off the top was $5 million for the Finish Line tower in the Boathouse district. That greedy son of a gun, should have given $10 mil.


10 mil???? How dare you.... he should at least gave a hundred million. Why should he get to live in a huge multi-million dollar house why Edgar has to live in 2,000sf(or less) house? This man owes people money!

----------


## PWitty

> I'm not saying that what CHK is doing on this is right by any means, but there is a difference between ethically right and legal. it is the landowner's responsibility to negotiate the terms of their lease. If this guy or his attorney didn't negotiate a "Cost Free Royalty" clause into his lease or at least a clause that capped transportation expenses that could be deducted, that is on the landowner.  If that clause isn't included, the operator can deduct from their royalty whatever the costs are. This does draw some questions of monopolistic behavior since access was spun off from CHK, but the lease terms generally protect the operator if they exclude that provision. Again, not saying it's right, but I don't think what they are doing to this guy is completely illegal. Sketchy...yes. 
> 
> While I would be mad at CHK if I were in his position, I would also be mad at myself for failing to negotiate a good lease or failing to request proper help to do so. If you noticed, the article states that lessors who negotiated cost free or limited royalty clauses into their leases were not affected by the change in pricing. 
> 
> 
> Sent from my iPhone using Tapatalk


I feel bad for any affected landowners as well, but I completely agree. If you are signing what could potentially be a multi-million dollar contract and you don't take the time to at least have a lawyer read it over beforehand, then you don't really have anyone to be upset with but yourself. Just because there was a clause you didn't understand before you signed it doesn't give you the right to bring a lawsuit after the fact. But these lawyers will gather up enough affected people to bring one because they know the company will most likely settle instead of spending the money to fight it.

----------


## ylouder

> Yep, the same man who has given millions to the general public and universities in OKC and the surrounding metro area.
> 
> Again Edgar, you have no earthly clue.


You're not mentioning the very important fact that those were tax right offs.

----------


## ylouder

> I feel bad for any affected landowners as well, but I completely agree.


I agree, its always best to have lawyers review any document but you have to remember the audience. 

A large amount of the population see all these feel good commercials that run non stop all day long on local channels and during the news where the oil and gas companies repeat that they are just like us, that they do good in the community, that they care and give back, that they invest here locally and create jobs - and ordinary people see these ads and go into the situation expecting a fare shake. That's exactly why they run these ads to setup this expectation. Just a few years ago people would yell and scream at anyone who dare say a negative thing about Chesapeake or fracing because they were this citys savior.

When in fact large corporations have billions of dollars to work every loop hole (that their lobbyist created) and have buildings full of of lawyers constantly stratigizing how to rip off the landowners; or if you will 'maximize profit for the company'. As you also know in a lot of cases these are usually rural, older, low intelligence people who have led very simple and humble lives and they dont stand a chance. Ordinary people cant go out and just buy up mineral rights anymore, most of these have been past down from generation to generation long before anyone knew what was under their feet. 

Just like the theft that happens on wallstreet, just because this type of theft is legal doesnt make it right.

----------


## catch22

^ What theft on Wall Street? 

If I buy something and sell it later at a higher price, how is that theft? If I buy 200,000 things and sell them twenty minutes later for a $20,000 profit, how is that theft?

----------


## ylouder

I was referring to banks aggressively pushing financial products that they knew were going to fail during the 2008 timeframe which was completely legal. Those same banks and hedge fund managers were pocketing billions of dollars while ordinary people had years of savings wiped away.

Basically - leading someone into a situation where you setup yourself to profit immensely by their lack of understanding and trust in you.

Take the time to read the whole story that was attached, or at least view the graphic titled 'the Chesapeake access deal'. Like others have said, its all legal and insanely clever, but just completely corrupt, ethically and morally wrong how they deliberately screwed the land owners out of millions of dollars. 

I've always been a fan of the old saying, 'they got there money the old fashioned way - they stole it.'

----------


## Edgar

> Yep, the same man who has given millions to the general public and universities in OKC and the surrounding metro area.
> 
> Again Edgar, you have no earthly clue.
> 
> 
> The last big donation off the top was $5 million for the Finish Line tower in the Boathouse district. That greedy son of a gun, should have given $10 mil.


Thank the good taxpayers in Ok still doling out 100's of millions every year in drilling tax credits.

----------


## Plutonic Panda

> Thank the good taxpayers in Ok still doling out 100's of millions every year in drilling tax credits.


benefits outweigh the negatives. All we can do is be thankful we don't live in a world full of people like you who are just jealous of people more successful than you.

----------


## Easy180

> Thank the good taxpayers in Ok still doling out 100's of millions every year in drilling tax credits.


Hard to live without those 10 bucks. I want 'em back!

----------


## Bellaboo

> You're not mentioning the very important fact that those were tax right offs.


Does that really matter if that's a tax write off or not ?  Millions are millions.

The end result is a killer boathouse and finish line tower for the general public to use.

----------


## Bellaboo

> Thank the good taxpayers in Ok still doling out 100's of millions every year in drilling tax credits.


Edgar, quite being a sore loser. All that drilling means more jobs and more taxes indirectly.

Quit being a troll.

----------


## Bellaboo

> Thank the good taxpayers in Ok still doling out 100's of millions every year in drilling tax credits.


This is about McClendon. AEP does the majority of their drilling in Ohio.

And I don't think it's a tax credit from the good taxpayers of Oklahoma, it's a reduction as an incentive to drill. For horizontal drilling, they pay 1% gross production tax for 48 Months, then it reverts to the normal 7% for the life of the well, which the shale wells are now being predicted to last 30 - 40 years.

----------


## ylouder

> Edgar, quite being a sore loser. All that drilling means more jobs and more taxes indirectly.
> 
> Quit being a troll.


Actually you are being the troll.

----------


## zookeeper

> I feel bad for any affected landowners as well, but I completely agree. If you are signing what could potentially be a multi-million dollar contract and you don't take the time to at least have a lawyer read it over beforehand, then you don't really have anyone to be upset with but yourself. Just because there was a clause you didn't understand before you signed it doesn't give you the right to bring a lawsuit after the fact. But these lawyers will gather up enough affected people to bring one because they know the company will most likely settle instead of spending the money to fight it.


I think a lot of the problem with the leases are the very words used, meaning one thing yesterday and another today. Chesapeake, at least under McClendon, was one of the worst in writing confusing, misleading, and sometimes downright fraudulent leases.

----------


## mugofbeer

> I think a lot of the problem with the leases are the very words used, meaning one thing yesterday and another today. Chesapeake, at least under McClendon, was one of the worst in writing confusing, misleading, and sometimes downright fraudulent leases.


But those who had attorneys look them over first didnt get taken.  My parents have a lease with another, more respected firm in OKC and their lawyer had several escape clauses removed from the ckntract before signing.

----------


## Bellaboo

> Actually you are being the troll.


You haven't been on here long enough to know who is and who is not being a troll. Go read back about 4 or 5 years.

----------


## Edgar

> Hard to live without those 10 bucks. I want 'em back!


Can I have mine back. wouldn't pee on McClendon if he were on fire.

----------


## Plutonic Panda

> Actually you are being the troll.


nope

----------


## Plutonic Panda

> Can I have mine back. wouldn't pee on McClendon if he were on fire.


I'm sure he would appreciate that.

----------


## Just the facts

...and so the Carl Icahn 'split it up and spin it off' begins.

Chesapeake eyes possible spinoff of subsidiary | News OK

----------


## Rover

Another NYSE company to be based in OKC.  Opportunity for good growth.  This could be very good for OKC.  How many company headquarters are in a city is one measure of strength of a city and OKC keeps gaining in that regard.

----------


## Just the facts

> Another NYSE company to be based in OKC.  Opportunity for good growth.  This could be very good for OKC.  How many company headquarters are in a city is one measure of strength of a city and OKC keeps gaining in that regard.


Let's just hope they don't load them with a lot of debt and environmental liability - ala Tronox.

Anadarko?s Kerr-McGee Held Liable in Tronox Spinoff - Bloomberg

----------


## Rover

Love the always glass half empty observations.

Yes, they will have debt.  Leverage by itself is not evil.  At borrowing rates of around 4%, a company should be able to make money by leveraging the cheap money.  If they can't create greater than 4% return, they shouldn't be in that business to start with.  Now, creating debt for non-productive activity is stupid...for individuals OR companies.

----------


## Just the facts

> Love the always glass half empty observations.


It's how Carl makes money. You want to bet he doesn't buy a single share of the new company?

----------


## Easy180

> Love the always glass half empty observations.


Unfortunately over the past few years Chesapeake has earned this approach. Kinda hard to go with the glass half full with their recent track record.

----------


## PhiAlpha

> ...and so the Carl Icahn 'split it up and spin it off' begins.
> 
> Chesapeake eyes possible spinoff of subsidiary | News OK


This isn't really that unheard of right now, Ichan or not. Doug Lawler mentioned wanting  to reduce CHK to a size and structure that resembles Devon and Anadarko. Neither of those companies are anywhere near as vertically integrated as CHK due to the high costs and limited benefits of doings so. Those companies don't own drilling companies, service companies, or fracture technology companies among other subsidiaries that CHK created. Devon, like CHK, now doesn't even manage their own midstream assets anymore as they spun them off as the Enlink MLP. 

I think this is a positive development that will further reduce CHK's debt and should've been expected when Lawler announced his plans for the company. Conoco, Marathon, Devon, Williams, Chaparral, and Questar, as well as OneOK and OGE on the midstream/downstream side have made similar moves over the last few years. The energy industry appears to be moving away from vertical integration all around.  


Sent from my iPhone using Tapatalk

----------


## Rover

> It's how Carl makes money. You want to bet he doesn't buy a single share of the new company?


He doesn't have to buy more.  He will have a substantial investment in it already.  His objective is to make the two parts more valuable apart than they are together.  Sometimes splitting them up to focus on their market segment and to consolidate core strengths is best in both the short and long term.  

Many industries do this....integrate vertically for awhile with acquisitions, internal start-ups, etc. and then spin them off.  Can be a very good strategy and best for all concerned.

----------


## Snowman

> He doesn't have to buy more.  He will have a substantial investment in it already.  His objective is to make the two parts more valuable apart than they are together.  Sometimes splitting them up to focus on their market segment and to consolidate core strengths is best in both the short and long term.  
> 
> Many industries do this....integrate vertically for awhile with acquisitions, internal start-ups, etc. and then spin them off.  Can be a very good strategy and best for all concerned.


Right, but his history is as a corporate raider, not building long term value in companies.

----------


## PWitty

> It's how Carl makes money. You want to bet he doesn't buy a single share of the new company?


Well right now it is a proposed spin-off, not a sell-off. So he will own the same percentage of shares of the new company as he currently owns of CHK, assuming I understand it correctly.

----------


## Rover

> Right, but his history is as a corporate raider, not building long term value in companies.


Ah...the old fallacy ad hominem.  The issue is not "who is behind this and what is their motive", but, "is this a good business move".  The answer is, "it may well be".  Who wants it to happen neither validates or invalidates the wisdom of the move.

Sometimes vertical integration does not enhance efficiency, but rather restricts the proper utilization of assets.  In this case, the spinning off of the company says that what this new company can now do is structure its own finances and support structure to become most efficient it what it does.  With a huge equipment/asset investment, it will be able to now go compete for business from other oil companies and maybe be more efficient and grow into even better inefficiencies.  What Chesapeake is doing is letting the major divisions concentrate on making themselves better without having to consider their sister divisions and whatever problems that creates.

----------


## Pete

Chesapeake’s Faltering Oklahoma Gas Field Threatens Loans
By Joe Carroll  Mar 26, 2014 8:50 AM PT 
Chesapeake?s Faltering Oklahoma Gas Field Threatens Loans - Bloomberg

Chesapeake Energy (CHK) Corp.’s Sahara natural gas field in Oklahoma in producing less than expected, undermining fuel sales backing $880 million in loans and notes.

Output from 3,300 Chesapeake-operated wells in the Sahara field was 12 percent below projections during the six-month period ending in February, Moody’s Investors Service said in a note to clients yesterday. As a result, the so-called production coverage ratio on the Glenn Pool Oil & Gas Trust five-year loan and 10-year notes declined to 1.18 from 1.29, the credit-rating firm said.

Chesapeake, the second-largest U.S. gas producer, borrowed $880 million from Barclays Plc (BARC) in May 2011 under a pair of agreements that repay the loans with future supplies of gas, crude oil and gas byproducts.

It’s the second time in three months that deteriorating production has triggered alarm bells at the credit agency. In December, Moody’s downgraded ratings on $360 million in Chesapeake borrowings backed by wells in the Barnett Shale formation in Texas. Chesapeake’s production growth slowed to 3.4 percent in 2013 after growing at double-digit rates in 11 of the prior 12 years, according to data compiled by Bloomberg.

Chief Executive Officer Doug Lawler, appointed last year after co-founder Aubrey McClendon was fired, has been shifting investment and drilling rigs to higher-profit oilfields after a glut of North American gas collapsed prices and forced the Oklahoma City-based company to sell billions of dollars in assets to avoid a cash crunch.

----------


## s00nr1

Another article posted today about the SSE spinoff:

Seventy Seven Spinoff Could Have Chesapeake's Investors Gushing - TheStreet

----------


## sooner88

Can someone point me in the direction for the summary of properties that CHK has sold off? I know it's out there, but can't seem to find it.

----------


## tomokc

Try this: Chesapeake empire marches on - OKCTalk

----------


## ljbab728

MidFirst Bank buys four Oklahoma City office buildings from Chesapeake Energy | News OK




> MidFirst Bank has purchased four office buildings on Grand Boulevard from Chesapeake Energy Corp. for an undisclosed price.
> 
> The acquisition will give MidFirst an additional 230,000 square feet of office space and expand the the banking company’s campus off Interstate 44, MidFirst said.
> 
> The buildings include One and Two Grand Park, and two smaller office buildings including 601 NW Grand Boulevard, which once housed the Oklahoma State Medical Association, and 625 NW Grand that once housed the Central Oklahoma Homebuilders Association.

----------


## ljbab728

This was a proposal that I had not heard of before.

Oklahoma City Council denies Chesapeake request | News OK




> Chesapeake Energy stumbled Tuesday in a dust-up with some of its northwest Oklahoma City neighbors and a creative attorney.
> 
> The energy giant asked the Oklahoma City Council to force its neighbors to pay hundreds of thousands of dollars toward street improvements that would largely benefit Chesapeake.





> The council’s vote to deny Chesapeake’s request was unanimous. No one from Chesapeake was available for comment Tuesday night.

----------


## pw405

> This was a proposal that I had not heard of before.
> 
> Oklahoma City Council denies Chesapeake request | News OK


I'm confused, how would this benefit Chesapeake?  these improvements are all North and East of their campus.  If anything, they would benefit AEP, right?

----------


## Snowman

> I'm confused, how would this benefit Chesapeake?  these improvements are all North and East of their campus.  If anything, they would benefit AEP, right?


At one point Chesapeake was buying up what seemed like everything north of Grand between Western & i235, the article mentions they own 90% of the land that will be served, the probably they will build or otherwise expand anything north of 63rd anytime soon has evaporated so it is surprising they would want to increase the taxes on the land they own there. I guess there is a chance they think they could get slightly more sale value with better roads to the properties but from their history they probably overpaid and it is going to be a lose anyway.  AEP only has a tiny footprint in the area right now compared to Chesapeake with at least some rumors they may build a campus elsewhere on land Aubrey McClendon already owns.

----------


## Pete

Chesapeake still owns tons of land north of 63rd that they have never really developed.  Wonder if they are trying to work a deal to unload most of it and wanted the street improvements as an enhancement.

AEP is only a renter at the Harvey Parkway.  The land Aubrey owns that is rumored to be the new site of their campus is along the east side of Broadway Extension, north of Wilshire.

----------


## HangryHippo

> MidFirst Bank buys four Oklahoma City office buildings from Chesapeake Energy | News OK


We certainly knew this was coming, but I still think this sucks.  MidFirst would have been a great anchor to have downtown.

----------


## Pete

^

Yes, the timing of this just didn't work out because before Aubrey was deposed, CHK was a buyer of the Mid* properties.

Once that changed, MidFirst made a hard run at the OPUBCO properties and the writing was on the wall.

Now, this transaction really makes a lot of sense for both companies.  Will be interesting to see if MidFirst develops the two properties between the larger office buildings.  They have the potential to have a very nice campus of their own.

----------


## Plutonic Panda

> We certainly knew this was coming, but I still think this sucks.  MidFirst would have been a great anchor to have downtown.


Honestly, I'm glad. There needs to be a balance of big, strong anchors out in the burbs as well as downtown. I think this is a good choice and hopefully we see a beautiful facility come out of this.

----------


## warreng88

> We certainly knew this was coming, but I still think this sucks.  MidFirst would have been a great anchor to have downtown.


I would rather them buy up empty CHK buildings instead of building something brand new DT just because and thus opening up over 100,000 feet of commercial space, not to mention all the empty building around them.

----------


## HangryHippo

> I would rather them buy up empty CHK buildings instead of building something brand new DT just because and thus opening up over 100,000 feet of commercial space, not to mention all the empty building around them.


It seems like nice space away from downtown gets taken up a lot faster than we're seeing large new tenants move downtown.  My preference would be for downtown to have MidFirst and then let other companies pick off what they want from the digs near CHK.

----------


## Easy180

> ^
> 
> Yes, the timing of this just didn't work out because before Aubrey was deposed, CHK was a buyer of the Mid* properties.
> 
> Once that changed, MidFirst made a hard run at the OPUBCO properties and the writing was on the wall.
> 
> Now, this transaction really makes a lot of sense for both companies.  Will be interesting to see if MidFirst develops the two properties between the larger office buildings.  They have the potential to have a very nice campus of their own.


My guess is they don't do much to make it a campus. They seem to be pretty low key. Kinda the opposite of the company they bought the buildings from.

----------


## HangryHippo

Chesapeake Energy planning record $3 billion bond offering to refinance debt | Dallas Morning News

----------


## TechArch

Pete -
When you get the chance, could you update the map that shows the properties owned by Chesapeake after all these sales?  It would interesting to see how much they have shrunk in land mass after all the recent transactions.

----------


## Pete

> Pete -
> When you get the chance, could you update the map that shows the properties owned by Chesapeake after all these sales?  It would interesting to see how much they have shrunk in land mass after all the recent transactions.


I'm working on it.

----------


## onthestrip

CHK stock, as well as Sandridge, hit 52 week highs today.

----------


## ou48A

Chesapeake Loses Bid to Reverse $121 Million Gas Verdict - Bloomberg

Chesapeake Energy Corp. (CHK), the second-largest U.S. natural gas producer, must pay $121 million to three Texas lease holders after failing to persuade an appeals court to overturn a verdict that it reneged on deals to buy mineral rights when prices plunged in 2008. 

A federal judge in Houston ruled in 2012 that Chesapeake couldnt escape contracts to lease more than 500 oil and gas properties from Preston Exploration Co. and two affiliates. The Oklahoma City-based company began negotiating the leases in June 2008, only to see gas prices plunge by as much as 50 percent in the weeks before the contract closing that November. 

The lawsuit is one of hundreds of landowner claims filed in federal and state courts in Texas, Michigan, Pennsylvania and other states alleging Chesapeake broke contracts for oil and gas leases. 

Chesapeake had no basis for claiming Preston and its affiliates couldnt deliver their end of the deal and was therefore required to fulfill its obligations under the agreement, a three-judge panel of U.S. Court of Appeals in New Orleans said in its ruling today.

----------


## rlewis

It looks like Chesapeake is continuing to get it's act together financially.  This should calm a lot of nerves about Chesapeake's future prospects.  The article also mentions the strong quarter that Devon Energy had as well.  This bodes very well for our local economy.

Chesapeake, Devon, Spectra's Oil And Gas Output Rises CHK DVN SE - Investors.com

----------


## Plutonic Panda

I think Chesapeake got its act together awhile ago, but dug itself so far a hole, it took awhile to get out. At least they are going up.

----------


## Plutonic Panda

Despite layoffs, Chesapeake Energy still qualifies for city job creation payments | News OK

----------


## PhiAlpha

Don't know if this has been mentioned anywhere, but the oil field services CHK spin off deal is now complete. The new company is called Seventy Seven Energy (for the 77 counties in Oklahoma) and will be headquartered in okc. Operating on its own should give it an excellent opportunity to expand its operations and client base. Should be a good deal for OKC that will add some more diversity to our energy company mix if this new company can add more clients that aren't CHK. With 5500 employees, this will be a fairly good size oil field services company and there aren't many of those (or really any) headquartered here. The new company's market cap is currently $1.12 billion. 

http://www.marketwatch.com/story/sev...ion-2014-07-01


Sent from my iPhone using Tapatalk

----------


## Plutonic Panda

Sorry if this is a stupid question, but will those 5,500 employees, or the ones that aren't here, be relocated here? So that means new jobs in OKC? If so, that is great. Hopefully they'll move into a nice building somewhere in the metro.

----------


## PhiAlpha

> Sorry if this is a stupid question, but will those 5,500 employees, or the ones that aren't here, be relocated here? So that means new jobs in OKC? If so, that is great. Hopefully they'll move into a nice building somewhere in the metro.


I wouldn't think that much would change from where they are located now. The vast majority of those 5,000 people are out of field offices and that shouldn't change. I'm sure this will net some additional employees in OKC as the company grows though. 


Sent from my iPhone using Tapatalk

----------


## Rover

> Don't know if this has been mentioned anywhere, but the oil field services CHK spin off deal is now complete. The new company is called Seventy Seven Energy (for the 77 counties in Oklahoma) and will be headquartered in okc. Operating on its own should give it an excellent opportunity to expand its operations and client base. Should be a good deal for OKC that will add some more diversity to our energy company mix if this new company can add more clients that aren't CHK. With 5500 employees, this will be a fairly good size oil field services company and there aren't many of those (or really any) headquartered here. The new company's market cap is currently $1.12 billion. 
> 
> Seventy Seven Energy Inc. Completes Spin-off from Chesapeake Energy Corporation - MarketWatch
> 
> 
> Sent from my iPhone using Tapatalk


A common measure of the health of a city's economy is the number of NYSE companies headquartered there.  This adds yet another to OKC.

----------


## Plutonic Panda

> I wouldn't think that much would change from where they are located now. The vast majority of those 5,000 people are out of field offices and that shouldn't change. I'm sure this will net some additional employees in OKC as the company grows though. 
> 
> 
> Sent from my iPhone using Tapatalk


cool!  And thank you

----------


## DowntownMan

Seventy Seven's HQ is the building on 63rd that was the old CHK administration and imaging center. 63rd & Shartel

They have a sign up now.

----------


## pw405

Crazy how 63rd street is becoming OKC's "Energy Corridor" of sorts.  Nothing close to the scale of Houston's, but just 2 years ago there was only CHK.  Now we've got CHK, SSE, and AEP all within a mile of each other.  AEP and CHK are more direct competitors, as they both engage in exploration and production, but they will likely both use SSE for field work.

For those not in-the-know, The E&P's use highly specialized contractors to complete certain processes and jobs to bring oil/gas to the market.  For example - CHK needs to drill a well.  They will hire a drilling contractor (SSE's is "Nomac Drilling") to construct ("drill") the well.  A completions contractor to "activate" the well (fracturing) (SSE's is "Performance Technologies"), and then you'll need a company to handle bringing what comes out of the well (oil, hopefully) to a place where you can sell it.  SSE handles all of these aspects of the O/G business.

----------


## Plutonic Panda

Chesapeake subsidiary sells assets for $135 million | News OK

----------


## warreng88

Drove down 63rd last night from 235 to Penn. How is it that the intersection of Classen and 63, quite ppossibly one of the busiest in the city during peak times, has not been redone? I feel like I am off-roading every time I drive that street east to west or west to east.

----------


## Plutonic Panda

wrong thread

----------


## warreng88

> wrong thread


You of all people should know that the title and content of threads don't matter.  :Smile:

----------


## Plutonic Panda

> You of all people should know that the title and content of threads don't matter.


i have ADHD  so I get a pass  :Wink:

----------


## ljbab728

An interesting development.

http://www.oklahoman.com/article/5334968?embargo=1




> Chesapeake Energy Corp. will leave $1.57 million in public-funded job creation money on the table after terminating its economic development contract with Oklahoma City early.
> 
> 
> 
> Company officials sent Oklahoma City a written notice in July that Chesapeake would cancel its agreement with the city after The Oklahoman reported that the company still was eligible to collect $572,500 in job creation incentives this year, although it employed 732 fewer people than when it entered the incentive program in 2011.
> 
> The remaining $1.57 million in incentive money from Chesapeake Energy’s contract with the city later will be reallocated to provide job creation incentives for other Oklahoma City employers, Bryant said. As of June 30, Oklahoma City had allocated more than $35.3 million in job creation incentives to more than 20 participating companies for the creation of up to 8,045 new jobs in the city.

----------


## Pete

That stinks because the reporting they had to do as a part of that program provided details on the number of OKC employees.

The article says they have 732 fewer jobs but since their last report they also spun off a big business unit.

I suspect they terminated because 1) they knew they would no longer qualify for the incentives and 2) they didn't want to report their numbers.

----------


## coov23

Any chance they are removing themselves because of a possible relocation? Don't shoot the messenger, just asking. Nothing more.

----------


## Plutonic Panda

I sure hope not. That would be a huge loss to OKC.

----------


## Rover

> Any chance they are removing themselves because of a possible relocation? Don't shoot the messenger, just asking. Nothing more.


Since there is no basis of fact, you wouldn't be the messenger, just a speculator.  There has been zero indication of any relocation.  They have been making lots of moves to try to make themselves more viable long term and selling assets and spinning off sections to make it all work.  Relocation doesn't resolve any of their issues and in fact would cost them money.

----------


## Teo9969

They'll have to be bought out before they relocate. Maybe a buy-out is in the works, but I doubt it.

----------


## Pete

They have recently consolidated all their employees back to campus and their financials have firmed up pretty dramatically.

They are in much, much better shape now that just a year ago.

----------


## PhiAlpha

> They have recently consolidated all their employees back to campus and their financials have firmed up pretty dramatically.
> 
> They are in much, much better shape now that just a year ago.


And despite removing themselves from this program, they are adding people back to their previously reduced workforce. I have several friends that have been hired or offered jobs there over the last few months. Things have definitely improved.

----------


## Pete

CHK sells over $5B in assets

Chesapeake Energy (NYSE: CHK) has executed a Purchase and Sale Agreement to sell assets in the Southern Marcellus Shale and a portion of the Eastern Utica Shale in West Virginia to Southwestern Energy Company (NYSE: SWN) (“Southwestern”) for aggregate proceeds of $5.375 billion. The transaction, which is subject to certain customary closing conditions, including the receipt of third-party consents, is expected to close in the fourth quarter of 2014.

----------


## PhiAlpha

Some good news out of CHK

Chesapeake beats expectations with third-quarter earnings | News OK

----------


## Pete

^

They have definitely turned things around.

The new CEO, Doug Lawler, has done a great job.

----------


## Richard at Remax

So good they are bringing Kelly Clarkson to the Xmas party

----------


## bradh

> So good they are bringing Kelly Clarkson to the Xmas party


hey i used to work for a privately held (then) car dealership software company, fairly modest but the owner was cheap, but the one thing they did big every year was the Christmas party, had the Beach Boys one year.

----------


## Plutonic Panda

U.S. Justice Department eyeing Chesapeake Energy Corp. | News OK

----------


## Pete

This is a really interesting article on the U.S. Justice probe of CHK from propublica.org, a non-profit investigative journalism organization.

They did a lot of the investigation that has led to the inquiry.

And what they found is very interesting:

1. Suddenly, property owners saw their mineral royalty payments from CHK drastically cut; some as much by 97 percent
2. Turns out CHK had added tons of expense which they subtracted from these payments
3. The expense was mainly around charges for midstream (pipeline) charges
4. CHK had sold of their Access Midstream division (first to a private group and Williams has recently bought it) for $5 billion, they allegedly entered into an agreement with the new buyers to pay back almost all that money through fees, which they in turn subtracted from their royalty payments

They are being accused of "disguised financing"; taking the $5 billion up front in the sale but paying it back through their usage agreements with Access, and then having their lease holders pay the cost.

Will be very interesting to see how this all shakes out in court:

Chesapeake Energy Faces Subpoena on Royalty Payment Practices - ProPublica

----------


## ljbab728

Another indication of Chesapeake's improving outlook.

Chesapeake Energy secures $4 billion credit facility | NewsOK.com

----------


## Plutonic Panda

Chesapeake to pay $119 million in settlement to royalty owners over natural gas marketing costs in Oklahoma | News OK

----------


## sooner88

Exclusive: Chesapeake Energy sues former CEO McClendon's new firm | Reuters

----------


## AP

I don't see how anyone can continue to support this guy.

----------


## Urbanized

Man, if this has legs he is perhaps the most cautionary tale in history when it comes to e-mail usage.

----------


## jn1780

Sure did take them awhile to figure out he may have stolen data.

----------


## Pete

If this is true, McClendon probably thought by using BCC it would never be detected.

Chesapeake must have had strong reason to believe he took data and then conducted a forensic data search that discovered the correspondence.


Brian Grow and Anna Driver from Reuters continue to kick butt when it comes to OKC energy reporting.

----------


## CuatrodeMayo

This is what USB drives are for...

----------


## Pete

McClendon has created a website to refute the CHK claims:

AELP v CHK Litigation




> Aubrey K. McClendon and American Energy Partners, LP (AELP) have responded to a meritless lawsuit commenced against them by Chesapeake Energy Corporation. When Mr. McClendon agreed to leave Chesapeake in January 2013, the company made a deal with him: first, the company promised he would be paid his compensation benefits as provided for in his employment agreement and second, the company promised he would be provided with an extensive array of information about the more than 16,000 wells, and the related leasehold acreage and future wells, he jointly owns with Chesapeake. That information includes land, well, title, accounting, geological, engineering, reservoir, operating, marketing, and performance data. The deal further gave Mr. McClendon the right to own and use this information for his own purposes, including sharing it with his employees, contractors, advisors, consultants and affiliated entities. We are confident that Mr. McClendon and AELP will be vindicated in this dispute and Mr. McClendon’s contractual rights to keep and use the information he received in the deal will be affirmed.

----------


## zookeeper

Anybody who is surprised that McClendon would do anything like this, raise your hands! (?????) _Anybody_ (????)

----------


## Rover

> Anybody who is surprised that McClendon would do anything like this, raise your hands! (?????) _Anybody_ (????)


What...surprised he negotiated this advantage?

----------


## Urbanized

Yeah, could very well be a gray area or even an outright clear-cut case for his vindication. Who knows? There are two sides to every story. And you can say a lot of things about him good or bad depending on your view, but one thing everyone can probably agree upon is that he is shrewd. It'll be interesting to see how this plays out.

----------


## moose

> This is what USB drives are for...


CHK IT folks can also detect when transfers of data is moved to a USB drive.  I was not previously aware this was possible.

----------


## Pete

> CHK IT folks can also detect when transfers of data is moved to a USB drive.  I was not previously aware this was possible.


I would imagine network logs are capable of tracking when any files are copied from the various servers.

And these days, almost all data is keep on servers rather than individual computers.

----------


## okatty

The Petition is an interesting read.   Can be seen on OSCN site, Okla County case No. CJ-2015-933.    There is a great old Abe Lemons story about a very bad word he said being written down and  "looking BAD IN PRINT."  Well, this looks bad in print on the first go-round.

----------


## Pete

This is why it's never a good idea to keep someone around after they've been effectively fired.

Whether McClendon did what they say or not, it's just too easy for these types of problems to occur after someone is basically told they have to leave the company.

----------


## mimino

> McClendon financier settles lawsuit with Chesapeake Energy


McClendon financier settles lawsuit with Chesapeake Energy - Chesapeake Energy Corporation (NYSE:CHK) | Seeking Alpha

Chesapeake Energy to get up to $25M, 6,000 acres from Aubrey McClendon?s American Energy-Utica - Columbus - Columbus Business First

~100M fine (25M + cost of land)

----------


## Urbanized

Wow. The headline is NOT the story in both of those links.

----------


## mimino

> Wow. The headline is NOT the story in both of those links.





> Energy & Minerals Group, an investment firm headed by John Raymond that has put billions of dollars into American Energy, reached the settlement without informing McClendon of the decision.


I assume that's what was meant by "financier."

----------


## Urbanized

What I meant was that Aubrey's chief financial backer settled with CHK without consulting with or even informing Aubrey, and that the fact that he did so was made very public. In reading more on the topic, there is some other intrigue regarding the Ohio subsidiary of AEP. It's just a bit worrisome that a guy who recently plowed billions into Aubrey's company now doesn't seem to be on the same page with him.

Of course, the whole discussion probably belongs in the AEP thread rather than the CHK one.

----------


## mimino

> Chesapeake reaches $25M settlement over Michigan leasing charges


Chesapeake reaches $25M settlement over Michigan leasing charges - Chesapeake Energy Corporation (NYSE:CHK) | Seeking Alpha

----------


## okatty

Their stock is down big getting to  and below 2008 levels - down 3.5% just today.    I assume due to ballooning natural gas surplus numbers.  Other natural gas producers are also down big (SW Energy, Ultra).

----------


## ou48A

IMHO..... NG prices will recover in the coming months and years in part due to increased demand, declining drilling rates and the start of LNG exports, the first of which are secluded to start late this year and increases from there. 

Collectively in due time this should be enough that it really helps CHK and other NG dominate players with higher NG prices… Add that the drillers and producers are increasing their efficacy’s, this includes CHK who has done a lot to become a more healthy company and as a result the likelihood of a buyout, though still small, is an increasing possibility. CHK has decent hedged positions from what I understand.

After staying on the sidelines for about 8 months with the E&P stocks I recently made a purchase of CHK stock. 
Buy low, sell high…. At least that’s what I hope for.

----------


## Pete

Chesapeake to cut dividends, sell some assets | News OK

Still baffling why they have not tried to sell the hundreds of properties they still own, like 50+ condos in Nichols Hills, a $10 million church, several small off-campus office buildings and lots of vacant land.

And of those they have liquidated, none were openly marketed all went to people with Chesapeake ties.


It's all very strange and contrary to the 'New Chesapeake' PR.

----------


## okatty

Closed at 9.26 down almost 10% today.

----------


## BillyOcean

I have repeatedly tried to buy a certain building from CHK multiple times with no luck.  Other than the parking lot, it sits vacant.

----------


## Stickman

This is from *THE STREET*  the other day
Also a lot of buying from Board Members................. :Sheep: 


Why Hess, Continental, Chesapeake, EOG Are Getting Exciting -- Dan Dicker, Jim Cramer 



By Daniel Dicker Follow   |  07/22/15 - 01:19 PM EDT 

Exclusive FREE Report: Jim Cramer's Best Stocks for 2015.


         13   
NEW YORK (TheStreet) -- The second wave of selling is now taking place in the energy market -- both with oil and the oil stocks. This time, however, many of the most pressured oil stocks are reaching a value level that could interest the majors like Exxon Mobil (XOM) and Chevron (CVX) to buy them on the cheap. And that's precisely what I've been waiting for to reignite my excitement in the energy sector.       

Oil has seen sub-$50 before, in the early springtime of this year. While that drop in oil prices had a more panicked feel to it compared to this slower melting away of prices, it has been the prices of the oil stocks that have interested me more. For example, the last time oil was breaking the $60 level, Continental Resources (CLR), a major producer of shale oil in the Bakken, was trading $42 a share, now it's at $35. Hess (HES - Get Report), another Bakken specialist, was trading $70 a share; it's now under $60. Chesapeake Energy (CHK) was at $15 and now trades near $9.

I could go on, but my point is that the exploration and production company stock prices are approaching low values that even the price of the underlying commodity would not have predicted. While this has been tough for shareholders, it presents value to other cash-rich oil companies in the market to buy cheap production assets.
And that means the majors. CEO Rex Tillerson of Exxon has been very clear of his company's interest in purchasing distressed shale oil producers at the right price. And I have been clear in my book "Shale Boom, Shale Bust", that consolidation needs to take place before this cycle of oil's collapse can near its end.

Must Read: George Soros' Top 5 Dividend Stock Picks for 2015

These stocks and others are now reaching those levels where they'll start to be very tempting to some of these very patient super-majors.

I want to see one or two big deals to convince me that the oil glut is on the verge of clearing before I commit again into this very weak energy sector. We've done well by staying mostly clear of the energy space as oil has begun its double dip recession in prices back toward the springtime low.

And we won't commit the almost equal error of trying to pick a bottom either. Instead, we'll wait for Rex Tillerson to tell us when it's safe again.


This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.   












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Chart of I :Big Grin: JI

----------


## mimino

CHK at $8.x today... with no end to downtrun in sight.

----------


## Stickman

Does anybody out there think they (Icahn   :Smiley122: ) is trying to trim up Chesapeake Energy for a sale?
Gulp........hope not  !   What a blow that would be.

----------


## s00nr1

Chesapeake Energy: ?We Would Not Be Surprised to See an Entire Company Sale? - Stocks to Watch - Barrons.com

----------


## okatty

They report earnings on Wed.   Stock is about 8.30 at the moment.  Will be interesting to see if they get a bump because it "isn't as bad as expected" and maybe the down has already been factored in.   Will be interesting to watch all the Okla energy stocks this week as they will be reporting.

----------


## okatty

Probably a sucker but I bit earlier today at 7.99.   Earnings tomorrow.

----------


## soonermike81

> Probably a sucker but I bit earlier today at 7.99.   Earnings tomorrow.


I don't mind the play. I'm long in several oil & gas plays. Going to keep buying as oil falls.

----------


## gopokes88

> Probably a sucker but I bit earlier today at 7.99.   Earnings tomorrow.


I did too. Stock has been beaten down so much lately it'll pop on any bit of good news.

----------


## OU Adonis

> I did too. Stock has been beaten down so much lately it'll pop on any bit of good news.


Does this constitute good news?

Chesapeake reports $4.1 billion second quarter loss | News OK

----------


## OkiePoke

> Does this constitute good news?
> 
> Chesapeake reports $4.1 billion second quarter loss | News OK


That is just a devaluation of their assets. Look at Devon's report. What is important is the earnings.

----------


## okatty

Check out the volume on the stock today.   Off the charts.  Someone dumped a bunch of shares around 10 am.

----------


## OU Adonis

I am going to buy if the stock goes below 7.

----------


## okatty

Was over 21 less than 6 months ago.   Lost almost 2/3 of that as we sit today.  When it was around 10 two weeks ago looked like a decent buy and now has lost 25% of that.   2 Mill shares just traded in 10 minutes.

----------


## OU Adonis

> Was over 21 less than 6 months ago.   Lost almost 2/3 of that as we sit today.  When it was around 10 two weeks ago looked like a decent buy and now has lost 25% of that.   2 Mill shares just traded in 10 minutes.


The Street rates it as a "Sell".

----------


## okatty

Needless to say a very interesting day in regard to CHK stock!  Wow.

----------


## OU Adonis

> Needless to say a very interesting day in regard to CHK stock!  Wow.


Its down almost 10%  Crazy.

----------


## Jersey Boss

> I am going to buy if the stock goes below 7.


Closed at 7.03 today.

----------


## okatty

What a hell of a day!  Volume of almost 57 million.  Got as low as 6.85.    Down over 12% (IN A DAY).  I really thought that $8 trade yday was a good one..haha :Cool:

----------


## OU Adonis

> What a hell of a day!  Volume of almost 57 million.  Got as low as 6.85.    Down over 12% (IN A DAY).  I really thought that $8 trade yday was a good one..haha


And I didn't see it go below 7.  I should of bought.

----------


## Just the facts

That reminds me of this.

----------


## gopokes88

> What a hell of a day!  Volume of almost 57 million.  Got as low as 6.85.    Down over 12% (IN A DAY).  I really thought that $8 trade yday was a good one..haha


In the long run it might still be a good trade.

----------


## king183

I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking.  Hoping for a buy out, maybe?

I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.

----------


## PhiAlpha

> I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking.  Hoping for a buy out, maybe?
> 
> I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.


Because even at $45 oil their physical assets are worth a good deal more than the stock price is giving them credit for, the company has generally made a huge turn around over the last 2 years, and at under $8 a share you can buy a lot without spending too much money. CHK still has one of the best asset bases in the country even after the asset sales and it is massively undervalued. I don't think anyone buying CHK right now is making a short term investment (outside of those that hoped to buy low yesterday and sell high on good news today). If you share in the general consensus that oil and gas prices will increase over the next few years, then CHK is a pretty good investment at $7.00. 

On oil prices, no one really seems to know what they are going to do, but I doubt we are stuck under $60 and definitely not under $50 long term. That of course depends on what you consider long term. There are a lot of variables at play, but US production will start falling quite a bit if we experience prolonged sub $50 prices.

----------


## okatty

The news today wasn't bad - it was pretty much as forcasted except revenue was somewhat lower.   There were some HUGE institutional sales following the call for whatever reason.  You don't see 20-plus million in volume on a stock like CHK prior to 10 AM CST very often.

----------


## gopokes88

> I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking.  Hoping for a buy out, maybe?
> 
> I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.


Because none of that has anything to do with their stock price. 

Ok that's not technically true, but still. Stocks very rarely behave rationally. Tesla is worth as much as GM despite having a fraction of the sales, never turning a profit and they gave away all their patents on their technology. If stocks behaved rationally tesla wouldn't even be listed, but they don't and tesla is super expensive. (I do understand why, don't get me wrong but if it was purely dollars and cents tesla is expensive) 

Second is because people get into the trap that most investors get into. They sell on bad news because it's bad news and they buy good news because it's good news. It's easy to say buy low sell high but it's much tougher to do in practice. Because if a stock is low there's a reason it's a low and it's hard not to be emotional about the low. Kinda like you are right now. You gave a few reasons why no one should buy because it's so bad right now, but by the time there is good news you'll be too late to the party. CHK is cheap right now expectations are near zero and any positive news the stock is going to pop.

----------


## okatty

^ I hope it pops like a dad-gum weasel! :Smile:

----------


## gopokes88

> ^ I hope it pops like a dad-gum weasel!


It will. Why and when are different story. They aren't going under so that's not a concern unlike SD. It'll pop because nothing goes up/down forever or a buyout offer. Given how down the stock is, it would take a nice offer to get shareholders to sell.

----------


## blangtang

> *I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking.  Hoping for a buy out, maybe*?
> 
> I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.


Maybe its home-town homerism, or local pride?  I remember living in Tulsa in the dot com bubble and people were loading up on Williams (WMB) and one of their hot communication spinoff stock, williams communication group.

Full disclosure: I don't work for the energy industry.

----------


## okatty

^ It may be something related to local interest or the fact it is followed more closely than a company from somewhere else, but not local pride.  You can argue the pros and cons of stocks like CHK but there is no doubt there is plenty of things you can point to (as have been noted above) to say it makes sense to buy it at what appears to be a very low price in relation to their asset base, etc.     You can argue the other side too, but it has nothing to do with pride in my view.  If I thought the right play was to short it I would do that too.

----------


## jn1780

> Maybe its home-town homerism, or local pride?  I remember living in Tulsa in the dot com bubble and people were loading up on Williams (WMB) and one of their hot communication spinoff stock, williams communication group.
> 
> Full disclosure: I don't work for the energy industry.


Money can be made as a stock bounces up and down.  Money can be made in the long run too when things recover.

----------


## king183

> Because none of that has anything to do with their stock price. 
> 
> Ok that's not technically true, but still. Stocks very rarely behave rationally. Tesla is worth as much as GM despite having a fraction of the sales, never turning a profit and they gave away all their patents on their technology. If stocks behaved rationally tesla wouldn't even be listed, but they don't and tesla is super expensive. (I do understand why, don't get me wrong but if it was purely dollars and cents tesla is expensive) 
> 
> Second is because people get into the trap that most investors get into. They sell on bad news because it's bad news and they buy good news because it's good news. It's easy to say buy low sell high but it's much tougher to do in practice. Because if a stock is low there's a reason it's a low and it's hard not to be emotional about the low. Kinda like you are right now. You gave a few reasons why no one should buy because it's so bad right now, but by the time there is good news you'll be too late to the party. CHK is cheap right now expectations are near zero and any positive news the stock is going to pop.


Most of us are well aware of the role emotion plays in short-term stock pricing; but I'm not talking about short-term pricing. I'm talking about the long-term price, which will, in fact, despite your opening sentence, be set by the company's fundamentals. I'm also making the assumption that people who boosting the stock on this board are buying it to hold it, not wait for a pop to sell for short-term gain. Maybe that's a faulty assumption.

My argument is that there is little in the CHK fundamentals to suggest their business will turn around, primarily because I don't believe oil or gas is going to make meaningful move upward for a long time, thereby resulting in lower earnings and cash flow and hurting their ability to pay down debt. CHK has already eliminated dividends and they're looking to sell more valuable assets to preserve cash holdings and we'll probably see limited layoffs before the end of the year.

The counter to that argument is that 1) oil could easily go up in a meaningful way if any number of events occur, including the Saudis deciding they've played this game of chicken too long and don't want to continue to deplete their cash reserves, which they're burning through rapidly; 2) CHK's book value is strong given their underlying assets, so if they were sold, you'd get much more than $7-8 return per share; 3) CHK has taken measures to prepare themselves for this type of depressed price environment by strategically selling assets to reduce liabilities and increase cash on hand, allowing them to "weather the storm" better than some of their competitors and, therefore, being in a position to succeed if oil and gas prices gain support.

----------


## gopokes88

> Most of us are well aware of the role emotion plays in short-term stock pricing; but I'm not talking about short-term pricing. I'm talking about the long-term price, which will, in fact, despite your opening sentence, be set by the company's fundamentals. I'm also making the assumption that people who boosting the stock on this board are buying it to hold it, not wait for a pop to sell for short-term gain. Maybe that's a faulty assumption.
> 
> My argument is that there is little in the CHK fundamentals to suggest their business will turn around, primarily because I don't believe oil or gas is going to make meaningful move upward for a long time, thereby resulting in lower earnings and cash flow and hurting their ability to pay down debt. CHK has already eliminated dividends and they're looking to sell more valuable assets to preserve cash holdings and we'll probably see limited layoffs before the end of the year.
> 
> The counter to that argument is that 1) oil could easily go up in a meaningful way if any number of events occur, including the Saudis deciding they've played this game of chicken too long and don't want to continue to deplete their cash reserves, which they're burning through rapidly; 2) CHK's book value is strong given their underlying assets, so if they were sold, you'd get much more than $7-8 return per share; 3) CHK has taken measures to prepare themselves for this type of depressed price environment by strategically selling assets to reduce liabilities and increase cash on hand, allowing them to "weather the storm" better than some of their competitors and, therefore, being in a position to succeed if oil and gas prices gain support.


I'm not trading short term I hate short term cap gains tax. I don't play with enough money it's not worth the big tax. 
4.) despite the fundamentals it is in oversold territory. 
5.) CHK stock has always been a roller coaster. It may be hard to predict the bottom but it's easier to know when it's cheap. 

You have to buy on bad news and sell on good news. Right now things look bad for CHK, hence why the share is in the $7s. Right now is when the pros start loading up. Carl Icahn is famous for doing this. 

Trading just on fundamentals you should look more towards industries that don't have as much voliatity. That creates fear which distorts the price. Just like you wouldn't trade tesla on fundamentals. You trade consumer products, medicine, etc. things that typically don't have as much swing in prices.

----------


## king183

> Trading just on fundamentals you should look more towards industries that don't have as much voliatity. That creates fear which distorts the price. Just like you wouldn't trade tesla on fundamentals. You trade consumer products, medicine, etc. things that typically don't have as much swing in prices.


Ahh, now that's what I was looking for. Good point. 

What primarily concerns me for our energy companies is the possibility for a long term (at least 2 years) depression in energy prices because of a weaker-than-expected global and national economy.  Perhaps I'm giving too much weight to the downside forces, though.

----------


## ou48A

A decent case can be made for higher NG prices in the next 3 to 5 years…. that should help CHK stock price…
As cheap as CHK is now the odds of a hostile takeover or buy out have increased.

----------


## okatty

Good Nat Gas Report and it's bouncing so far today.  Up almost 11%.   Short players are NERVOUS.

----------


## okatty

CHK up again today big....almost 11% today after a huge up day yesterday.  Over $9 .  Bounce has occurred.   Shorts are PUCKERED UP.

----------


## mimino

> CHK up again today big....almost 11% today after a huge up day yesterday.  Over $9 .  Bounce has occurred.   Shorts are PUCKERED UP.


They have been shorting it since at least $14-15, so this short covering hasn't really started yet, imho.

----------


## okatty

^ Those shorts will still be taking a big profit....just maybe not as good as it was 3 days ago.   Wild week for sure.

----------


## mimino

> ^ Those shorts will still be taking a big profit....just maybe not as good as it was 3 days ago.   Wild week for sure.


I'd pick up a few lots of CHK and SD, if I were willing to treat them strictly as a gamble at this point. It's a traders' dream stocks at this point, imho.

----------


## king183

A friend who works at CHK just told me employees are starting to hear increasing rumors of impending layoffs. If true, let's hope they are small in number and primarily affect out of state employees (sorry, out of state employees!).

----------


## Spartan

A lot of rumors starting to swirl around Marcellus shale insiders of a CHK takeover. The company has made itself more attractive and vulnerable now that it's so lean.

----------


## PhiAlpha

> A lot of rumors starting to swirl around Marcellus shale insiders of a CHK takeover. The company has made itself more attractive and vulnerable now that it's so lean.


While true that they have made themselves more attractive, there are just as many people saying that their debt load and production/drilling commitments among other things still make them unattractive at current commodity prices. There have been a CHK takeover rumors swirling almost constantly since they went public in 93 and no matter how credible they seem, I've learned to take them with a grain of salt. It would have to be a hell of a deal at these commodity prices for their largest shareholders to be interested in getting out at this point. Like many other E&P companies, CHK isn't in great shape right now, but they have a ways to go before becoming desperate.

----------


## sooner88

> While true that they have made themselves more attractive, there are just as many people saying that their debt load and production/drilling commitments among other things still make them unattractive at current commodity prices. There have been a CHK takeover rumors swirling almost constantly since they went public in 93 and no matter how credible they seem, I've learned to take them with a grain of salt. It would have to be a hell of a deal at these commodity prices for their largest shareholders to be interested in getting out at this point. Like many other E&P companies, CHK isn't in great shape right now, but they have a ways to go before becoming desperate.


The Dim Outlook For Chesapeake Energy - Forbes

This article speaks to most of that.

----------


## mimino

Anyone know what the magnitude of their OBS (off balance sheet) obligations is? I've heard some numbers in the Bs.

----------


## Richard at Remax

Hearing some layoffs could happen tomorrow. VP of Midcon got let go today.

----------


## chuck5815

yea, i'm hearing approx. 700 in OKC

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## gopokes88

> yea, i'm hearing approx. 700 in OKC


I've heard 1300-1500 don't know how many in okc though. Brutal.

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## okc_bel_air

It's has begun.........  Rumor from Thelayoff.com is 15 VP's were axed this morning and now they are cutting the regular staff.

----------


## king183

> It's has begun.........  Rumor from Thelayoff.com is 15 VP's were axed this morning and now they are cutting the regular staff.


I've confirmed it with friends who work there, including one of the VPs who was told this morning. Entire groups were let go. Not a good day at all for CHK or Oklahoma. The mood there is understandably tense and fearful.

----------


## OkiePoke

I have heard that the emails are being sent out right now to the regular employees.

Does anyone know if this will require a WARN?

----------


## Edmond_Outsider

Layoffs Underway At Chesapeake Energy - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |

----------


## adaniel

> I have heard that the emails are being sent out right now to the regular employees.
> 
> Does anyone know if this will require a WARN?


They usually must issue a warn notice 30 days in advance if there will be more than 500 people let go.

----------


## elitespy

Just watched a buddy get laid off through periscope.

----------


## FighttheGoodFight

Thoughts and prayers to all those families.

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## OU Adonis

What is a WARN notice?

----------


## Of Sound Mind

> What is a WARN notice?


The Worker Adjustment and Retraining Notification Act (WARN) protects workers, their families, and communities by requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs.

Employee entitled to notice under WARN include managers and supervisors, as well as hourly and salaried workers. WARN requires that notice also be given to employees' representatives, the local chief elected official, and the state dislocated worker unit.

Advance notice gives workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs, and, if necessary, to enter skill training or retraining that will allow these workers to compete successfully in the job market. 

Generally, WARN covers employers with 100 or more employees, not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week.Employees entitled to advance notice under WARN include managers and supervisors as well as hourly and salaried workers.Regular federal, state, and local government entities that provide public services are *not covered by WARN.*

http://www.dol.gov/compliance/laws/comp-warn.htm

----------


## OkiePoke

> What is a WARN notice?


https://en.wikipedia.org/wiki/Worker...tification_Act

The Worker Adjustment and Retraining Notification Act (WARN Act) is a United States labor law which protects employees, their families, and communities by requiring most employers with 100 or more employees to provide 60 calendar-day advance notification of plant closings and mass layoffs of employees, as defined in the Act. In 2001, there were about 2,000 mass layoffs and plant closures which were subject to WARN advance notice requirements and which affected about 660,000 employees.[1]

Employees entitled to notice under the WARN Act include managers and supervisors, hourly wage, and salaried workers. The WARN Act requires that notice also be given to employees' representatives (i.e., a labor union), the local chief elected official (i.e. the mayor), and the state dislocated worker unit.

The advance notice is intended to give workers and their families transition time to adjust to the prospective loss of employment, to seek and to obtain other employment, and, if necessary, to enter skill training or retraining programs that will allow these workers to successfully compete in the job market.[2]

----------


## Stickman

There goes home prices.    YIKES!

----------


## SSEiYah

> There goes home prices.    YIKES!


That is a bit of a stretch. 

Oklahoma City Major Employer List :
Greater Oklahoma City Economic Development - Major Employers

----------


## adaniel

> That is a bit of a stretch. 
> 
> Oklahoma City Major Employer List :
> Greater Oklahoma City Economic Development - Major Employers


Yeah it will hurt but it won't be the end of the world. I've got contacts in both Houston and Calgary and both say things are much worse there. Those two cities got to experience more of the run up and are now getting bitten harder by the slowdown.  

Unfortunately this is the third big RIF Chesapeake has had since 2008, and OKC has made it just fine on all occasions.

----------


## Teo9969

> There goes home prices.    YIKES!


It's not going to help home prices, but there are way too many things involved there to say that this is going to be the death of them. Depending on the severance packages these employees receive, it may not hurt nearly as bad as it sounds like it will.

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## gopokes88

It'll be fine on home prices. There's still a big shortage of inventory on the market.

----------


## kelroy55

> Thoughts and prayers to all those families.


Same here and I hope the cuts aren't too deep.

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## fromdust

I frac'd for Schlumberger and they completely shut down stimulation operations in OK, so, i know it depends on the company but if SLB has made deep cuts then someone like CHK will be making them too. It totally sucks out there.

----------


## bigjkt405

Back in July I interviewed at another E&P company, and I expressed concern for the company and leaving a stable company such as mine.  I had a friend who interviewed and ultimately took a job at CHK about the same time.  They got the axe today.  That really sucks...

----------


## Filthy

Just curious to know what type of positions are those being relieved of their duties? Are most of these management level employees? Data entry drones? Cafeteria workers? Anyone know if it is specific departments being targeted...or are they cutting a percentage across the entire company?

----------


## Libbymin

> Just curious to know what type of positions are those being relieved of their duties? Are most of these management level employees? Data entry drones? Cafeteria workers? Anyone know if it is specific departments being targeted...or are they cutting a percentage across the entire company?


My friend who works there says they've basically been cutting in every department.

----------


## Libbymin

News9 is saying 559 people confirmed let go.

----------


## Pete

Believe before the cuts there were 3,000 employees at the HQ, so 559 is a big chunk.

----------


## LakeEffect

> Believe before the cuts there were 3,000 employees at the HQ, so 559 is a big chunk.


19% according to NewsOK.com

----------


## Pete

559 divided by 3,000 equals 18.6%, so those numbers must be pretty accurate.

----------


## Stickman

Not to get off the topic but I talked to someone at the fair that works for a non-profit agency and the $$ is not coming to them anymore. 
This will have  trickle down consequences,  other O & G companies are laying off too.

   Hopefully Oil and Gas will go up 2 qtr. of 16

----------


## Pete

The funding for nonprofits has been drying up for a long time.

----------


## Bellaboo

A friend of mine works in the oilfield in Elk City. He told me 5 people out there at the CHK office lost their jobs today. He knows a production engineer who had worked for them for 15 years who got let go 3 weeks ago. He knows another production engineer who has worked for them for 2 years and was kept.

----------


## fromdust

> A friend of mine works in the oilfield in Elk City. He told me 5 people out there at the CHK office lost their jobs today. He knows a production engineer who had worked for them for 15 years who got let go 3 weeks ago. He knows another production engineer who has worked for them for 2 years and was kept.


Keep the guy of two years; makes less.

----------


## Just the facts

I wonder if CHK will keep the Quality Jobs money like last time.  Maybe they would think twice about job cuts if they lost their public financing at the same time.

----------


## sooner88

> A friend of mine works in the oilfield in Elk City. He told me 5 people out there at the CHK office lost their jobs today. He knows a production engineer who had worked for them for 15 years who got let go 3 weeks ago. He knows another production engineer who has worked for them for 2 years and was kept.


You can't fire all of one age group or another, because once prices rebound you will be left with a major age gap.... either the employees that can train your future or, the future of the company.

----------


## ljbab728

This article by Steve and Adam Wilmoth focuses on the affects of a downturn in charitable contributions in OKC.

Oklahoma City shares pain being felt as spending cuts and layoffs continue at Chesapeake Energy | NewsOK.com

----------


## Just the facts

> You can't fire all of one age group or another, because once prices rebound you will be left with a major age gap.... either the employees that can train your future or, the future of the company.


You are thinking to far ahead.  Corporate America only looks at the current quarter (3 month horizon at most).  The scenario you just describe has been the reality in IT every since they started shipping entry-level job to India.  Corporate America has no problem cutting off it's future supply chain of talent if it boosts the bottom line at the next earnings announcement.  What does Chesapeake do in 2 years when what you described becomes reality?  From the CEO's point of view - that is some future person's problem, not his.  Welcome to Wall Street driven business decisions.  Big Tom Callahan is dead.  Ray Zelinsky is in charge now.

----------


## BG918

While I'm sure there are plenty of hard-working intelligent people working at CHK the ones I know (and knew, they were axed during the last layoff) were not the brightest barely graduating from OU and getting CHK jobs because their dad knows someone.  One guy pulled $80k/year right out of school and literally did maybe an hour of work a day since their drilling program was curtailed.  All the while working out at the company gym, eating at the cafeteria with local honey from not just one but two beekeepers on staff, etc.  Layoffs were bound to happen even though things have become more lean, and continue to get leaner, under Lawler & Co

----------


## Filthy

> While I'm sure there are plenty of hard-working intelligent people working at CHK the ones I know (and knew, they were axed during the last layoff) were not the brightest barely graduating from OU and getting CHK jobs because their dad knows someone.  One guy pulled $80k/year right out of school and literally did maybe an hour of work a day since their drilling program was curtailed.  All the while working out at the company gym, eating at the cafeteria with local honey from not just one but two beekeepers on staff, etc.  Layoffs were bound to happen even though things have become more lean, and continue to get leaner, under Lawler & Co


 That's kind of where I was going with my post earlier, when asking what type of positions were being released. But, was somewhat hesitant as there are several posters who get butthurt at the smallest hint of going against the grain. Obviously, there are lives at play here..and there will be families who will feel the impact. But at the same time, when you accept a position with a company within this industry, history has shown for many many decades...that the industry itself has many ebbs and flows, and is one of uncertainty and inconsistency. So there should never be any surprise, when layoffs of this magnitude happen. I would assume that all of these people lived their life as such, and lived within their means, and saved significant amounts of money, so that when this day came...they could continue on living their daily lives without much change for them of their family. In speaking on that..I did find this post on another local message board this morning, that hits pretty close to home on said subject......(It seems like a pretty tongue in cheek post...but, I'm pretty confident that it is a thought shared by many here in the area....)

*"I was one of those who lost my job yesterday. I'm a single guy, so it doesn't really affect anyone other than myself, but it's still gonna be tough going for a while, as I have no savings. I've been living paycheck to paycheck for the past 5-7 years. I still owe about $71,000 on my 2015 Denali 4x4 dually diesel, and the mortgage on my Edmond home is about $3,200/month. 

If anyone knows anyone hiring, please let me know. I don't have any "real" tangible work skills or abilities, and I don't have a degree. However, Chesapeake has been paying me $160,000 a year to sit in a chair and stare at a mechanical gauge on a wall for 4 hours a day out in Elk City. So I need a job making comparable money. Let me know, K thanks!"*

----------


## Thomas Vu

> That's kind of where I was going with my post earlier, when asking what type of positions were being released. But, was somewhat hesitant as there are several posters who get butthurt at the smallest hint of going against the grain. Obviously, there are lives at play here..and there will be families who will feel the impact. But at the same time, when you accept a position with a company within this industry, history has shown for many many decades...that the industry itself has many ebbs and flows, and is one of uncertainty and inconsistency. So there should never be any surprise, when layoffs of this magnitude happen. I would assume that all of these people lived their life as such, and lived within their means, and saved significant amounts of money, so that when this day came...they could continue on living their daily lives without much change for them of their family. In speaking on that..I did find this post on another local message board this morning, that hits pretty close to home on said subject......(It seems like a pretty tongue in cheek post...but, I'm pretty confident that it is a thought shared by many here in the area....)
> 
> *"I was one of those who lost my job yesterday. I'm a single guy, so it doesn't really affect anyone other than myself, but it's still gonna be tough going for a while, as I have no savings. I've been living paycheck to paycheck for the past 5-7 years. I still owe about $71,000 on my 2015 Denali 4x4 dually diesel, and the mortgage on my Edmond home is about $3,200/month. 
> 
> If anyone knows anyone hiring, please let me know. I don't have any "real" tangible work skills or abilities, and I don't have a degree. However, Chesapeake has been paying me $160,000 a year to sit in a chair and stare at a mechanical gauge on a wall for 4 hours a day out in Elk City. So I need a job making comparable money. Let me know, K thanks!"*


^ You can't make that stuff up.

----------


## fromdust

^^^Hurts my head when I hear stories like this guy. We know this is going to happen, but spend all our money like it won't.
I worked in the oilfield and have been laid off for a month now. Luckily I was one of the few, yes few, that actually saved and can sustain my lifestyle of living downtown and driving a sports car + all the other expenses for about a year. SMH....

----------


## Jersey Boss

I wonder how many of the layoffs were initially hired under the Quality Jobs program that lavished this company with tax payer money. I also would love to know if the guy referenced above was one of them. I want this spigot of unaccountable credits turned off retroactively.

----------


## bradh

That reads tongue in cheek because it is, who is gonna put something like that in writing about themselves?  That said, even though that's a stretch, there are some people like that.

----------


## Just the facts

> I wonder how many of the layoffs were initially hired under the Quality Jobs program that lavished this company with tax payer money. I also would love to know if the guy referenced above was one of them. I want this spigot of unaccountable credits turned off retroactively.


sadly, that isn't how Quality Jobs works.  Let's say you have a company with 500 employees and you apply for 100 Quality Jobs positions and receive a payout.  Then next year you eliminate 100 jobs.  You don't cut the 100 you created under QJ, you eliminate them from the 500 (even if you move an existing employee into one of the 100 QJ positions and layoff the guy who was in the QJ position previously).  As long as your company has 100 people working for it you keep the payout for the 100 QJ positions.  You can do whatever you want to the other 500 positions.  The rules for this program were not an accident.

Now as for the guy doing 1 hour of work a day.  I would rather pay him to do an hour's work than to pay some clown on Wall Street who doesn't do any work for CHK.  CHK has a $billion in cash and billions more in assets.  The layoffs are only to boost the stock price to keep the investment community happy.  This is where the TeaParty and Occupy Wall Street should have had a great coming together - but both groups got derailed by Wall Street billionaires.  Big surprise.

----------


## Bellaboo

I'm not too sure if many on here understands how Quality of Jobs incentive program works.

http://okcommerce.gov/assets/files/i...Guidelines.pdf

Here's a link that's easily understood. A company does not receive money unless they've qualified for it, and what they get is part of the state payroll taxes that THEY have already paid in.

There are a lot of positive requirements to receive this benefit, especially for the employee, such as wage levels and insurance.

----------


## Jersey Boss

Good thing that the OKC THUNDER received millions from this program so that their players could get insurance.

----------


## Pete

As they lay off hundreds, they continue to sit on hundreds of millions of superfluous real estate with no real effort to sell...  Or even returning the calls of people who want to buy.

----------


## Just the facts

> I'm not too sure if many on here understands how Quality of Jobs incentive program works.
> 
> http://okcommerce.gov/assets/files/i...Guidelines.pdf
> 
> Here's a link that's easily understood. A company does not receive money unless they've qualified for it, and what they get is part of the state payroll taxes that THEY have already paid in.
> 
> There are a lot of positive requirements to receive this benefit, especially for the employee, such as wage levels and insurance.


The company doesn't get back the payroll taxes the company paid.  They get the state income taxes the employee paid.  Then we sit around and wonder why we have a billion dollar hole in the state budget.  Well here is one of the reasons.

----------


## pw405

> As they lay off hundreds, they continue to sit on hundreds of millions of superfluous real estate with no real effort to sell...  Or even returning the calls of people who want to buy.


What are the foremost examples?

----------


## Bellaboo

[QUOTE]


> Good thing that the OKC THUNDER received millions from this program so that their players could get insurance.[/QUOTE


It's the other 100 employees of the organisation that got the insurance. The players health benefits are regulated by the NBA Players association.

Do you have a clue on how much state income tax that NBA team has brought in ? Also, not only do the opposing players pay state income tax for the games they play in OKC, but so do the coaches and also the opposing teams ownership group.

Trust me, i'm in the know on this.

----------


## Bellaboo

> The company doesn't get back the payroll taxes the company paid.  They get the state income taxes the employee paid.  Then we sit around and wonder why we have a billion dollar hole in the state budget.  Well here is one of the reasons.


There are several articles you can grab with google about this program. It has it's pros and cons, I grabbed this from one of them -

"One advantage of Quality Jobs that many development professionals pointed to was that there never is any money paid in advance.
“The payroll rebates begin as each job is filled,” McLaughlin said. “If the company fails to create the number of jobs it promises, there’s no money to return.”

----------


## chuck5815

> As they lay off hundreds, they continue to sit on hundreds of millions of *superfluous* real estate with no real effort to sell...  Or even returning the calls of people who want to buy.


true, but what reasonable buyer is looking to add some other company's "superfluous" acreage right now? it would be one thing if CHK and others were actually offering core assets, but the vast majority of deals on the market are simply low quality at this point. if you're strapped for cash, the last thing you need is more leases.

----------


## Jersey Boss

[QUOTE=Bellaboo;911312]


> It's the other 100 employees of the organisation that got the insurance. The players health benefits are regulated by the NBA Players association.
> 
> Do you have a clue on how much state income tax that NBA team has brought in ? Also, not only do the opposing players pay state income tax for the games they play in OKC, but so do the coaches and also the opposing teams ownership group.
> 
> Trust me, i'm in the know on this.


If you are in the know on this why did you not mention that the tax the opposing players and coaches pay the state does not stay with the state? In fact  the amended for the Thunder QJP also permit the Thunder to receive rebates on the taxable payroll paid by players from opposing teams when they play in the city. The rebate will be about $4 million a year and $60 million over its 15-year life.  Please don't tell me about sales taxes collected by restaurants and such as this is money folks would be spending regardless. Just because the Thunder are here does not mean folks are getting a meal stipend to spend on Thunder game nights. It means they are forsaking a different night out at the restaurant. But the topic is CHK and not the Thunder. I just wanted to point out one of the ways our representatives are squandering revenue by using the Thunder as one example.

----------


## Jersey Boss

> true, but what reasonable buyer is looking to add some other company's "superfluous" acreage right now? it would be one thing if CHK and others were actually offering core assets, but the vast majority of deals on the market are simply low quality at this point. if you're strapped for cash, the last thing you need is more leases.


I don't think Pete is only referring to oil leases.

----------


## Urbanized

> true, but what reasonable buyer is looking to add some other company's "superfluous" acreage right now? it would be one thing if CHK and others were actually offering core assets, but the vast majority of deals on the market are simply low quality at this point. if you're strapped for cash, the last thing you need is more leases.


Pete's not talking about oilfield, he's talking about real estate. Much of it prime real estate. Buildings and land which have nothing to do with O&G.

----------


## mugofbeer

> Pete's not talking about oilfield, he's talking about real estate. Much of it prime real estate. Buildings and land which have nothing to do with O&G.


If the real estate is Prime then they may be holding it for investment purposes at this time.  Nothing wrong with that.  JTF et al, do you really think that ANY business that is facing a prolonged business downturn, has no need for a number of employees at this time, yet plans to stay in business for the long run would honestly squander their company cash to keep the 750 employed?  If you think so then you've lost your marbles.  Businesses are not the government and thats not how business works.

----------


## Pete

Hold land while you fire employees?

I just don't get it.

----------


## mugofbeer

They arent going to give company assets away!  If McClendon bot that land with company money, it is every bit ask much of a business asset as an oil well.  If the potential is the land appreciates significantly in value over the next 5 years then it is an investment asset...no matter what your main business line may be.  Selling heaps of drilling land is what CHK has been doing and has kept them solvent.  As bad a thing as it is, if your business contracts, you sometimes have to let people go.  Ive been laid off the re-hired 18 months later when the employee demand warranted it.  Thats why you dont live check to check IF YOU CAN HELP IT.

----------


## Pete

Who said give it away?

They've already sold a bunch of properties but all to cronies of the company and not through any sort of marketing effort.   And all at losses -- which is the only possible way given what McClendon paid for everything.

----------


## mugofbeer

It may be now but who knows 5 years from now or a week from now.  Unfortunately, unless there is a Persian Gulf war or a major hurricane in Houston, I'm bearish enough on oil for a while that they may have to do a lot more selling and laying off to stay afloat.  As I said, when your core business contracts, sometimes you have to lay people off.

----------


## Teo9969

> If you are in the know on this why did you not mention that the tax the opposing players and coaches pay the state does not stay with the state? In fact  the amended for the Thunder QJP also permit the Thunder to receive rebates on the taxable payroll paid by players from opposing teams when they play in the city. The rebate will be about $4 million a year and $60 million over its 15-year life.  Please don't tell me about sales taxes collected by restaurants and such as this is money folks would be spending regardless. Just because the Thunder are here does not mean folks are getting a meal stipend to spend on Thunder game nights. *It means they are forsaking a different night out at the restaurant.* But the topic is CHK and not the Thunder. I just wanted to point out one of the ways our representatives are squandering revenue by using the Thunder as one example.


More likely they're forsaking a weekend in Dallas or a vacation to San Diego or buying the latest model car. That doesn't diminish the core subject of your post by any means, but don't underestimate how much money that keeps in our market that would otherwise flow into other/competing markets.

----------


## mimino

> *"I was one of those who lost my job yesterday. I'm a single guy, so it doesn't really affect anyone other than myself, but it's still gonna be tough going for a while, as I have no savings. I've been living paycheck to paycheck for the past 5-7 years. I still owe about $71,000 on my 2015 Denali 4x4 dually diesel, and the mortgage on my Edmond home is about $3,200/month. 
> 
> If anyone knows anyone hiring, please let me know. I don't have any "real" tangible work skills or abilities, and I don't have a degree. However, Chesapeake has been paying me $160,000 a year to sit in a chair and stare at a mechanical gauge on a wall for 4 hours a day out in Elk City. So I need a job making comparable money. Let me know, K thanks!"*


Lolz that trolling came from here: https://www.thelayoff.com/chesapeake...56530282512384

That "board" turned into a sheet fest in no time.

----------


## AP

^I was pretty sure that that statement was someone trolling and not being genuine.

----------


## Bellaboo

[QUOTE]


> If you are in the know on this why did you not mention that the tax the opposing players and coaches pay the state does not stay with the state? In fact  the amended for the Thunder QJP also permit the Thunder to receive rebates on the taxable payroll paid by players from opposing teams when they play in the city. The rebate will be about $4 million a year and $60 million over its 15-year life.  Please don't tell me about sales taxes collected by restaurants and such as this is money folks would be spending regardless. Just because the Thunder are here does not mean folks are getting a meal stipend to spend on Thunder game nights. It means they are forsaking a different night out at the restaurant.* But the topic is CHK and not the Thunder.* I just wanted to point out one of the ways our representatives are squandering revenue by using the Thunder as one example.


You brought the Thunder up.......... And you are off base on the state income tax issue.

The latest estimate on those 43 home games is over a million a game economic impact  ?

----------


## Just the facts

> Hold land while you fire employees?
> 
> I just don't get it.


Because they only goal is to keep the stock price up.  Wall Street is priority #1, and there is no priority #2.

----------


## Filthy

> Lolz that trolling came from here: https://www.thelayoff.com/chesapeake...56530282512384
> 
> That "board" turned into a sheet fest in no time.


Interestingly enough, I saw it posted on another message board, well before it was posted on Thelayoff site. And then once the thread on the other message board got to about 4 pages long..someone posted the link to that layoff site...and it looks like whoever made that comment...went ahead and shared on thelayoff site as well. It is most definitely trolling.

----------


## AP

What other site did you see it on?

----------


## HangryHippo

> It may be now but who knows 5 years from now or a week from now.  Unfortunately, unless there is a Persian Gulf war or a major hurricane in Houston, I'm bearish enough on oil for a while that they may have to do a lot more selling and laying off to stay afloat.  As I said, when your core business contracts, sometimes you have to lay people off.


Why is laying people off the first option when they hold millions in real estate that others want to buy?  Why not keep people working at your company while you rid your company of absurd amount of prime real estate that sits idle?  Then look to layoffs in conditions still merit that.

----------


## Jersey Boss

> You brought the Thunder up.......... And you are off base on the state income tax issue.
> 
> The latest estimate on those 43 home games is over a million a game economic impact  ?


You are correct, I brought the Thunder up so I thought it appropriate to retire it. But while I am here why don't you clarify how I am off base on the income tax.  Also where does that figure of a  million a game come from? Do you think the Thunder would not be economically viable w/o being funded through the treasury or is it just an additional plum for those who are in the ownership group?

----------


## onthestrip

> You are correct, I brought the Thunder up so I thought it appropriate to retire it. But while I am here why don't you clarify how I am off base on the income tax.  Also where does that figure of a  million a game come from? *Do you think the Thunder would not be economically viable w/o being funded through the treasury or is it just an additional plum for those who are in the ownership group?*


Of course they would. The special tax deal/exemption/Quality Jobs Act deal that they were given was nothing more than a welfare handout to well connected folks. The thunder coming here werent dependent on it, everyone knew they wanted to and were coming here. This was done after the fact and was just giving wealthy people free money. BTW, since the thunder have come here, they've only about doubled in value to $800,000,000+, so this was not necessary and was nothing but a giveaway of tax payer money. 

Its the same with Quality Jobs Act money going to CHK. CHK has a sprawling campus in OKC, everyone knew they werent going anywhere yet we still give them taxpayer dollars to subsidize their natural expansion and hiring. This money is given with the hope that jobs are come here and are created here and then stay here. Its a horrible deal when we give them money for these jobs only to have them eliminate those jobs in the middle of the program and after they have received some money for them. Its a terrible deal for the state when we dont have a clawback provision. 

So much for conservative, free market principles. This also makes me think, with this corporate welfare, should we be drug testing Thunder and CHK executives and staff? (please note the extreme sarcasm that serves to highlight the constant hypocrisy we see from the GOP in this state).

----------


## Just the facts

Somewhere along the way it was decided that corporations can only be profitable with government assistance and enough people bought into that.

When the people find that they can vote themselves money,
 that will herald the end of the republic.” 

- Benjamin Franklin

----------


## Bellaboo

> You are correct, I brought the Thunder up so I thought it appropriate to retire it. But while I am here why don't you clarify how I am off base on the income tax.  Also where does that figure of a  million a game come from? Do you think the Thunder would not be economically viable w/o being funded through the treasury or is it just an additional plum for those who are in the ownership group?


You are on the net, that's an easy one to find. The Thunder would be viable on their own sure, but the impact of them being in OKC, measures in many different positive ways. That's the point of 'is it worth it' or not. Not all incentives carry weight, landing an international brand means something. The last 4 or 5 times in Europe and once in Asia whenever I've had a Thunder shirt on, I've had people stop me and talk ball.

I was way off on the per game local economic impact when I said a million. Believe what you want but the latest has it at 1.5 million per game.

Oklahoma City Thunder Boosts City's Economy - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |

----------


## Jersey Boss

> You are on the net, that's an easy one to find. The Thunder would be viable on their own sure, but the impact of them being in OKC, measures in many different positive ways. That's the point of 'is it worth it' or not. Not all incentives carry weight, landing an international brand means something. The last 4 or 5 times in Europe and once in Asia whenever I've had a Thunder shirt on, I've had people stop me and talk ball.
> 
> I was way off on the per game local economic impact when I said a million. Believe what you want but the latest has it at 1.5 million per game.
> 
> Oklahoma City Thunder Boosts City's Economy - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |



Interactive: Quality Jobs Payouts by Company | Oklahoma Watch

169 jobs created,  Thunder gets $18,710, 330.  Those are pretty costly jobs. I wonder how long it will take to recoup this investment.   This is mismanagement of resources. While you are quick to post a link to a claim by city officials with no verifiable data,  you fail to post a link showing why I am in error on the taxes. I am open to you showing me the data you claim to know, so either share it with us or concede it is nothing but your opinion.

----------


## Filthy

> What other site did you see it on?


Landthieves

----------


## Just the facts

> Interactive: Quality Jobs Payouts by Company | Oklahoma Watch
> 
> 169 jobs created,  Thunder gets $18,710, 330.  Those are pretty costly jobs. I wonder how long it will take to recoup this investment.   This is mismanagement of resources. While you are quick to post a link to a claim by city officials with no verifiable data,  you fail to post a link showing why I am in error on the taxes. I am open to you showing me the data you claim to know, so either share it with us or concede it is nothing but your opinion.


We will never recoup it - not unless we plan to over-tax them on the back end to the tune of $18 million.  That is where so many people fail in understanding this program.  We NEVER get the money back.  It's not designed that way.  I guess many people think this is loan or something where we given them a tax rebate for a few years and they pay that money back at some point in the future.  All that happens in the future is they don't collect the rebate.  They keep what they already got and never pay it back.

----------


## SouthsideSooner

> Interactive: Quality Jobs Payouts by Company | Oklahoma Watch
> 
> 169 jobs created,  Thunder gets $18,710, 330.  Those are pretty costly jobs. I wonder how long it will take to recoup this investment.   This is mismanagement of resources. While you are quick to post a link to a claim by city officials with no verifiable data,  you fail to post a link showing why I am in error on the taxes. I am open to you showing me the data you claim to know, so either share it with us or concede it is nothing but your opinion.


How much of that $18,710,330 would the state have if the team had never moved here?

----------


## onthestrip

> How much of that $18,710,330 would the state have if the team had never moved here?


But they did move here, and it wasnt because of the free money. And Im pretty sure the doling out of this free money happened after the relocation, so it was just a gift to those kind benevolent owners who were only looking out for each and every Oklahoman...

----------


## Filthy

> Why is laying people off the first option when they hold millions in real estate that others want to buy?  Why not keep people working at your company while you rid your company of absurd amount of prime real estate that sits idle?  Then look to layoffs in conditions still merit that.


Assets vs Expenditures

I can justify the move in my own little World, but obviously it's much more complicated to understand the inner workings of every detail. However, in layman's terms I can simplify my thoughts with a simple hypothetical scenario.....

Much like Chesapeake, Lets say that as an individual I'm somewhat irresponsible in my spending habits,. I'm going out every weekend buying Classic Cars, Rolex Watches, and Sports Memoribilia. These are "questionable" investments, some might even consider them frivolous. But hey..it's my life, and I'll do what I so choose. But what happens when all of the sudden I realize that in all reality my outgoing expenses are more than what I have incoming.  In this scenario I know exactly how I would handle the situation. I bought those cars, watches, and memoribilia on hopes or premise of them someday increasing in value over time. Some will, and some won't. Several of them will probably depreciate. Either way, they are liquid assets that I'm not willing to part with them. After all..I spent my hard earned money buying them. But what am I going to do to change my bottom line budget? You better believe that I'm gonna look at my $300 cable bill,and cut that. I'm gonna look at my $300/monthly dry cleaning bill and cut that. The $500/month that is outgoing to support my drinking/socializing tendencies would also be done. $300/month for the wife's workout/manicure budget...done. $250/month for cleaning ladies at the house...done. The list goes on and on! These are all expenditures that I can do without. 

The pieces of properties that Chesapeake bought up, much like my Cars, Watches, and Memoribilia are assets that I've acquired. They are still valuable. The employees that were let go by CHK, were nothing more than expenditures. No matter how good they were at their jobs, no matter how hard they work, or how good they were as people it wasn't going to change the economical climate of their chosen industry. 

Honestly, It would have been very easy for me to make the exact same decision.

----------


## gopokes88

This is Chesapeake thread, not let's all debate the economic pros and cons of the thunder.  (which shouldn't even be a debate unless you live with your head in the sand)

----------


## jccouger

> Why is laying people off the first option when they hold millions in real estate that others want to buy?  Why not keep people working at your company while you rid your company of absurd amount of prime real estate that sits idle?  Then look to layoffs in conditions still merit that.


If there isn't any work to do it doesn't make any sense to keep people employed.

----------


## Bellaboo

> Interactive: Quality Jobs Payouts by Company | Oklahoma Watch
> 
> 169 jobs created,  Thunder gets $18,710, 330.  Those are pretty costly jobs. I wonder how long it will take to recoup this investment.   This is mismanagement of resources. While you are quick to post a link to a claim by city officials with no verifiable data,  *you fail to post a link showing why I am in error on the taxes*. I am open to you showing me the data you claim to know, so either share it with us or concede it is nothing but your opinion.


It's not as if you are in error on state taxes, but I don't think the general public knows how far reaching the tax base is and without the Thunder that base would not be here. Due to confidentiality agreements, I can't say much more.

----------


## Bellaboo

> Interactive: Quality Jobs Payouts by Company | Oklahoma Watch
> 
> 169 jobs created, * Thunder gets $18,710, 330.*  Those are pretty costly jobs. I wonder how long it will take to recoup this investment.   This is mismanagement of resources. While you are quick to post a link to a claim by city officials with no verifiable data,  you fail to post a link showing why I am in error on the taxes. I am open to you showing me the data you claim to know, so either share it with us or concede it is nothing but your opinion.


Fathom this, on KD's salary, not counting his endorsement income, just his basketball wage, he will pay around $500,000.00 in state income taxes for one year. That 18 million dollar figure might not be that much out of line. Think of all games played here with every active player from every team, will pay a percentage of what they earned that night to the state of Oklahoma. Also, this breaks down to the coaches and owners of the opposing teams, they pay Oklahoma state income tax for games played in OKC.

----------


## gopokes88

Go somewhere else you are ruining this board

----------


## OKCPetro83

Do some math, we can easily recoup this payout to them. In player's salary alone the thunder will pay 94.6M in salary this year. Billy D is probably getting 5 and Presti is probably gettting 2-3M. So if you add in all the people involved, they are paying way north of 100M in salaries next year and that mark is going to grow with the new TV deal. Let's just make this a nice round 100M salary for this simple exercise. Now since only half of their salaries will be eligible for State income tax because of , it is about 7 year payout just from the Thunder. Fortunately, jock taxes that started being enforced around Jordan's time allow us to go get the salaries from opposing teams so it probably more like 4 year payout.  At of the end of the day, this was a payout for billionaires.  They mostly wanted this to help attract talent to their workforce and have some fun, which is has done both. Small price to pay for the media that covers OKC during things like the NBA finals which has a WORLDWIDE audience. Basketball is the second most popular sport in the world after soccer. Screw cricket, I don't believe the numbers.

----------


## zookeeper

I believe this is a thread about Chesapeake.

----------


## Sonny_Crockett

Chesapeake wouldn't hire mo so to hell with 'em

----------


## Just the facts

Meanwhile, back at the farm - Oklahoma has 600 fewer taxpayers and a company still keeping the income tax of hundreds of more employees AND a $ billion hole in the State budget.  If only someone could figure out this riddle.

----------


## pw405

One thing I've never understood is why large companies choose to do layoffs vs. a furlough... So, Chesapeake incurred $55,000,000 in layoff costs this quarter.  For that, they get no productivity, and a very hectic few weeks as the company re-structures.  They pay people to not show up.  (Severance).   

I understand Chesapeake has a 4.5 day work week (9 hours M-Th, then 4 on Friday).  Why not just cancel Fridays, reduce everybody's pay by 10%?  You start saving money in ONE pay period.  You retain staff in case prices pick back up.  Stress is lower, people likely more productive and happier.  In Chesapeake's situation (and other O&G companies), I think they should have started a furlough back in May-June, and re-asses at the end of every quarter.  Seems like a far cheaper move in PR too.  I dunno.. anybody have experience with this?  I had furloughs at my job back in 2009 because of the recession.

----------


## Just the facts

> One thing I've never understood is why large companies choose to do layoffs vs. a furlough... So, Chesapeake incurred $55,000,000 in layoff costs this quarter.  For that, they get no productivity, and a very hectic few weeks as the company re-structures.  They pay people to not show up.  (Severance).   
> 
> I understand Chesapeake has a 4.5 day work week (9 hours M-Th, then 4 on Friday).  Why not just cancel Fridays, reduce everybody's pay by 10%?  You start saving money in ONE pay period.  You retain staff in case prices pick back up.  Stress is lower, people likely more productive and happier.  In Chesapeake's situation (and other O&G companies), I think they should have started a furlough back in May-June, and re-asses at the end of every quarter.  Seems like a far cheaper move in PR too.  I dunno.. anybody have experience with this?  I had furloughs at my job back in 2009 because of the recession.


I'm with you.  I have worked for several companies that did just what you suggested.  I worked for a company in St. Pete that paid my whole department to play video games for 3 months because they knew when the worked picked back up they would need us.  Sure enough, the work picked back up and we went back to full steam with little ramp-up time.  We actually spent a lot of our time cross-training in other departments.

----------


## mugofbeer

A furlough is generally short in nature and a defined period of time and usually allows the fuloughed employee to keep some portion of benefits.  With the petroleum market the way it is now, the downturn is to likely not be short-term or definable in duration.  Nothing out there, short of a war, points to strongly rebounding  oil prices.   CHK still has a lot of employees to pay and debt to service.  They simply need to cut the cash outflow.  They very well may sell their HQ area real estate, but they may also feel the investment value for it is greater than the other petroleum assets.

----------


## YeahIKnow

I didn't know whether to put this here, or open a new thread in Current Events/Open Topic.  KOCO did a story yesterday on whether or not we'd see Christmas lights displayed on the Chesapeaker campus this year.  They stated that by this time in October, workers would already be stringing lights on all the trees, but they have not been out there yet.  I imagine people would rather have jobs than the amount of money it takes to string the lights, and keep them on for nearly 2 months.

----------


## sooner88

> I didn't know whether to put this here, or open a new thread in Current Events/Open Topic.  KOCO did a story yesterday on whether or not we'd see Christmas lights displayed on the Chesapeaker campus this year.  They stated that by this time in October, workers would already be stringing lights on all the trees, but they have not been out there yet.  I imagine people would rather have jobs than the amount of money it takes to string the lights, and keep them on for nearly 2 months.


They've been out for awhile putting the lights up like they always have on the Glimcher property, I haven't noticed if they had started on CHK or not. It would make sense to take a year off considering the timing of the layoffs.

----------


## turnpup

Just saw this.  I guess it's official:

Chesapeake: No Holiday Lights On Campus This Year - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |

----------


## Martin

translation: "we're too broke to pay for an expensive light display, so we'll throw a few bucks to charity to deflect any criticism."

----------


## gopokes88

> translation: "we're too broke to pay for an expensive light display, so we'll throw a few bucks to charity to deflect any criticism."


No, 

I think it's we just laid off a bunch of people and it would be in poor taste to spend hundreds of thousands on lights when we could have spared a few employees.

----------


## Tundra

It's called making tough decisions, sounds like they have the right CEO in place. Our own Govt. could learn a few things by this example.

----------


## FighttheGoodFight

> No, 
> 
> I think it's we just laid off a bunch of people and it would be in poor taste to spend hundreds of thousands on lights when we could have spared a few employees.


They laid off quite a few people in 2013 and then did the lights that year and last year. They should just do like one giant tree. Keep people driving by and liking it but not as much as the previous years.

----------


## gopokes88

> They laid off quite a few people in 2013 and then did the lights that year and last year. They should just do like one giant tree. Keep people driving by and liking it but not as much as the previous years.


Maybe they spared a few people this year by eliminating the lights?

----------


## bradh

$2800 PER TREE is what that display costs on average...chew on that

----------


## Just the facts

> No, 
> 
> I think it's we just laid off a bunch of people and it would be in poor taste to spend hundreds of thousands on lights when we could have spared a few employees.


I doubt that seriously.  What about the people who put the lights up?  Does Chesapeake not care about those people and their families?

----------


## chuck5815

> It's called making tough decisions, sounds like they have the right CEO in place. Our own Govt. could learn a few things by this example.


The state gov. is slashing costs/making tough decisions as well, no?

----------


## FighttheGoodFight

> $2800 PER TREE is what that display costs on average...chew on that


I need to get in the holiday light business...

----------


## Anonymous.

> I doubt that seriously.  What about the people who put the lights up?  Does Chesapeake not care about those people and their families?


Steven Levitt, is that you!?

----------


## bradh

> I need to get in the holiday light business...


and from what I'm told, it's an incredibly low margin business too because all the landscapers just do it to keep their crews busy and occupied (and stateside).

----------


## Bullbear

First Starbucks cups and now this!!.. this war on Christmas is too much!  ( in sarcasm font)

----------


## Tundra

> The state gov. is slashing costs/making tough decisions as well, no?


Oklahoma is in far better shape than most, but they are going to struggle to keep up in the future, if oil doesn't correct itself real soon. Laying people off is probably the hardest thing in the world to do, even if that person is a turd. But tough decisions have to be made if they want to have a shot of surviving.

----------


## PhiAlpha

> I doubt that seriously.  What about the people who put the lights up?  Does Chesapeake not care about those people and their families?


Chesapeake doesn't employ those people. Completely different.

----------


## ou48A

> I doubt that seriously.


It is absolutely correct…. 

Those lights cost the company hundreds of thousands of dollars to install maintain and operate…. That’s not a wise expenditure of company wealth and it’s an indication of why poor decisions have caused so much suffering with in that company.

Compare those outgoing funds to the charitable tax deduction they will probably receive and it quickly becomes very clear what the wise choice is and why CHK is now under more responsible management.

The first CHK responsibility is to the shareholders and as a CHK shareholder I hate wasteful spending.

----------


## Pete

I'll say it again: If they are so strapped for money why on earth are they not trying to sell off all their surplus commercial real estate?  Interested parties can't even get a return phone call.

----------


## ou48A

They likely have higher priorities than commercial real estate but with NG and oil price what they are they are strapped for cash just as the entire industry is… Some worse than others.

But in any case, pulling the plug on the lights is the right move....

----------


## mugofbeer

Pulling the plug may be appropriate in light of the layoffs. I'm not sure I agree with giving the money otherwise used for lighting to charity, though.  If the money was there, they might have kept some of those laid off on the payroll a while longer so they might have enjoyed Christmas a little more.

----------


## Urbanized

^^^^^^
Regarding "higher priorities than commercial real estate", like all major corporations they surely have individuals and/or divisions within their company whose main responsibilities are real estate. And it's not like energy companies aren't to some extent real estate driven entities anyway.

Besides, over the past couple of years their primary objective company-wide has been to get on the right side of the books. Offloading unwanted commercial real estate is one of the most powerful tools they could bring to bear. Pete is right; refusal to even respond to inquiries is puzzling.

----------


## Pete

Typically, you just hire a brokerage firm and let them handle property sales.

I will also say that even of the properties they have sold, they haven't been openly marketed and generally sold to CHK cronies.  

It's all very strange.

----------


## Urbanized

Right, obviously the marketing and transactions would be handled by brokers, but it's not like there aren't people within the company with the skills/time/capability of deciding which properties to unload and to deal with the broker. "Other priorities" is not a viable explanation.

----------


## Pete

^

That sort of thing is usually handled by one person (VP of Administration or similar) and is a small part of one person's time.

I dealt with those types (VP of Admin) frequently as a broker and then actually held that position for a large financial services company for the entire West Coast.  It was about 10% of my time and  amounted to a few conversations with the CEO to get buy-in on what we were going to buy/sell/lease/sublease and then you let the brokers document fair market value and bring you deals.  You review and pass upstream for approval.

This is not a complicated or time-consuming process, especially since almost all their property is in the immediate area.  In my case, I was responsible from Seattle to San Diego and would have to occasionally travel to scout sites with brokers, etc., and it still wasn't a big chunk of my time.

----------


## ou48A

> ^^^^^^
> Regarding "higher priorities than commercial real estate", like all major corporations they surely have individuals and/or divisions within their company whose main responsibilities are real estate. And it's not like energy companies aren't to some extent real estate driven entities anyway.
> 
> Besides, over the past couple of years their primary objective company-wide has been to get on the right side of the books. Offloading unwanted commercial real estate is one of the most powerful tools they could bring to bear. Pete is right; refusal to even respond to inquiries is puzzling.


Selling the properties would need the approval of senior management who would likely want to study the issue in depth. Are they willing to take a loss? How do the fit future needs….Who would buy these properties in their location? How much revenue do the produce? Some of them might actually produce net revenue and that’s the last thing CHK can afford to give up. If they are sold, do the new buyers maintain the property’s at a CHK level. If not the area might start a decline. Senior management at any corporation typically doesn’t like to give up control over what directly could impact them.

It’s not like there are tons of buyers in the current market that would use the properties in a way that CHK management would like. The few that might be interested probably believe property prices are going to drop by a lot?

 With such a large number of total square footage the property’s located near 63 and Western are somewhat stranded for large operations of other corporations. I always thought it was an AKM mistake to not be headquartered in or near downtown OKC. But he didn’t want to make the drive.

 CHK assets in the field even at these depressed prices are worth many times more than a signal commercial property….It’s far more important to the company’s core future to get this right first and to make these operations as efficient as possible. *They have already saved many millions.
*

----------


## chuck5815

> *With such a large number of total square footage the property’s located near 63 and Western are somewhat stranded for large operations of other corporations.* I always thought it was an AKM mistake to not be headquartered in or near downtown OKC. But he didn’t want to make the drive.
> 
> [/B]


Couldn't you say the same thing about Linn, Gulfport, Chaparral, etc.? 

It seems like a lot of the energy companies are rocking the suburbs.

----------


## adaniel

> Couldn't you say the same thing about Linn, Gulfport, Chaparral, etc.? 
> 
> It seems like a lot of the energy companies are rocking the suburbs.


Apples and oranges. 

Those 3 companies collectively might have 700 employees. CHK has had as many as 4,000+, and still has nearly 3,000 after this latest layoff round. Big companies need the space; that's why they will either go downtown in a giant office tower or out in the middle of nowhere to build a corporate campus. Rarely do you see them plop down in the middle of an established middle ring area. As CHK has shown, it starts to become a pretty expensive affair.

----------


## 2Lanez

> The state gov. is slashing costs/making tough decisions as well, no?


Eh, ask Scott Pruitt.

----------


## Rover

> Selling the properties would need the approval of senior management who would likely want to study the issue in depth. Are they willing to take a loss? How do the fit future needs….Who would buy these properties in their location? How much revenue do the produce? Some of them might actually produce net revenue and that’s the last thing CHK can afford to give up. If they are sold, do the new buyers maintain the property’s at a CHK level. If not the area might start a decline. Senior management at any corporation typically doesn’t like to give up control over what directly could impact them.
> 
> It’s not like there are tons of buyers in the current market that would use the properties in a way that CHK management would like. The few that might be interested probably believe property prices are going to drop by a lot?
> 
>  With such a large number of total square footage the property’s located near 63 and Western are somewhat stranded for large operations of other corporations. I always thought it was an AKM mistake to not be headquartered in or near downtown OKC. But he didn’t want to make the drive.
> 
>  CHK assets in the field even at these depressed prices are worth many times more than a signal commercial property….It’s far more important to the company’s core future to get this right first and to make these operations as efficient as possible. *They have already saved many millions.
> *


Pete isn't talking about their office buildings on campus.  They still own commercial properties having nothing to do with operations now, and never will be.  They not only wont answer calls of interested parties, they discourage or refuse efforts to buy from valid interested parties.  It is very odd.

They aren't negatively affected by their campus location.  It is and will be a very attractive corporate location should they choose to divest of campus buildings.  But there is plenty of room to expand should they need to in the future.  There is good transportation access and is in a very desire able area of the city.

----------


## pw405

Yikes, the stock is getting hammered.  Seems like the market thinks they aren't going to survive.  Despite the current CEOs efforts which I think have been nothing short of amazing (cutting capex by ~10 Billion) and keeping production the same), I hope it is enough to keep the company going.  From those who work there, they say it is a completely different company now.  They are operating efficiently, departments have to compete for capital, and they continue to innovate to increase margins.  Will be interesting to see the Q4 numbers. The natural gas prices are really a drag for them.  ~85% of their production is natural gas.

----------


## Plutonic Panda

Chesapeake unit to pay $1.4 million fine in Pennsylvania | News OK

----------


## pw405

> ^
> 
> That sort of thing is usually handled by one person (VP of Administration or similar) and is a small part of one person's time.
> 
> I dealt with those types (VP of Admin) frequently as a broker and then actually held that position for a large financial services company for the entire West Coast.  It was about 10% of my time and  amounted to a few conversations with the CEO to get buy-in on what we were going to buy/sell/lease/sublease and then you let the brokers document fair market value and bring you deals.  You review and pass upstream for approval.
> 
> This is not a complicated or time-consuming process, especially since almost all their property is in the immediate area.  In my case, I was responsible from Seattle to San Diego and would have to occasionally travel to scout sites with brokers, etc., and it still wasn't a big chunk of my time.


Hi Pete... do you have a few examples of these properties you mention?  I was just sorta curious how much they owned/where. etc.  The campus will NOT be expanding anytime soon.  They have plenty of office and parking capacity now.

----------


## Pete

> Hi Pete... do you have a few examples of these properties you mention?  I was just sorta curious how much they owned/where. etc.  The campus will NOT be expanding anytime soon.  They have plenty of office and parking capacity now.


The own all that vacant land to the east and south of their campus.  Could understand why they would want to hold on to it, but it cost them tens of millions to acquire.

Also own:

Tons of property north of NW 63rd and east of Western (dozens of individual parcels and buildings)Possum Creek (SW corner of 63rd & Western, plus vacant land to the south)Several small lots near NH PlazaThe SE corner of NW 50th & WesternThe triangle of property between Western and Grand, north of I-44, including several office buildings they have never occupiedThe old Salvation Army building on the SW corner of NW Expressway and Penn, along with 10 houses directly behind it50 condos in 3 different complexes directly west of NH Plaza.

Plenty more.  They still own hundreds of millions in excess real estate they will never use for their own purposes.

----------


## pw405

Very strange.  I would think they would dump this immediately to help bolster cash reserves.

----------


## Urbanized

^^^^^^^
That's what I'M saying. But somebody upthread said they're probably too busy to sell stuff.

----------


## sooner88

You would have to think that Glimcher would have wanted to acquire some of those properties in their purchase of NHP and the Curve... makes 0 sense why CHK doesn't want to dump these assets. Take the loss and move on, they have nothing to do with their operations.

----------


## Rover

> ^^^^^^^
> That's what I'M saying. But somebody upthread said they're probably too busy to sell stuff.


They are not too busy.  There seems to be other motives.

----------


## Urbanized

^^^^^
I didn't say that I believed it, only that it was suggested upthread. Seemed like a silly idea to me.

----------


## Pete

From the WSJ:

********************


Chesapeake’s Boss Faces Tall Order
By ERIN AILWORTH
Nov. 26, 2015 12:18 p.m. ET

OKLAHOMA CITY, Okla.—Two years ago, Doug Lawler stepped into a maelstrom.

When Mr. Lawler took over as chief executive at Chesapeake Energy Corp., the company, an icon of the U.S. energy boom, was in turmoil: financially, operationally and culturally.

Chesapeake was deeply in debt and spending billions of dollars it didn’t have. It faced hundreds of lawsuits and investigations challenging its business practices. And activist investors, including Carl Icahn, had forced out its charismatic co-founder, Aubrey McClendon, who used to make nearly every decision at the company, down to the kind of cheese served in the company cafeterias.

Mr. Lawler, a buttoned-down petroleum engineer, had big boots to fill—though he says he didn’t see it that way.

“There’s kind of an inference that in filling someone’s shoes that you are going to pursue the same path they did,” Mr. Lawler, 49, said during his first in-depth interview about taking the reins at Chesapeake. “I knew we were going to change everything.”

ENLARGE
His challenge comes as the entire U.S. energy industry is struggling to survive low oil and gas prices. But the hurdles are extreme in Chesapeake’s case. Perhaps as a result, Mr. Lawler has attracted almost no public criticism, even from former executives.

Mr. Lawler started his career at Kerr-McGee Corp., an Oklahoma-based oil-and-gas company, which was acquired in 2006 by Anadarko Petroleum Corp. He swiftly climbed the ranks there; by the time Chesapeake’s recruiters came calling in 2013, Mr. Lawler was on Anadarko’s executive committee, and in the running to head the company someday.

Given that Chesapeake’s woes had been the talk of the energy industry and chronicled in the national press, Mr. Lawler thought he knew how troubled the company was. He declined to meet with the company’s board—twice—before deciding to take on “the biggest challenge in the entire industry,” he said.

Advertisement

Those who know Mr. Lawler well say not to bet against him. “Doug came into Chesapeake with a lot of backbone,” said Jim Hackett, who led Anadarko for most of Mr. Lawler’s time there.

Before Mr. Lawler arrived, Chesapeake’s stock had been on a roller coaster. In addition to the company’s chronic overspending, investors had been spooked by controversy over Mr. McClendon, who had borrowed large sums—for his personal use—from private-equity firms that had invested in the company.

A mainstay of Oklahoma City, Chesapeake gave millions of dollars to charity, and it offered great perks. ENLARGE
A mainstay of Oklahoma City, Chesapeake gave millions of dollars to charity, and it offered great perks. PHOTO: BRETT DEERING FOR THE WALL STREET JOURNAL
Mr. McClendon, who led Chesapeake after founding it with a partner in 1989, declined to comment. The company accused him earlier this year of stealing proprietary maps and data and using them to start a rival company, American Energy Partners LP. Mr. McClendon has said the information was rightfully his. The case is before an arbitrator.

The problems went even deeper than Mr. Lawler expected, he said. For example, there was no real budgeting process. The focus was almost exclusively on acquiring and drilling land.

One eye-opening discovery: 54% of Chesapeake’s projects in 2012 hadn’t turned a profit, according to a presentation Chesapeake made to analysts last year.

To make matters worse, there was little appreciation among employees for the many challenges facing the company, Mr. Lawler said. A mainstay of Oklahoma City, Chesapeake had its name on the local sports arena, it gave millions of dollars to charity, and it offered great perks, including a community garden (with company beekeeper) and, at times, access to tanning beds and Botox injections.

The more Mr. Lawler dug in, he said, the more problems he found. Mr. McClendon had signed contracts with outside investors that committed it to drilling hundreds of wells, whether or not they were economic. He also inked deals requiring the company to transport specific amounts of natural gas on certain pipelines or face big financial penalties.

In part because of such obligations, Chesapeake spent nearly $30 billion more on drilling and leasing than it brought in from its operations from 2010 through 2012, financial filings show.

Under Mr. Lawler’s direction, Chesapeake has slashed spending by more than half compared with 2012, and pared its staff by 67%. Its drilling footprint is nearly 5.5 million acres smaller. Antitrust allegations against the company in Michigan have been resolved, as have about two-thirds of the lawsuits filed against Chesapeake over past business practices.

He also made symbolic changes. This year, Chesapeake is forgoing its traditional holiday lights display—putting the thousands of dollars it would have spent on those decorations toward providing gifts to poor children and matching community donations made to a regional food bank.

Employees have responded well to Mr. Lawler, who displays his own commitment even on his black crocodile boots, embroidered with Chesapeake’s name. Asked to cut the average cost of drilling a well by $1 million within a year, workers instead hit the goal in three months—shaving more than $1 billion from Chesapeake’s budget, Mr. Lawler said. A well in the Eagle Ford Shale of South Texas that in 2013 cost Chesapeake $6.9 million, on average, now costs $5.3 million—or 23% less.

Despite all this, Chesapeake’s future remains shaky.

Shares have fallen by more than 70% since the start of the year. Chesapeake has written off $15.6 billion in holdings, and its cash flow continues to shrink. In the past several months, the company has suspended its dividend and laid off 740 employees.

At this point, Mr. Lawler said, the biggest challenge is external. Chesapeake has been hampered by the low price of natural gas, which accounts for more than 70% of the company’s output. Oil accounts for the rest, and the bust of the past 15 months hasn’t helped.

Mr. Icahn has praised Mr. Lawler for his aggressive leadership. “Doug so far has done a great job,” he said in February, when Chesapeake’s stock was trading over $20 a share, versus just over $5 today. He didn’t respond to recent requests for comment.

Mr. Lawler said he knows his future depends on Chesapeake’s turnaround and the support of investors like Mr. Icahn.

“If I am not adding value for the shareholders, I fully expect Carl to fire me,” Mr. Lawler said. “That’s the reason I came here.”

----------


## Pete

From the WSJ:

********************


Chesapeake’s Boss Faces Tall Order
By ERIN AILWORTH
Nov. 26, 2015 12:18 p.m. ET

OKLAHOMA CITY, Okla.—Two years ago, Doug Lawler stepped into a maelstrom.

When Mr. Lawler took over as chief executive at Chesapeake Energy Corp., the company, an icon of the U.S. energy boom, was in turmoil: financially, operationally and culturally.

Chesapeake was deeply in debt and spending billions of dollars it didn’t have. It faced hundreds of lawsuits and investigations challenging its business practices. And activist investors, including Carl Icahn, had forced out its charismatic co-founder, Aubrey McClendon, who used to make nearly every decision at the company, down to the kind of cheese served in the company cafeterias.

Mr. Lawler, a buttoned-down petroleum engineer, had big boots to fill—though he says he didn’t see it that way.

“There’s kind of an inference that in filling someone’s shoes that you are going to pursue the same path they did,” Mr. Lawler, 49, said during his first in-depth interview about taking the reins at Chesapeake. “I knew we were going to change everything.”

His challenge comes as the entire U.S. energy industry is struggling to survive low oil and gas prices. But the hurdles are extreme in Chesapeake’s case. Perhaps as a result, Mr. Lawler has attracted almost no public criticism, even from former executives.

Mr. Lawler started his career at Kerr-McGee Corp., an Oklahoma-based oil-and-gas company, which was acquired in 2006 by Anadarko Petroleum Corp. He swiftly climbed the ranks there; by the time Chesapeake’s recruiters came calling in 2013, Mr. Lawler was on Anadarko’s executive committee, and in the running to head the company someday.

Given that Chesapeake’s woes had been the talk of the energy industry and chronicled in the national press, Mr. Lawler thought he knew how troubled the company was. He declined to meet with the company’s board—twice—before deciding to take on “the biggest challenge in the entire industry,” he said.

Those who know Mr. Lawler well say not to bet against him. “Doug came into Chesapeake with a lot of backbone,” said Jim Hackett, who led Anadarko for most of Mr. Lawler’s time there.

Before Mr. Lawler arrived, Chesapeake’s stock had been on a roller coaster. In addition to the company’s chronic overspending, investors had been spooked by controversy over Mr. McClendon, who had borrowed large sums—for his personal use—from private-equity firms that had invested in the company.

Mr. McClendon, who led Chesapeake after founding it with a partner in 1989, declined to comment. The company accused him earlier this year of stealing proprietary maps and data and using them to start a rival company, American Energy Partners LP. Mr. McClendon has said the information was rightfully his. The case is before an arbitrator.

The problems went even deeper than Mr. Lawler expected, he said. For example, there was no real budgeting process. The focus was almost exclusively on acquiring and drilling land.

One eye-opening discovery: 54% of Chesapeake’s projects in 2012 hadn’t turned a profit, according to a presentation Chesapeake made to analysts last year.

To make matters worse, there was little appreciation among employees for the many challenges facing the company, Mr. Lawler said. A mainstay of Oklahoma City, Chesapeake had its name on the local sports arena, it gave millions of dollars to charity, and it offered great perks, including a community garden (with company beekeeper) and, at times, access to tanning beds and Botox injections.

The more Mr. Lawler dug in, he said, the more problems he found. Mr. McClendon had signed contracts with outside investors that committed it to drilling hundreds of wells, whether or not they were economic. He also inked deals requiring the company to transport specific amounts of natural gas on certain pipelines or face big financial penalties.

In part because of such obligations, Chesapeake spent nearly $30 billion more on drilling and leasing than it brought in from its operations from 2010 through 2012, financial filings show.

Under Mr. Lawler’s direction, Chesapeake has slashed spending by more than half compared with 2012, and pared its staff by 67%. Its drilling footprint is nearly 5.5 million acres smaller. Antitrust allegations against the company in Michigan have been resolved, as have about two-thirds of the lawsuits filed against Chesapeake over past business practices.

He also made symbolic changes. This year, Chesapeake is forgoing its traditional holiday lights display—putting the thousands of dollars it would have spent on those decorations toward providing gifts to poor children and matching community donations made to a regional food bank.

Employees have responded well to Mr. Lawler, who displays his own commitment even on his black crocodile boots, embroidered with Chesapeake’s name. Asked to cut the average cost of drilling a well by $1 million within a year, workers instead hit the goal in three months—shaving more than $1 billion from Chesapeake’s budget, Mr. Lawler said. A well in the Eagle Ford Shale of South Texas that in 2013 cost Chesapeake $6.9 million, on average, now costs $5.3 million—or 23% less.

Despite all this, Chesapeake’s future remains shaky.

Shares have fallen by more than 70% since the start of the year. Chesapeake has written off $15.6 billion in holdings, and its cash flow continues to shrink. In the past several months, the company has suspended its dividend and laid off 740 employees.

At this point, Mr. Lawler said, the biggest challenge is external. Chesapeake has been hampered by the low price of natural gas, which accounts for more than 70% of the company’s output. Oil accounts for the rest, and the bust of the past 15 months hasn’t helped.

Mr. Icahn has praised Mr. Lawler for his aggressive leadership. “Doug so far has done a great job,” he said in February, when Chesapeake’s stock was trading over $20 a share, versus just over $5 today. He didn’t respond to recent requests for comment.

Mr. Lawler said he knows his future depends on Chesapeake’s turnaround and the support of investors like Mr. Icahn.

“If I am not adding value for the shareholders, I fully expect Carl to fire me,” Mr. Lawler said. “That’s the reason I came here.”

----------


## Stickman

Chesapeake Energy Corporation's Stock Slammed After Note Exchange Offer -- The Motley Fool 

   Interesting article about CHK,  Hope it links

----------


## Jersey Boss

Bad news for T Bone Pickens and OSU.

America's biggest gas field finally succumbs to downturn | Reuters

While gas keeps flowing, the drilling crews are gone and with gas prices near 14-year lows, producers have choked hundreds of wells in the region in the hope that falling supply will stem the slide.

Several gas producers, including* Chesapeake Energy* and Cabot Oil and Gas, have announced production cuts in the region.

----------


## bradh

> Bad news for T Bone Pickens and OSU.
> 
> America's biggest gas field finally succumbs to downturn | Reuters
> 
> While gas keeps flowing, the drilling crews are gone and with gas prices near 14-year lows, producers have choked hundreds of wells in the region in the hope that falling supply will stem the slide.
> 
> Several gas producers, including* Chesapeake Energy* and Cabot Oil and Gas, have announced production cuts in the region.


I wish the infrastructure to use more natural gas across several sectors was there to help prop up demand.

----------


## pw405

> I wish the infrastructure to use more natural gas across several sectors was there to help prop up demand.


I think that natural gas will become important once carbon emissions are required to be cut.  Power plants and marine transportation are great candidates.  I just hope this happens sooner rather than later for CHK's sake.  These are very scary times.  Many commentors at Seeking Alpha say the company is headed towards bankruptcy.

----------


## Tundra

Chesapeake Bonds Plummet To 27 Cents Of Par After Company Hires Restructuring Advisor | Zero Hedge

----------


## kelroy55

Looks like more Chesapeake problems.

If allegations put forward this week are true, one of the nations largest fracking companies may have to pay millions in Pennsylvania for underpaying royalties to landowners.

Chesapeake Energy Corporation and others connected with their operations in Pennsylvania allegedly defrauded thousands of landowners, including seniors, Pennsylvanias Attorney General Kathleen G. Kane charged in a lawsuit filed Wednesday. The attorney general is seeking restitution for at least 4,000 victims, mostly from northeastern counties of Bradford, Sullivan, and Cayuga  rural communities located on top of the Marcellus Shale, the largest producing shale gas basin in the United States.

The number of affected parties could grow as many more victims are likely to come forward, said Jeffrey Johnson, deputy press secretary for the state attorney general.

We expect that number to grow significantly, because any Pennsylvania resident who has signed [a lease] with Chesapeake  would be covered under this lawsuit, he told ThinkProgress.

Chesapeake Energy, based in Oklahoma, denies the allegations. We strongly disagree with Attorney General Kanes baseless allegations and will vigorously contest them in the appropriate forum, said Gordon Pennoyer, Chesapeake Energy director of strategic communications, via email.

Major Fracking Company Accused Of Cheating Thousands In Rural Pennsylvania | ThinkProgress

----------


## onthestrip

> Looks like more Chesapeake problems.
> 
> If allegations put forward this week are true, one of the nations largest fracking companies may have to pay millions in Pennsylvania for underpaying royalties to landowners.
> 
> Chesapeake Energy Corporation and others connected with their operations in Pennsylvania allegedly defrauded thousands of landowners, including seniors, Pennsylvanias Attorney General Kathleen G. Kane charged in a lawsuit filed Wednesday. The attorney general is seeking restitution for at least 4,000 victims, mostly from northeastern counties of Bradford, Sullivan, and Cayuga  rural communities located on top of the Marcellus Shale, the largest producing shale gas basin in the United States.
> 
> The number of affected parties could grow as many more victims are likely to come forward, said Jeffrey Johnson, deputy press secretary for the state attorney general.
> 
> We expect that number to grow significantly, because any Pennsylvania resident who has signed [a lease] with Chesapeake  would be covered under this lawsuit, he told ThinkProgress.
> ...


Seems to be weekly that CHK is accused of wrongdoing. 

Speaking of, I see more shareholder litigation docs are being mailed out to Sandridge shareholders. Aubrey and Tom sure seem like extremely ethical guys...

----------


## gopokes88

I wonder if they put it into Chapter 7 or 11

----------


## mkjeeves

From the article:




> The state attorney general accuses Pennsylvania’s largest producer of natural gas of negotiating leases promising royalties that then went underpaid, according to court documentation, which alleges that defendants took deductions from landowners’ royalties even though leases contained language prohibiting those deductions.





> Seems to be weekly that CHK is accused of wrongdoing. 
> 
> Speaking of, I see more shareholder litigation docs are being mailed out to Sandridge shareholders. Aubrey and Tom sure seem like extremely ethical guys...


I received a class action settlement check a few weeks ago for the same kind of dispute in Oklahoma. It made me wonder how much I have really been cheated out of.

http://newsok.com/article/5433501

----------


## gopokes88

The Deal ? Chesapeake Energy noteholders face ?prisoners?...

----------


## ou48A

Ouch, ouch, ouch! Welp!  ???????????
Did anyone hear about this?

https://www.thelayoff.com/t/FDbzR7D

----------


## chuck5815

> Ouch, ouch, ouch! Welp!  ???????????
> Did anyone hear about this?
> 
> https://www.thelayoff.com/t/FDbzR7D


I'm not saying it's not true. But you really can't trust anything posted on that site. There's just way too many bitter folks who have already been laid off. And many of them post there to wind up the surviving employees.

----------


## Pete

My understanding is they will release a new budget on Thursday (tomorrow) and layoffs will then ensue.

----------


## LandThieves

^ This is also similar to what I have been told. Although the devision and allocation of that budget, to individual areas and their directors/supervisors (assets/in the Land Dept), will still be on going and news to many come Friday. At the end of the day, although this budget will most likely be deflating to an extent and worrisome, at the same time it will be a bit of a relief. To at least know something, and attempt to move forward.

As for the suspected layoffs.. That, I have/had no idea about. But this would also be easy for one to speculate. A lot are doing the same.

----------


## Bits_Of_Real_Panther

So, this year, did anyone really miss the xmas lights, i mean like out of towners back for the hollidays who noticed them before and were like ' damn, we loved those lights, what happened?" Perhaps the whole thinng was a luxury

----------


## gopokes88

> So, this year, did anyone really miss the xmas lights, i mean like out of towners back for the hollidays who noticed them before and were like ' damn, we loved those lights, what happened?" Perhaps the whole thinng was a luxury


$800 a tree will do that

----------


## Rover

> So, this year, did anyone really miss the xmas lights, i mean like out of towners back for the hollidays who noticed them before and were like ' damn, we loved those lights, what happened?" Perhaps the whole thinng was a luxury


Of course they are a luxury.  But what they do is help convey the message that things are good in OKC and there is prosperity.  This city always looks better when it is making money.  You see more money spent on landscaping, building maintenance, outdoor lighting, roadway care, etc., etc., etc.  Things LOOK better.  When companies and people start cutting back it is noticeable.  At some point, if everything goes back to everyone just covering the basics, then it is bad of us.

----------


## Tundra

Posted by an ex-employee.....tells it like it is


"Really....I worked there 8 years....started at the bottom....worked my way up.....watched all the little thirty something OU grads come rolling in each year with signing bonuses of multiple thousands and starting salaries higher than mine after 17years experience.....

Watched the 30 somethings enter the office most days around 8:20 with their breakfast from the Cat and eat it while answering text messages then around 9 begin working only to leave for lunch work out at 11:40 to come back at 1pm and toting yet another meal to eat....repeat morning schedule....at least when I worked there they came back showered and dressed in business attire....

Then along 4:45....was time for them to go to some function in society that got them photoed in the latest rag......wow.....they worked so very hard...

I got dissed by my boss....JOE...fur coat wearing prick or a liar.....for not setting a good example for the younger employee because I left for lunch work out at 11:45 and was back by one showed in business attire and had eaten lunch after being there at 7 a.m. and working most days til 5:30 min.....

What a joke.....not to mention all the blonde bimbets that AKM hired so they could be eye candy and do nothing.....

Jesus....so glad I am gone from that **** hole of a so called Forbes top 100 company and all the stupid computer messages from management each morning that I had to view before I could actually log in to do real work....

To funny...an insane experience I am grateful for....but what a joke....so yep...the contract rep is telling it like it is......and I was a full time employee that drank the AKM koolaide and got burned....oops....MY BAD

Glad I am rid of you CHK.....good luck to you....campus is looking darker and darker....been told buildings are being emptied and folks moving into the glass buildings......yikes...don't throw stones.....chuckle..."

----------


## mugofbeer

Nothing good will happen if CHK  goes under.  It might make a few people with axes to grind feel better but it will be devastating for OKC

----------


## zookeeper

> Nothing good will happen if CHK  goes under.  It might make a few people with axes to grind feel better but it will be devastating for OKC


I agree with this. When McClendon got the boot (rightly) I hoped that it might bring better times for Chesapeake, which would mean better times in Oklahoma City. Had McClendon stayed at the helm, it would already be a nice campus for a private university. I want Chesapeake to survive and prosper. But, I have my doubts.

----------


## Just the facts

> Posted by an ex-employee.....tells it like it is
> 
> 
> "Really....I worked there 8 years....started at the bottom....worked my way up.....watched all the little thirty something OU grads come rolling in each year with signing bonuses of multiple thousands and starting salaries higher than mine after 17years experience.....
> 
> Watched the 30 somethings enter the office most days around 8:20 with their breakfast from the Cat and eat it while answering text messages then around 9 begin working only to leave for lunch work out at 11:40 to come back at 1pm and toting yet another meal to eat....repeat morning schedule....at least when I worked there they came back showered and dressed in business attire....
> 
> Then along 4:45....was time for them to go to some function in society that got them photoed in the latest rag......wow.....they worked so very hard...
> 
> ...


This comes to mind.
The Fox and the Grapes. Aesop. 1909-14. Fables. The Harvard Classics

----------


## mimino

> Posted by an ex-employee.....tells it like it is
> 
> 
> ""


Source?

----------


## Pete

> I agree with this. When McClendon got the boot (rightly) I hoped that it might bring better times for Chesapeake, which would mean better times in Oklahoma City. Had McClendon stayed at the helm, it would already be a nice campus for a private university. I want Chesapeake to survive and prosper. But, I have my doubts.


They are in much better position now because of those changes.

If they had not happened when they did, they would probably already be out of business or at least employing far less than they do now.

----------


## PhiAlpha

> I agree with this. When McClendon got the boot (rightly) I hoped that it might bring better times for Chesapeake, which would mean better times in Oklahoma City. Had McClendon stayed at the helm, it would already be a nice campus for a private university. I want Chesapeake to survive and prosper. But, I have my doubts.


They have a pretty good shot at it. The situation they're in right now is really unfortunate, Doug Lawler put them on a great path to recovery but commodity prices have stifled those efforts.

----------


## Pete

^

AKM had them heavily weighted in NG and that has been down far longer than oil and they were in deep trouble long before crude started to plunge.

----------


## PhiAlpha

> Posted by an ex-employee.....tells it like it is
> 
> 
> "Really....I worked there 8 years....started at the bottom....worked my way up.....watched all the little thirty something OU grads come rolling in each year with signing bonuses of multiple thousands and starting salaries higher than mine after 17years experience.....
> 
> Watched the 30 somethings enter the office most days around 8:20 with their breakfast from the Cat and eat it while answering text messages then around 9 begin working only to leave for lunch work out at 11:40 to come back at 1pm and toting yet another meal to eat....repeat morning schedule....at least when I worked there they came back showered and dressed in business attire....
> 
> Then along 4:45....was time for them to go to some function in society that got them photoed in the latest rag......wow.....they worked so very hard...
> 
> ...


Jeez has anyone found that guy's red stapler yet?

That "tells it like it is" from the perspective of one former employee that just left or was fired and like similar outbursts from former employees of other companies, it isn't representative of the views of the majority there. I've had many friends and family at CHK, some of which are still there and some that have left or were laid off. All have had their complaints (as do most people with most companies) but overall have said it is/was a great place to work. The general consensus is that it was more enjoyable under Aubrey but commodity prices were higher back then and is has been completely evident, his approach wasn't sustainable even at higher commodity prices.

----------


## PhiAlpha

> ^
> 
> AKM had them heavily weight in NG and that has been down far longer than oil and they were in deep trouble long before crude started to plunge.


Yes that is true. However, that's what I meant when I said Lawler put them on a good path to recovery. Due to the lack of recovery on NG prices, they actually started a push to diversify into liquids under AKM, but under Lawler they've made liquids a higher priority. He also pushed the sale of non-core assets, non-core business unit spinoffs (access, 77 energy, etc), and internal restructuring to reduce debt. All of those efforts very much improved the outlook of the company and that was reflected in the stock price improvement from 2012 to July 2014. Had the price of oil not tanked after July 2014, CHK would probably be in pretty decent shape right now. NG prices would've held them a tier or two below some of the stronger oil heavy companies, but it wouldn't resemble the dumpster fire it was in 2011 or the strained company it is now.

----------


## jccouger

I went to school with a lot of people who were hired by Chesapeake. They fit that guys description to the tee.

----------


## LandThieves

Let's not forget, Chk is still heavily weighted in NG... Which has actually played out in their benefit with price of crude collapsing over the last 16 months.  They're not 85/15 in favor of NG, but they're still 70-75/25-30 NG.  They also have (unfortunate) MVCs in the dry gas area they have to meet, or else get fined, which keeps that NG production up quite a bit.

----------


## David

I can't take anyone seriously who uses that many ellipses in that amount of written text.

----------


## TheTravellers

That screed could've been written by millions of ex-employees at thousands of companies - I could've written it myself a few times...

----------


## PhiAlpha

> I went to school with a lot of people who were hired by Chesapeake. They fit that guys description to the tee.


As did I and they do not fit that description.

----------


## Eric

The thing I noticed when interviewing there 5 years ago or so, was that not a sole appeared to be over 35 years old. The person I would have reported to was my age, his boss (family) was just having babies. It was pretty crazy. Pretty un-diversified if you ask me. I passed and never questioned my decision once since.

----------


## Thomas Vu

The person who wrote that sounds like the same troll-y person that wrote about how much debt they took on after the lay off.

----------


## adaniel

> The thing I noticed when interviewing there 5 years ago or so, was that not a sole appeared to be over 35 years old. The person I would have reported to was my age, his boss (family) was just having babies. It was pretty crazy. Pretty un-diversified if you ask me. I passed and never questioned my decision once since.


TBH that's just the nature of oil and gas right now. This is an industry that hired very little between 1985 and the early 2000's. So there really are no "gen X" employees and most boomers are retiring, a pace I'm sure will speed up thanks to this latest downturn. In my own company, we have a few employees who are late 50s and up, then almost nobody younger than 50, then a much much larger group 35 and younger. Heck, I am 29 going on 30 and I'm a bit on the old side in my department.

As far as that rant, yep pretty much what I'd expect from a salty ex-worker.

----------


## gopokes88

> TBH that's just the nature of oil and gas right now. This is an industry that hired very little between 1985 and the early 2000's. So there really are no "gen X" employees and most boomers are retiring, a pace I'm sure will speed up thanks to this latest downturn. In my own company, we have a few employees who are late 50s and up, then almost nobody younger than 50, then a much much larger group 35 and younger. Heck, I am 29 going on 30 and I'm a bit on the old side in my department.
> 
> As far as that rant, yep pretty much what I'd expect from a salty ex-worker.


You could replace the word Chesapeake with the name of any other company. Just sour grapes.

----------


## catch22

Heard the same type of commentary when United outsourced OKC jobs. 

"What a joke" is a very common phrase during layoffs.

----------


## gopokes88

In actual CHK news, they report 4Q earnings on Feb 24th

----------


## mimino

> As did I and they do not fit that description.


Did you and your bros even lift?

----------


## Easy180

> The thing I noticed when interviewing there 5 years ago or so, was that not a sole appeared to be over 35 years old. The person I would have reported to was my age, his boss (family) was just having babies. It was pretty crazy. Pretty un-diversified if you ask me. I passed and never questioned my decision once since.


Back in the good ole days they posted pics of new employees in the Sunday Oklahoman. I'm fairly certain 80-90% looked like recent college grads going in with same awesome sounding job titles.

----------


## Tundra

I haven't seen anyone playing ultimate frisbee on the west lawn lately, is that frowned upon these days?

----------


## bradh

> Did you and your bros even lift?


Great post

----------


## PhiAlpha

> Did you and your bros even lift?


Duh. And took some jger bombs afterword.

----------


## pw405

> My understanding is they will release a new budget on Thursday (tomorrow) and layoffs will then ensue.


Where are you hearing this?  High confidence level?

----------


## pw405

When did they take on more debt? I follow the stock pretty closely and haven't heard about additional debt.  They just cut 1.5 billion of debt at the end of 2015.

----------


## Tundra

> When did they take on more debt? I follow the stock pretty closely and haven't heard about additional debt.  They just cut 1.5 billion of debt at the end of 2015.


I hope you don't still own any of that stock.....

----------


## onemoreokie

Chesapeake Plummets Over 20% On Report It Has Hired Bankruptcy Attorneys | Zero Hedge

Kind of a sketchy site for financial news but that doesn't sound good.

----------


## sooner88

> Chesapeake Plummets Over 20% On Report It Has Hired Bankruptcy Attorneys | Zero Hedge
> 
> Kind of a sketchy site for financial news but that doesn't sound good.


Down to $1.83/share (40%)

----------


## bradh

If that's the case, companies can work their way out of bankruptcy, Continental Airlines did it

----------


## onemoreokie

> If that's the case, companies can work their way out of bankruptcy, Continental Airlines did it


Sure a company can emerge from BK, but the common shareholders will be wiped out.

----------


## Just the facts

> If that's the case, companies can work their way out of bankruptcy, Continental Airlines did it


Thousands of companies emerge from bankruptcy and all of them were better off for it - but the people who own stock are wiped out - which often times includes the employees if their 401k match is done in company stock (something that should be illegal).  Also, if the debt holder is a bank then the impact to all of us can be significant if the bankruptcy is large or there are a lot of them thanks to our debt-based currency.

----------


## Pete

I wonder if Aubrey still owns a good chunk of CHK stock.

----------


## Richard at Remax

Trading halted on Charles Schwab as of 10:10am

----------


## Pete

Ugh.

Wow, what a mess.

----------


## gopokes88

> If that's the case, companies can work their way out of bankruptcy, Continental Airlines did it


American Airlines files for bankruptcy like every 5 years. With the Dallas fed already pressuring banks not to let this turn into a debt crisis, I bet CHK emerges from this just fine. Huge buying opportunity, huge risk but if they emerge the upside is enormous.

----------


## Pete

Just checked and CHK trading was halted and tagged T1, which means material news is expected soon.

I'm sure that is the bankruptcy announcement.

----------


## adaniel

Chesapeake Energy Says It Has No Plans of Pursuing Bankruptcy - Bloomberg Business

----------


## Pete

Bloomberg has a preferential deal with CHK wherein they get the news first in exchange for taking it easy on them.

I know this first hand because I worked directly with Bloomberg writers on a piece before Aubrey was ousted, and it pretty much got hacked to bits by their editors in New York for this exact reason.

It's the ugly side of journalism.

----------


## David

CHESAPEAKE ENERGY CORPORATION STATEMENT




> OKLAHOMA CITY, Feb. 8, 2016 /PRNewswire/ -- Chesapeake Energy Corporation (NYSE:CHK) stated today that Kirkland & Ellis LLP has served as one of Chesapeake's counsel since 2010 and continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange. Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders.


From the press release.

I mean, maybe it's a straight up lie, but its not like Bloomberg had some particularly early inside source on this considering the statement is right there on Chesapeake's website for anyone to find and look at.

----------


## jn1780

What they meant to say is there are no plans to file for bankruptcy *this month*.  

This was probably a false report, but once the rumor gets out there, it is hard for a company to recover on the PR front especially when your financial numbers don't look that great.

----------


## Pete

^

I bet they gave the press release to Bloomberg first.

Not saying anyone is lying, just throwing in a tidbit of info.

----------


## gopokes88

> What they meant to say is there are no plans to file for bankruptcy *this month*.  
> 
> This was probably a false report, but once the rumor gets out there, it is hard for a company to recover on the PR front especially when your financial numbers don't look that great.


I don't think it's false, they probably want to work with their creditors and get a deal hammered out, that's the plan and that doesn't require a bankruptcy filing. However, if that plan fails then they file bankruptcy and a judge forces the two to try and work it out. Neither wants that, so they'll try to avoid a bankruptcy filing.

----------


## onemoreokie

Bankruptcy or restructuring is pretty likely....It's just a matter of time.
Asset sales in this price environment will be really ugly and once you clean out the closet what's left.

Natural gas prices are low and there is not a whole lot of hope for a big improvement in the near term.

----------


## Just the facts

They might not have a plan for bankruptcy, but I wonder if they have a concept for one.

----------


## adaniel

> Bankruptcy or restructuring is pretty likely....It's just a matter of time.
> Asset sales in this price environment will be really ugly and once you clean out the closet what's left.
> 
> Natural gas prices are low and there is not a whole lot of hope for a big improvement in the near term.


The firm they hired (Kirkland and Ellis) is one of the top firms for bankruptcy/restructuring litigation in the nation. You would not hire them for anything other than that. 

My guess: they are probably preparing an offer to bondholders to convert their debt to equity. I doubt few would do that, so they'd probably file for a pre-packaged Ch 11 at that point.

Don't know where I read it, but only around 5% of fields are profitable at today's oil and gas prices. So its highly unlikely someone buys Chesapeake. It's a bad deal for them, but a Ch 11 would not be the worst thing for OKC. They certainly won't be the last to do so.

----------


## bradh

> My guess: they are probably preparing an offer to bondholders to convert their debt to equity. I doubt few would do that, so they'd probably file for a pre-packaged Ch 11 at that point.


exactly

----------


## David

I think my concern would be: how likely is it that their plan to avoid bankruptcy is going to fail now that todays 'rumor' hit their stock so hard? Is the rumor going to turn itself into reality?

----------


## Jersey Boss

UPDATE-2: Chesapeake Energy Corporation (NYSE:CHK): Here?s Why the Stock Crashed Today | BidnessEtc | Oil & Gas | By Faraz Illahi

_Last month, Standard & Poor’s downgraded Chesapeake’s credit rating from B to CCC+, while keeping the outlook as Negative as another downgrade may be on the cards. Analysts expect the company to post a loss of 16 cents per share when it reports its quarterly results later this month, widening from a loss of 5 cents per quarter in the preceding quarter.

Trading in Chesapeake shares was halted several times in today’s session due to the sharp dips, and despite the company’s reassurances, it remains down 35%. The stock has lost more than 90% of its value in the last one year._

----------


## jn1780

It will be nice to get all the energy bankruptcies/restructuring over with and behind us so we can start looking towards the future.

----------


## Just the facts

> It will be nice to get all the energy bankruptcies/restructuring over with and behind us so we can start looking towards the future.


The problem is they never learn and go right back to borrowing money from anyone willing to give it to them.  Entire industries have now become nothing more that legalized Wall Street Ponzi schemes that reset themselves via bankruptcy (instead of jail time).

----------


## bradh

> The problem is they never learn and go right back to borrowing money from anyone willing to give it to them.  Entire industries have now become nothing more that legalized Wall Street Ponzi schemes that reset themselves via bankruptcy (instead of jail time).


Example 1 (coming to a bankruptcy court near you soon): Rocket Mortgage.  Seriously, anyone else see that ad last night and go "isn't that what got us into the 2008 crisis?"

----------


## chuck5815

> It will be nice to get all the energy bankruptcies/restructuring over with and behind us so we can start looking towards the future.


my fear is that the restructuring will mean that the big boys in Houston and Dallas end up obtaining a substantial amount of assets and personnel from our OKC operators.

----------


## HangryHippo

Exactly.

----------


## Tundra

> Thousands of companies emerge from bankruptcy and all of them were better off for it - but the people who own stock are wiped out - which often times includes the employees if their 401k match is done in company stock (something that should be illegal).  Also, if the debt holder is a bank then the impact to all of us can be significant if the bankruptcy is large or there are a lot of them thanks to our debt-based currency.


Its all the little guys that get screwed....and they owe a ton of money to the little guys....those are the ones that don't recover.

----------


## Tundra

> It will be nice to get all the energy bankruptcies/restructuring over with and behind us so we can start looking towards the future.



The same could be said about our nation.... Its the only way to get the 19 trillion off the books.

----------


## jccouger

So Chesapeake is lying about planning for bankruptcy? Why I never! How could a company that has always placed such a high level of importance on integrity & honesty mislead us so much now?

----------


## TU 'cane

> Example 1 (coming to a bankruptcy court near you soon): Rocket Mortgage.  Seriously, anyone else see that ad last night and go "isn't that what got us into the 2008 crisis?"


Boy am I glad I wasn't the only one who noticed that. American Consumerism wrapped up into a single commercial slapping us all in the face. 

I sat there and wondered how many people were wanting to throw something at their tv after that commercial compared to how many didn't even realize the whole charade.

----------


## PhiAlpha

> Example 1 (coming to a bankruptcy court near you soon): Rocket Mortgage.  Seriously, anyone else see that ad last night and go "isn't that what got us into the 2008 crisis?"


Went to see The Big Short and saw that commercial on TV immediately after. Had a good laugh.

----------


## mimino

> Chesapeake Energy Says It Has No Plans of Pursuing Bankruptcy - Bloomberg Business


I think we should hear what Bankruptcy has to say about this statement...

----------


## d-usa

I'm glad they had a strong rally according to the headline, which seems to be the Oklahoman's spin on today.

----------


## Zorba

> So Chesapeake is lying about planning for bankruptcy? Why I never! How could a company that has always placed such a high level of importance on integrity & honesty mislead us so much now?


Every company lies about going into bankruptcy. If they came out and said they were thinking about it, their stock and credit ratings would drop so fast they would be forced into it.

----------


## Spartan

> The problem is they never learn and go right back to borrowing money from anyone willing to give it to them.  Entire industries have now become nothing more that legalized Wall Street Ponzi schemes that reset themselves via bankruptcy (instead of jail time).


That's what companies do. The bigger the company, the bigger the credit line.

----------


## zorobabel

> I'm glad they had a strong rally according to the headline, which seems to be the Oklahoman's spin on today.


I have to admit that was funny in a sad sort of way. 30+% daily drop qualifies as rallying.

----------


## gopokes88

> The problem is they never learn and go right back to borrowing money from anyone willing to give it to them.  Entire industries have now become nothing more that legalized Wall Street Ponzi schemes that reset themselves via bankruptcy (instead of jail time).


You should probably tell that to opec, so they'll realize this strategy isn't ever going to work.

----------


## rte66man

At the close of trade today, CHK was at $1.59/share.  That's down 11% today alone.  It's nearly hit the all-time low from Monday.

----------


## OKCRT

> The firm they hired (Kirkland and Ellis) is one of the top firms for bankruptcy/restructuring litigation in the nation. You would not hire them for anything other than that. 
> 
> My guess: they are probably preparing an offer to bondholders to convert their debt to equity. I doubt few would do that, so they'd probably file for a pre-packaged Ch 11 at that point.
> 
> Don't know where I read it, but only around 5% of fields are profitable at today's oil and gas prices. So its highly unlikely someone buys Chesapeake. It's a bad deal for them, but a Ch 11 would not be the worst thing for OKC. They certainly won't be the last to do so.


So I should not buy any of their stock? I was thinking about taking a gamble at these low prices but if they do chapter 11 I would lose it all,correct?

----------


## Tundra

> So I should not buy any of their stock? I was thinking about taking a gamble at these low prices but if they do chapter 11 I would lose it all,correct?


Correct....

----------


## pw405

Pretty strong showing on the market today after announcing Q4 numbers.  Wiped out $2B in debt, sold some small assets to raise cash, announced aggressive plans to wipe out debt and create a more competitive cost structure.  Stock popped 20%+. I wouldn't count them out yet.

----------


## Bellaboo

> Correct....


Why would you lose your stock on a reorg ?

----------


## onthestrip

> Pretty strong showing on the market today after announcing Q4 numbers.  Wiped out $2B in debt, sold some small assets to raise cash, announced aggressive plans to wipe out debt and create a more competitive cost structure.  Stock popped 20%+. I wouldn't count them out yet.


Part of that stock pop is from buyout rumors...

----------


## gopokes88

Chesapeake retains $4 billion credit line | NewsOK.com

$4 billion credit line reaffirmed. No more revaluations until 2017. Great news.

----------


## PhiAlpha

> Chesapeake retains $4 billion credit line | NewsOK.com
> 
> $4 billion credit line reaffirmed. No more revaluations until 2017. Great news.


Survive and Advance

Here's to a price rebound by 2017.

----------


## gopokes88

More details here. 

Chesapeake amends credit facility agreement with lenders - MarketWatch

Must maintain $500 million in liquidity, $750 million if certain credit metrics aren't met by years end. 

No revaluation until June of 2017. 

This is a big win for CHK.

----------


## Pete

Yes, very good news.

Gives them a big lifeline to ride things out for a while.

I would hope once things turn around that they have their act together now.  I've been impressed with their new CEO and his no-nonsense approach.

----------


## sooner88

The OCC recently released their new guidelines for energy lending. There were some pros and cons from a banks perspective, but one thing they stressed was for banks to remain patient. It's good to see that happening.

http://m.haynesboone.com/~/media/fil...uidelines.ashx

----------


## Anonymous.

Wow. CHK up 50-60% in just 3 days. Congrats to last week's buyers!

And for those that were still holding onto February shares, congrats on retirement!

----------


## pw405

> So I should not buy any of their stock? I was thinking about taking a gamble at these low prices but if they do chapter 11 I would lose it all,correct?


A buy on 2-12-16 would have yielded some impressive gains:

----------


## bchris02

I was so close to buying back in the Jan/Feb range.  Now I wish I would have.

----------


## PhiAlpha

> I was so close to buying back in the Jan/Feb range.  Now I wish I would have.


Ehh, hindsight is 20/20. Bankruptcy was a major possibility and if they had occurred, you might have lost everything you invested. Great move for everyone that bought, but certainly not a bad move for people who refrained.

----------


## warreng88

Chesapeake sells wells, leases to FourPoint

By: Sarah Terry-Cobo  The Journal Record	June 1, 2016

OKLAHOMA CITY – Chesapeake Energy Corp. closed a $385 million deal Wednesday on oil and gas wells and land leases in western Oklahoma.

Denver-based FourPoint Energy LLC bought about 473,000 acres in the Granite Wash and Cleveland and Tonkawa Sands petroleum formations.

Analyst Neal Dingmann said Chesapeake got a reasonable price for the assets. The energy research managing director at SunTrust Robinson Humphrey said there are a lot of wells and leases for sale in the Granite Wash, which covers a portion of western Oklahoma and part of the Texas Panhandle.

The sale includes wells that produce about 64 percent natural gas and 36 percent oil, according to a press release FourPoint issued. The company hired more than 90 former Chesapeake employees to work on newly acquired operations.

Wednesday’s sale shows Chesapeake has plenty of assets, and selling its Granite Wash wells won’t bring down its total production by much, Dingmann said. It’s important that selling assets doesn’t lower the company’s reserves, because banks determine a driller’s credit line by how much undrilled oil and gas it could produce.

CEO Doug Lawler is making the right moves to cover the driller’s short-term debt obligations, through asset sales and with his recent debt-for-equity swaps, Dingmann said.

“I can easily see them covering their financial requirements in the next few years,” he said.

Dingmann said he one of two analysts with a “buy” rating for Chesapeake, among the 39 who cover the driller. If natural gas prices continue to rise, the company will be able to bring on more production for higher margins, he said.

----------


## warreng88

I know this is a ways off, but does anyone know what happens to the naming rights if Chesapeake files for BK? Not saying this is going to happen, but curious if this has happened in the past and how it was handled.

----------


## pw405

Good question... since the former business was contractually bound to the naming rights, would the contracts still be valid after emerging from BK? Anybody know?

----------


## HangryHippo

Is CHK close to filing for bankruptcy or are we just curious about what it would mean for naming rights?

----------


## OkiePoke

> Is CHK close to filing for bankruptcy or are we just curious about what it would mean for naming rights?


They are just curious. CHK should be safe for a year.

----------


## rlewis

A bit of a surprise--Chesapeake is pulling completely out of the Barnett Shale field in North Texas.

http://www.star-telegram.com/news/bu...e94890877.html

----------


## Will

> A bit of a surprise--Chesapeake is pulling completely out of the Barnett Shale field in North Texas.
> 
> http://www.star-telegram.com/news/bu...e94890877.html


It's a good move for them.  They were losing a lot of money there.

----------


## warreng88

Chesapeake notes help cut debt

By: Sarah Terry-Cobo  The Journal Record	September 13, 2016	

OKLAHOMA CITY – Chesapeake Energy Corp. continues to make strides to reduce short-term debt obligations, said University of Oklahoma finance professor Chitru Fernando. The driller announced Tuesday results for its $750 million in notes tendered.

Fernando said note offerings are fairly common and provide an opportunity for a company to repurchase shares and provide a tender offer under better market conditions than in previous years.

“They have clearly been trying to reduce their debt burden, when you add this combined with asset sales,” Fernando said.

Chesapeake is also offering $600 million for 2.5-percent contingent convertible senior notes, due in 2037, it announced in a news release. The driller also increased its pending cash tender offers from $500 million to $800 million, for other notes. It is increasing the cap from $325 million to $610 million for notes due in 2019, according to a separate news release.

“These are short-term notes, and they’ll have to pay these in the near future, in the next two to three years,” Fernando said.

When a company has debt due in the near-term, it’s common to refinance when the market provides better conditions, he said.

Chesapeake is still recovering from the industry downturn, when falling oil prices hurt the best part of the driller’s balance sheet, Fernando said.

CEO Doug Lawler has worked since August 2013 to reduce the company’s debt, then in the tens of billions of dollars, by selling oil and gas properties and ending complex financial arrangements.

Chesapeake spokesman Gordon Pennoyer did not return requests for comment.

Shares of Chesapeake Energy, which trades under the symbol CHK, closed down 67 cents, or 8.32 percent, at $7.38 on Tuesday.

----------


## jn1780

Looks like Chesapeake is getting a new logo.

http://newsok.com/article/5529442

----------


## Rover

That is AWFUL.  Very amateurish looking.

----------


## gopokes88

More importantly

http://www.marketwatch.com/story/che...eal-2016-12-05

----------


## HangryHippo

> That is AWFUL.  Very amateurish looking.


100% agree - looks cheap.

----------


## gurantula35

I like it better than what they currently have.  not bad at all.

----------


## Pete

CEO Lawler says CHK 'stronger than ever':

http://www.news9.com/story/34076725/...-is-doing-well

----------


## chuck5815

I'll admit the pricing environment for dry gas is looking more favorable on a forward basis, and Doug has allegedly been running a tighter ship, but "stronger than ever" seems like a rather dubious claim




> CEO Lawler says CHK 'stronger than ever':
> 
> http://www.news9.com/story/34076725/...-is-doing-well

----------


## gopokes88

> I'll admit the pricing environment for dry gas is looking more favorable on a forward basis, and Doug has allegedly been running a tighter ship, but "stronger than ever" seems like a rather dubious claim


Not really. 

CHK was only able to get where they are based on $10/mcf gas. They ran up huge debt and never really made that much money, even in the boom times. Even when the getting was good CHK wasn't fully realizing it. It's a relative claim because CHK has never been that strong.

----------


## pw405

Another $500mm sale yesterday.  Roughly $1 billion in assets sales this month.

----------


## warreng88

Chesapeake sells non-campus real estate

By: Sarah Terry-Cobo  The Journal Record	March 13, 2017

OKLAHOMA CITY – Sometimes a fire sale isn’t a bad thing.

Chesapeake Energy Corp.’s most recent real estate sales signal CEO Doug Lawler is continuing to shed extraneous assets unrelated to oil and gas drilling, said Jason Wangler, managing director with Wunderlich Securities. Board Chairman Archie Dunham’s purchase of about 500,000 Chesapeake shares on March 8 is also a good signal, Wangler said.

Chesapeake’s affiliated real estate companies have sold nearly a dozen properties for about $6.43 million since Jan. 27, according to the Oklahoma County assessor’s website. The properties include the land on which Deep Fork Grill is located, several office complexes and four tracts of land, two of which are vacant. The 11 properties were purchased for about $12 million since 2005. The market value for the 11 assets is about $7.6 million, according to the assessor’s website.

Chesapeake spokesman Gordon Pennoyer said the company’s executives are pleased to have sold the properties adjacent to the Oklahoma City campus. There are a few remaining properties in the surrounding area that were purchased under prior leadership, he said.

David Chapman, finance professor with the University of Central Oklahoma, said Chesapeake co-founder and former CEO Aubrey McClendon had a vision for what he wanted in Oklahoma City and had a strong appetite for buying real estate. When the late executive bought land around the N. Western Avenue and Classen Boulevard area near the company’s headquarters, that drove up prices.

McClendon left the company in March 2013. Lawler has been focused on simplifying Chesapeake’s balance sheet since he took the helm in summer 2013. He spun off subsidiaries and sold real estate, in addition to selling oil and gas wells and land leases in less-profitable petroleum plays.

Chapman said the sale prices suggest distressed sales, which could lower nearby property values for a while. But the sales are a good thing, because the oil and gas driller wasn’t going to develop those properties, he said. So a developer could raise the value if she or he does something with the former Chesapeake properties, Chapman said.

Pennoyer said the remaining for-sale real estate is about 75 acres of commercially zoned and industrially zoned land on the south side of Wilshire Boulevard, north of Chesapeake’s campus. There are also tracts of land ranging from 5 acres to 60 acres near Interstate 40 and Radio Road in El Reno. McClendon pushed for an exit ramp there, where one former subsidiary has field offices.

Chapman said the land near the interstate will be a good investment for a potential buyer. There is more optimism in the oil and gas industry, since commodity prices began to stabilize.

“They (Chesapeake) will get what they paid for it, because that area is doing really well,” Chapman said. “When (companies) are not drilling, they’ll need places to store unused equipment for the next cycle.”

Wangler said he doesn’t follow Oklahoma City’s real estate market closely, but McClendon was known for wanting to get things done quickly. That led him to pay more to close deals expediently. The same was true when he bought oil and gas leases.

Even if Lawler lost money on the real estate transactions, it’s the right thing for the company, Wangler said. The sales give Chesapeake cash and helps simplify the driller’s asset base. Non-oil-and-gas-related properties and businesses take time, money and effort to manage.

Wangler declined to speculate on why Dunham recently spent about $2.6 million buying Chesapeake shares. But he purchased Chesapeake stock before when share prices were low.

“It’s always good to see management and board directors aligning with investors,” Wangler said. “It’s good to see them jumping in and giving confidence to the market, that he would see some additional value there.”

Dunham is an advisory board member of Newport Beach, California-based SAIL Capital Partners. A company representative did not return requests for comment by publication time.

----------


## chuck5815

*$6.43 million* . . . so CHK can probably drill, what, one lateral with that?

----------


## Pete

> *$6.43 million* . . . so CHK can probably drill, what, one lateral with that?


I am planning a big story on all this, as I have kept very detailed records dating back about a decade.

I know exactly what CHK bought and for how much and what they've sold and for how much.

These last couple of articles on this subject were just straight PR from CHK without any fact checking or context.  Also, no real mention as to who is buying as in almost all cases it's people closely associated with Chesapeake.

I will provide tons of data, as it's very interesting stuff.

----------


## gopokes88

Who cares if CHK lost money on it. They were just sitting on it, and now maybe they can be developed. Also wouldn't surprise if Aubrey way overpaid.

----------


## Rover

> I am planning a big story on all this, as I have kept very detailed records dating back about a decade.
> 
> I know exactly what CHK bought and for how much and what they've sold and for how much.
> 
> These last couple of articles on this subject were just straight PR from CHK without any fact checking or context.  Also, no real mention as to who is buying as in almost all cases it's people closely associated with Chesapeake.
> 
> I will provide tons of data, as it's very interesting stuff.


Yes, and they still own some properties they haven't sold despite interest ....I guess just not from the right people.

----------


## Pete

> Yes, and they still own some properties they haven't sold despite interest ....I guess just not from the right people.


It's all very strange.

None of these properties have even been put on the open market and virtually all have been sold to former or current CHK insiders.

And of course, all are paying a fraction of what CHK has invested.

----------


## Martin

> Who cares if CHK lost money on it. They were just sitting on it, and now maybe they can be developed. Also wouldn't surprise if Aubrey way overpaid.


 well... if a publicly traded company sells assets at a loss to an _insider_, then i'd be pretty concerned if i were a shareholder.

----------


## gopokes88

> well... if a publicly traded company sells assets at a loss to an _insider_, then i'd be pretty concerned if i were a shareholder.


I wouldn't. It's a fire sale of a non core asset that Aubrey probably overpaid for. A $3,000,000 loss in a company with $10 billion in revenue is pennies. They have power bills that high.

----------


## bradh

I guess I fail to see the smoking gun here.

----------


## Teo9969

It's always going to be a loss...might as well get it on the books for a loss so they can write it off.

----------


## Teo9969

There is, of course, something to be said for maximizing the value of anything you sell, and actually putting something on the market to see it's value rather than selling it unlisted to company insiders is something less than ideal for sure

...but it's such a small amount to them and it's so far outside the scope of their business that it's not really worth a fuss. I think what Devon has done using Preftakes and BOK as a shell to build a new tower would be far more concerning to me as a shareholder.

----------


## Pete

I agree but it's still interesting to look at the details.

----------


## Teo9969

> I agree but it's still interesting to look at the details.


Absolutely.

In fact, one has to wonder if AKM's greatest philanthropy wasn't in fact robbing shareholders (which are by-and-large non-Oklahomans) and giving the spoils to locals through spending outrageous amounts of company money on property that was never used for legitimate CHK business.

----------


## Rover

> I wouldn't. It's a fire sale of a non core asset that Aubrey probably overpaid for. A $3,000,000 loss in a company with $10 billion in revenue is pennies. They have power bills that high.


Should be concerned when they won't entertain offers from other parties that may be above rates eventually paid.  Or, when they won't entertain offers on other properties until a chosen offer comes up.

----------


## chuck5815

I've always heard Aubrey had a penchant for overpaying for office buildings (and retail), and then giving sweetheart deals to the tenants. Classen Curve is probably the best known example of this, but there are countless office buildings in NW OKC where CHK paid a major league premium. Seems like the commercial real estate portfolio was handled similarly to the company's oil and gas leases: secure as much as humanly possible, price be damned.

----------


## Pete

> I've always heard Aubrey had a penchant for overpaying for office buildings (and retail), and then giving sweetheart deals to the tenants. Classen Curve is probably the best known example of this, but there are countless office buildings in NW OKC where CHK paid a major league premium. Seems like the commercial real estate portfolio was handled similarly to the company's oil and gas leases: secure as much as humanly possible, price be damned.


That was something else that was obvious but hard to report because those transactions were private.

For example, huge incentives were offered to Whole Foods but we don't know what they were.  I suspect the same was true for Balliets and I believe McClendon actually bought into that business to get them to move from 50 Penn.

We get the occasional peek, such as when the current owners filed against Cafe 501 and the lease was attached as a supporting document.  In that case, Cheaspeake gave them a massive amount for tenant improvements and favorable rent terms and that was completely spelled out.


One other very interesting thing about Classen Curve...  Aubrey insisted on only local tenants and there was significant vacancy when CHK ultimately sold to Washington Prime.  Since the acquisition, they have almost completely filled that center and what was available in Nichols Hills with lots of new-to-market, quality national and regional tenants (with a good blend of some locals as well) and that's proven to be a great strategy and I assure you they are not giving away the farm to get those new retailers.

----------


## Richard at Remax

The central park land acquisition convo made me think of this. Completely random but I was driving down 63rd on the east end of CHK and saw that house on 62nd just east of Shartel was still there. Kinda made me chuckle because I was told by my wife who used to work there that they we're really difficult in negotiations when CHK was trying to buy the land. I bet they are kicking themselves because I don't see CHK using that land around them anytime soon.

----------


## jn1780

> The central park land acquisition convo made me think of this. Completely random but I was driving down 63rd on the east end of CHK and saw that house on 62nd just east of Shartel was still there. Kinda made me chuckle because I was told by my wife who used to work there that they we're really difficult in negotiations when CHK was trying to buy the land. I bet they are kicking themselves because I don't see CHK using that land around them anytime soon.


Probably an elderly couple who think they "won".  The house is in the shadow of two parking garages and it will be next to impossible to sale the house itself.  They have to hope now another company wants that land, but even then they won't get nearly as much as they would in the Chesapeake boom days.

----------


## Pete

CHK bought the house next door for about $250K.

----------


## Lazio85

For those interested in buying it ...

https://ariisp1.oklahomacounty.org/a...TNO=R085596225

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## jn1780

> CHK bought the house next door for about $250K.


Ouch, if this one was offered a similar price, that could have been a nice new house somewhere.

----------


## pw405

> Probably an elderly couple who think they "won".  The house is in the shadow of two parking garages and it will be next to impossible to sale the house itself.  They have to hope now another company wants that land, but even then they won't get nearly as much as they would in the Chesapeake boom days.


I'm pretty sure the lady that lives there is a hoarder, and likely the reason she didn't sell. When I used to work there, I would see her walking around the front yard with underwear on moving random boxes everywhere, and if you look closely, she has 4-5 storage sheds that are packed to the brim with random stuff.  

I was once outside milling around after work on a phone call with a friend (long distance) and she flies up in her car, almost hysterical, asking "what are you doing here?"  "I work here", pointing to the office building I am standing in front of, on the south side of the street from her house.  She replies "Well, I'm really worried for my safety, a few nights ago, I think saw some BLACK people walking down the street, so I'm going to call the police now when I see people out here".  Whoah!!!!  ... OK lady... I encouraged her to call the police right away and tell them there is a person on the phone at CHK.  Weird weird weird.  She obviously isn't well, but I feel SO bad for her she didn't sell her house! 

Although to be honest, I wouldn't mind living there in a new structure.  Easy highway access, plenty of places to go withing walking distance, no neighbors to worry about, and likely very safe, as CHK has 24/7 security patrols.  

Does anybody know if CHK still owns that parcel of land surrounding her house?

----------


## Pete

^

CHK owns that entire block which surrounds her house and has since the Aubrey buy-a-thon.

----------


## pw405

> ^
> 
> CHK owns that entire block which surrounds her house and has since the Aubrey buy-a-thon.


I still wonder what Aubrey had envisioned for that area.  Logically, I would assume that he wanted to build a few more whacky Rand-Elliot buildings.  Some have claimed that he wanted have his initials in the shape of the buildings: B14 looks like a "K", B15 looks like an "A", and one would only assume the next plan was to have one shaped like an "M".   

While I was never a fan of his "expand at all costs" management style..... boy-o-boy... to think what could have been if natural gas never went below $5, and oil stayed near $80. Hell, by now they would probably have 30,000 employees!

----------


## mugofbeer

Im guessing he wanted a Cherry Creek North (Denver) or Preston and NW Hiway (Dallas) type of development.

----------


## Johnb911

I used to work in the now demolished building just north of this lady's house and I would see her in her back yard from the parking lot.  Never had any interaction with her other than a 'hello' as I'd get in my car after work from time to time.  I was told by my co-workers that she refused to sell to AKM because her dog had run away and she had been told 'by a cloud of butterflies' that she needed to stay there for when the dog would return.

----------


## Anonymous.

These stories are fascinating. I sort of want to see an interview with this resident. I wonder if she has heirs and where they have been in all of this.

----------


## Pete

It is interesting because if it was a public project, they could merely use eminent domain and have the courts determine a fair price.

But since this is CHK or another private developer, all they can do is try and throw money at the problem.  And for some people, it's not about the money.

----------


## chuck5815

> It is interesting because* if it was a public project, they could merely use eminent domain and have the courts determine a fair price.*
> 
> But since this is CHK or another private developer, all they can do is try and throw money at the problem.  And for some people, it's not about the money.


Well . . . . https://en.wikipedia.org/wiki/Kelo_v..._of_New_London

----------


## Pete

> Well . . . . https://en.wikipedia.org/wiki/Kelo_v..._of_New_London


That was a municipality getting involved and taking the property from one owner and then selling to another, something that doesn't apply to CHK, especially since they were relatively at war with the city because they kept coming for rezoning requests and would never reveal their bigger plan.

Also, the individual rights of property owners in cases such of this have been upheld in many subsequent court cases.

Generally speaking, cities / governments do not take private land for anything other than government use because they know that practice would likely be struck down in court.  In fact, this very issue created problems regarding the city taking private land through eminent domain for the convention center then selling off a piece to a hotel developer, which turned out to be Omni.

----------


## mugofbeer

Might the fact the city is investing millions into the Omni I n a public-private partnership make the eminent domain valid?

----------


## Richard at Remax

Apparently CHK laying off people this morning. Sounds like it's around 1/4 of the campus.

----------


## catch22

> Apparently CHK laying off people this morning. Sounds like it's around 1/4 of the campus.


A 25% layoff would be massive. Hopefully you are wrong.

----------


## Pete

Being told it's pretty substantial and an organized bunch of security people to provide assistance in escorting people out.

----------


## dankrutka

[@Mecoy] NEW: Chesapeake Energy laying off 13 percent of its employees, or about 400 people, including 330 in OKC.

https://twitter.com/Mecoy/status/958364881731891201

----------


## Johnb911

Just heard the 13% number from a buddy who works there

----------


## chuck5815

> [@Mecoy] NEW: Chesapeake Energy laying off 13 percent of its employees, or about 400 people, including 330 in OKC.
> 
> https://twitter.com/Mecoy/status/958364881731891201


Obviously the whole market is down today, but I noticed that Gulfport's stock is off by almost 8%. Who knew that rising interest rates + tons of leverage was a bad combination? You see the same thing happening to REITs, too.

----------


## Bellaboo

'Ang***** , said its 13% and it a division that they had sold and now they dont need those people, plus other low performers.'  


This is what I heard from an employee.

----------


## Pete

Holy cow, that is a lot of people considering 1) they have already laid off a ton and 2) oil prices continue to go up.

Reminder that the City has paid CHK $1.925 million in job creation incentives and none of that will be paid back.

----------


## Bellaboo

^^^   Are you sure that they are paid before the time qualifications are met ?

My understanding is the QOJ program does not pay up front.

----------


## Pete

> ^^^   Are you sure that they are paid before the time qualifications are met ?
> 
> My understanding is the QOJ program does not pay up front.


Yes, all of the $1.925 million has been paid to Chesapeake.

The original GOLT allocation (back in 2012) was for $3.5 million but they never met their target at the peak, then the layoffs started.

----------


## dcsooner

Until OKC further diversifies its employment base, these cyclical layoffs in the O&G industry will impact both college graduate percentage and median income as they represent the higher paying  positions within the City.

----------


## PhiAlpha

> Until OKC further diversifies its employment base, these cyclical layoffs in the O&G industry will impact both college graduate percentage and median income as they represent the higher paying  positions within the City.


This is not really a cyclical layoff. You could’ve considered it that 2 years ago, but commodity prices have been steadily rising since then and most companies have either been stable or hiring. This is company specific and a result of their massive assets sales in an attempt to stabilize and reduce debt. The timing is a bit surprising give that commodity prices are the highest they’ve been since 2014, but unfortunately I feel like this was inevitable at some point. They still have a massive asset base though so hopefully this is the last of their layoffs. 

Having said that, quit beating on the diversification drum. We could certainly use more diversity in our local economy but don’t act like OKC has been in dire straits for the last 3 years. The city road out the worst industry downturn in the past 30 years with barely a scratch. As Pete and others keep saying, our local economy has diversified much more than many seem to give it credit for. Aside from the state budget’s over reliance on the energy industry, both OKC and Tulsa weathered the downturn very well. At this point a healthy energy industry is more of an accelerator for the economy than a sluggish one is a hinderance.

----------


## gopokes88

> Holy cow, that is a lot of people considering 1) they have already laid off a ton and 2) *oil prices continue to go up.*
> 
> Reminder that the City has paid CHK $1.925 million in job creation incentives and none of that will be paid back.


That would matter if CHK sold oil but they are still heavily gas. 

Tom Ward’s Mach Resources just bought their assets in NW OK and CHK sold their assets around Lindsey. Still more news to come.

----------


## gopokes88

> Until OKC further diversifies its employment base, these cyclical layoffs in the O&G industry will impact both college graduate percentage and median income as they represent the higher paying  positions within the City.


LOL. 

We literally just had a company in the aerospace industry announce 350 jobs last week. Stop being so predictable

----------


## Pete

Just to clarify, the City has something called the Strategic Initiative Plan funded by the General Obligation Bond (GOLT) program.

As a part of this, the OKC Economic Development Trust (headed by Cathy O'Connor) offers incentives for new job creation, for new companies moving to OKC (like Boeing) and more controversially to existing OKC companies like Chesapeake.  Ultimately these incentives are approved by the City Council but as far as I can determine, 100% have received authorization.


In 2011 and under Aubrey McClendon, CHK originally applied for $3.5 million from the program, with a starting baseline of 3,984 current jobs.  As jobs were added, the funds were to be dispensed when targets were met.

By 2014 the City had paid CHK $1.925 million; then the layoffs started so that was all they received.  McClendon had been forced out by April of 2013.


As of this year's Chamber of Commerce list, it shows Chesapeake with 2,500 Oklahoma City-based employees.  After today's layoff with an announced 330 OKC-based employees that number would now be 2,170.  (At it's apex, CHK employed over 5,000 people in OKC.)

The incentive deal was inked with the idea that Chesapeake would create jobs over and above the 3,984 they had at the start of their application.  Now that they are down to about half of that, the $1.925 million paid to them will not be returned to the City.

----------


## OU Adonis

> Just to clarify, the City has something called the Strategic Initiative Plan funded by the General Obligation Bond (GOLT) program.
> 
> As a part of this, the OKC Economic Development Trust (headed by Cathy O'Connor) offers incentives for new job creation, for new companies moving to OKC (like Boeing) and more controversially to existing OKC companies like Chesapeake.  Ultimately these incentives are approved by the City Council but as far as I can determine, 100% have received authorization.
> 
> 
> In 2011 and under Aubrey McClendon, CHK originally applied for $3.5 million from the program, with a starting baseline of 3,984 current jobs.  As jobs were added, the funds were to be dispensed each year that the targets were met.
> 
> By 2014 the City had paid CHK $1.925 million; then the layoffs started so that was all they received.  McClendon had been forced out by April of 2013.
> 
> ...


Considering that CHK is 9b in debt its not surprising lol

----------


## mugofbeer

Pete, I'm sure that  Chesapeake wouldn't have had the layoff without it being necessary.  I'm sure they made the commitment to the job's incentives program with the best of intentions but tbings change.  They had to lay some people off.  Feel badly for those effected.  The city and state will survive the lost incentive money.

----------


## catch22

> Pete, I'm sure that  Chesapeake wouldn't have had the layoff without it being necessary.  I'm sure they made the commitment to the job's incentives program with the best of intentions but tbings change.  They had to lay some people off.  Feel badly for those effected.  The city and state will survive the lost incentive money.


I don't think Pete is implying that CHK set out to mislead and steal from the city. I think he is criticizing the program itself and using this as an example of the method being used not being effective at retaining the jobs or refunding the money if they can't keep the positions.

----------


## mugofbeer

Criticize all you want, every major city and every state have similar programs.  These are investments in our future.  Sometimes investments pay off and sometimes they don't.  This one did for a while but eventually went south.  Dust off and try again.  Its a missed basketball shot.

----------


## d-usa

There are also a ton of cities and states throwing tax incentives at companies with none of them ever making that money back. They do it because everybody else is doing it, not because it’s working.

----------


## catch22

> Criticize all you want, every major city and every state have similar programs.  These are investments in our future.  Sometimes investments pay off and sometimes they don't.  This one did for a while but eventually went south.  Dust off and try again.  Its a missed basketball shot.


I don't disagree.

 I think they could be a little more restricted on the incentives, however. For example, this money never should have been given to Chesapeake. They were set on growing in OKC whether we signed a check or not. We would have had these jobs with or without the extra money thrown their way.

----------


## mugofbeer

There are times companies move away because other firms are getting incentives while existing firms are forgotten.  Under McClendon, CHK gave away millions to fund charity, civic projects, pay for Arena naming, and investments in multiple small businesses to help them get off the ground.  Incentives are a must for attracting business but they are also necessary to retain business and find the money may indirectly go for other highly valued things around town.

----------


## Pete

> There are times companies move away because other firms are getting incentives while existing firms are forgotten.  Under McClendon, CHK gave away millions to fund charity, civic projects, pay for Arena naming, and investments in multiple small businesses to help them get off the ground.  Incentives are a must for attracting business but they are also necessary to retain business and find the money may indirectly go for other highly valued things around town.


Since you are raising these points:

1. Please provide an example of what you describe as the problem being solved by these incentives.  Specifically, what companies have recently moved away from OKC due to receiving incentives elsewhere?
2. CHK had already put the brakes on almost all the things you mentioned by the time these incentives were awarded.
3. McClendon was completely gone by the time a lot of these incentives were paid out.
4. In 2013 -- because of the quirky nature of this arrangement -- the city paid CHK almost $1 million when the number of employees at CHK had actually gone down from the year before.
5. The reason we are even talking about this now is that CHK continues to teeter based largely on the outrageous spending you cited in your post.  Since they have slashed their workforce to less than half and continue to due so while other O&G are prospering, I'm not sure all that lavish spending was in the best interest of the community.  Short-term spending vs. long-term viability.

A reminder that the city and state are in desperate need for funds, have cut important services for years and in the case of the city have raised taxes to try and get some basic maintenance done, like streets.

----------


## d-usa

The city doesn’t need jobs, they need more company owned super blocks and campuses.

----------


## onthestrip

> Criticize all you want, every major city and every state have similar programs.  These are investments in our future.  Sometimes investments pay off and sometimes they don't.  *This one did for a while but eventually went south.*  Dust off and try again.  Its a missed basketball shot.


How did this pay off for a while? From my perspective, the reason for these programs and the only way they pay off is if you have long term new employment for the city or state. Otherwise, you are just directly subsidizing CHK payroll, and that certainly does not pay off when they end up laying off these people. Ive ran numbers in the past and some of these payments that come from Quality Jobs Act are up to $20,000/year per employee. If that employee doesnt exist for a decade, then its a complete failure imo.

BTW, the Quality Jobs Act has paid out a billion dollars, and we have no idea how many of those were missed basketball shots.

One more thing, as others pointed out, its one thing to give this to companies that will re-locate or open new operations here but to give it to a local and existing company who are naturally expanding is simply a give away.

----------


## Pete

It's very strange to me that in a state where people scream bloody murder if a state legislator mis-spends $5,000 that we have these scores of these 'economic incentive' programs were billions are spent with absolutely zero direct links between these huge amounts and actual benefits to the people paying the tab, local taxpayers.

And it's all based on a single and completely un-provable premise:  We would not get the job creation or company relocation or new development or new retailers WITHOUT spending all this money.

There are a ton of dubious examples but here is one that is easy to understand:  Cabela's.  Oklahoma City paid them $3.5 million.  Why??  They will have one location and it almost had to be in OKC city limits.

The huge problem here is once you start giving this money out everyone comes with their hand out and know approximately how much they can get.  TIF is a fantastic example of this but there are many more.

Remember, we are providing this corporate welfare on top of all the other huge public investments made through MAPS, Better Streets, GOLT bonds, the Hotel Tax and many, many other avenues.  

And absolutely no one can prove this works, the amounts are appropriate, etc.  Those questions don't even get asked; I've never even seen any of our programs even objectively compared to our so-called competition.


The main reason for all of this is that the Oklahoman is just cheerleading all these programs as they receive most their revenues from big business and have way-too-cozy relationships with the Chamber and the CVB.  There is simply no one out there reporting on these matters objectively or bothering with the details of these programs, let alone holding people to account.

----------


## Bellaboo

> How did this pay off for a while? From my perspective, the reason for these programs and the only way they pay off is if you have long term new employment for the city or state. Otherwise, you are just directly subsidizing CHK payroll, and that certainly does not pay off when they end up laying off these people. Ive ran numbers in the past and some of* these payments that come from Quality Jobs Act are up to $20,000/year per employee*. If that employee doesnt exist for a decade, then its a complete failure imo.
> 
> BTW, the Quality Jobs Act has paid out a billion dollars, and we have no idea how many of those were missed basketball shots.
> 
> One more thing, as others pointed out, its one thing to give this to companies that will re-locate or open new operations here but to give it to a local and existing company who are naturally expanding is simply a give away.


I'm not so sure about this. I do know that the QOJ is a tax credit, not a cent is actually paid to the company, they just receive an income tax credit. Which in turn is money in their coffers, but the state does not write them a check. So, IMO indirectly it is a gain, there will be trickle down into the community for the payroll added, which may not have been there if not for the QOJ program.

I imagine the $20,000 CREDITS are for only high end execs, which are far and few between.

----------


## Anonymous.

Does anyone know the details of the severance package that was received for these recent layoffs?

----------


## Pete

> Does anyone know the details of the severance package that was received for these recent layoffs?


I had heard 1 month for every year at CHK; not sure if that is accurate.

----------


## gopokes88

> I don't disagree.
> 
>  I think they could be a little more restricted on the incentives, however.* For example, this money never should have been given to Chesapeake. They were set on growing in OKC whether we signed a check or not*. We would have had these jobs with or without the extra money thrown their way.


You can't write a law this way though. It'll get thrown out in court.

The post about treating these as investments is correct. Some pan out (Boeing, GE energy research center), some don't.

----------


## gopokes88

> I had heard 1 month for every year at CHK; not sure if that is accurate.


6 month + 1month per year. It was the standard severance package they've been offering.

----------


## Pete

> You can't write a law this way though. It'll get thrown out in court.


I need to double-check with the Alliance but I know they have put new, claw-back clauses in TIF agreements and that may be the case with the GOLT job incentive program as well.

----------


## gopokes88

> I need to double-check with the Alliance but I know they have put new, claw-back clauses in TIF agreements and that may be the case with the GOLT job incentive program as well.


That's the way to solve it, has to vest for X amount of years.

----------


## Pete

> That's the way to solve it, has to vest for X amount of years.


Right, and to stop borrowing money at taxpayer's expense so we can not only pay these incentives but pay them very early or in some cases, in advance.

I am doing a separate study on interest costs, which is a large expense that has gone pretty much under the radar.

----------


## onthestrip

> I'm not so sure about this. I do know that the QOJ is a tax credit, not a cent is actually paid to the company, they just receive an income tax credit. Which in turn is money in their coffers, but the state does not write them a check. So, IMO indirectly it is a gain, there will be trickle down into the community for the payroll added, which may not have been there if not for the QOJ program.
> 
> I imagine the $20,000 CREDITS are for only high end execs, which are far and few between.


No, you are wrong. When a company is approved, they get quarterly CASH payments based on the payroll of theses new jobs. Its literally a direct cash subsidy. 
https://okcommerce.gov/business/ince...-jobs-program/

----------


## Lanni

> No, you are wrong. When a company is approved, they get quarterly CASH payments based on the payroll of theses new jobs. Its literally a direct cash subsidy. 
> https://okcommerce.gov/business/ince...-jobs-program/



Yes, this. The amounts paid are listed on the OKTap website.
https://oktap.tax.ok.gov/oktap/web/_/

----------


## Bellaboo

> No, you are wrong. When a company is approved, they get quarterly CASH payments based on the payroll of theses new jobs. Its literally a direct cash subsidy. 
> https://okcommerce.gov/business/ince...-jobs-program/


I am not wrong - below snippet is from the QOJ forms. I'm very familiar with the program, and most take the credit. There are different options for the size of the companies.

Oklahoma is globally recognized for its outstanding incentive programs and pro-business environment*. Businesses can choose between a cash incentive or a tax credit package,* and in some cases, qualifying businesses can take advantage of both programs.

Call us today at 405-990-9147 to request your preliminary incentives analysis. Our team will provide an estimate of the payments your business may be eligible to obtain.

----------


## Lanni

> I am not wrong - below snippet is from the QOJ forms. I'm very familiar with the program, and most take the credit. There are different options for the size of the companies.
> 
> Oklahoma is globally recognized for its outstanding incentive programs and pro-business environment*. Businesses can choose between a cash incentive or a tax credit package,* and in some cases, qualifying businesses can take advantage of both programs.
> 
> Call us today at 405-990-9147 to request your preliminary incentives analysis. Our team will provide an estimate of the payments your business may be eligible to obtain.



You previously said that "not a cent" went to any company. In FY18 alone over $36,000,000 in cash has been paid out directly to various businesses. (Number from the OKTap website)

----------


## djohn

> 6 month + 1month per year. It was the standard severance package they've been offering.


Thats not what I heard.  I talked to someone with 5 years at CHK that received 2 weeks and that was all.   ...at least that is what they said.

----------


## SoonerDustin

> Thats not what I heard.  I talked to someone with 5 years at CHK that received 2 weeks and that was all.   ...at least that is what they said.


I run a staffing firm here in town.  The folks I have talked to have been 2-3 months severance, 3 months of insurance, and they were all paid their target bonuses that we set to be paid in March at 100%.

----------


## OkiePoke

CHK to sell Mississippi Lime assets for $500 Million

http://newsok.com/chesapeake-energy-...rticle/5582438

----------


## OU Adonis

> CHK to sell Mississippi Lime assets for $500 Million
> 
> http://newsok.com/chesapeake-energy-...rticle/5582438


I have lost so much money with CHK.  Their stock is now at a two year low.

----------


## BG918

> CHK to sell Mississippi Lime assets for $500 Million
> 
> http://newsok.com/chesapeake-energy-...rticle/5582438


Wonder who the buyers were?

----------


## gopokes88

> Wonder who the buyers were?


Territorial resources for the Lindsay assets. Mach for the NW assets

----------


## PhiAlpha

> Territorial resources for the Lindsay assets. Mach for the NW assets


Tom Ward just can’t help himself...it’s like any company he’s involved in has be focused on the Miss Lime play, for better or worse.

----------


## gopokes88

> Tom Ward just can’t help himself...it’s like any company he’s involved in has be focused on the Miss Lime play, for better or worse.


They’ll add 3 rigs and he has about 150 DUCs to finish too

----------


## PhiAlpha

> They’ll add 3 rigs and he has about *150 DUCs to finish too*


That’s pretty solid.

----------


## pw405

Chesapeake acquires 400K+ acres in the Eagleford with acquisition of Wild Horse Resource Development (WRD) for $4 billion:

http://investors.chk.com/2018-10-30-...Stock-And-Cash

http://ir.wildhorserd.com/press-rele...018/10-30-2018

CHK was down 10% in pre-market trading.

----------


## gopokes88

Market has hated every M&A lately so if it plummets that’s not a good thing, but not necessarily surprising either. 

Wall Street in general hates energy right now

----------


## king183

> Market has hated every M&A lately so if it plummets that’s not a good thing, but not necessarily surprising either. 
> 
> Wall Street in general hates energy right now


Why is this, in your opinion? I know commodity prices aren't high, but they aren't low either. Is it that there are too many competitors in the market (a theory I heard from one oil industry expert who expects many mergers to occur)? Is it bad management? Is it low expected future demand?

----------


## gopokes88

> Why is this, in your opinion? I know commodity prices aren't high, but they aren't low either. Is it that there are too many competitors in the market (a theory I heard from one oil industry expert who expects many mergers to occur)? Is it bad management? Is it low expected future demand?


Well right now today it’s because everyone hates stocks. 

But a month ago when energy equities where down while everything was up it was a bunch of factors. In order-

- Lack of trust they’ll hold spending in check
- Still a lot of bad blood over fund managers getting burned in the crash
- The enormous salaries and wages everyone makes. From ceo to a level 1 engineer
- Green energy taking a decent chunk of the investments. Not so much worried about demand destruction, but it’s just not as sexy as being green. 
-disbelief shale is sustainable

----------


## chuck5815

> Well right now today it’s because everyone hates stocks. 
> 
> But a month ago when energy equities where down while everything was up it was a bunch of factors. In order-
> 
> - Lack of trust they’ll hold spending in check
> - Still a lot of bad blood over fund managers getting burned in the crash
> - The enormous salaries and wages everyone makes. From ceo to a level 1 engineer
> - Green energy taking a decent chunk of the investments. Not so much worried about demand destruction, but it’s just not as sexy as being green. 
> -disbelief shale is sustainable


i would add that you have a number of companies who re-hedged as prices started to come up (say around $50), such that they are not completely exposed to today's higher strip prices. 

you also have the well-documented issues in places like the Permian (lack of takeaway capacity, Midland is still Midland, resulting in discounts to the major indices because of said issues)

a number of these operators are still smarting from a period of low prices. the balance sheets, and, more importantly, the earnings aren't in a place that inspires confidence. 

and I think the biggest issue has been opportunity cost. if i'm an investor with a specific amount of capital, why would I plug it into an industry that has delivered, at best, flat returns when I could put that same capital to work in shares of deeply undervalued companies like Signet Jewelers or even Twitter, for that matter?

----------


## PaddyShack

> Market has hated every M&A lately so if it plummets that’s not a good thing, but not necessarily surprising either. 
> 
> Wall Street in general hates energy right now


Just wondering, do you currently work in the energy industry or do you just keep a close watch on it? Not meaning to be offensive, just wondering since you respond a great deal on energy industry matters.

----------


## gopokes88

> i would add that you have a number of companies who re-hedged as prices started to come up (say around $50), such that they are not completely exposed to today's higher strip prices. 
> 
> you also have the well-documented issues in places like the Permian (lack of takeaway capacity, Midland is still Midland, resulting in discounts to the major indices because of said issues)
> 
> a number of these operators are still smarting from a period of low prices. the balance sheets, and, more importantly, the earnings aren't in a place that inspires confidence. 
> 
> and I think the biggest issue has been opportunity cost. if i'm an investor with a specific amount of capital, why would I plug it into an industry that has delivered, at best, flat returns when I could put that same capital to work in shares of deeply undervalued companies like Signet Jewelers or even Twitter, for that matter?


That explains part of it but,

Look at CLR stock, they are unhedged, don’t operate in Midland, growing rapidly and making money hand over fist, while keeping capex in line. Stock off 25% from highs. 

Devon has crashed from 45 to 30 in a matter of about 2 months. They’re hedged so protected from Permian diffs. 

All the stock prices are struggling and it’s just energy isn’t sexy right now.

----------


## gopokes88

> Just wondering, do you currently work in the energy industry or do you just keep a close watch on it? Not meaning to be offensive, just wondering since you respond a great deal on energy industry matters.


Work in it, trade it, follow it.

----------


## gopokes88

https://www.bloomberg.com/amp/view/a...mpression=true

----------


## shawnw

https://kfor.com/2018/10/30/chesapea...-billion-deal/

kind of overlap but only about chk

----------


## OkiePoke

CHK acquires WildHorse

http://investors.chk.com/2019-01-31-...-Consideration

----------


## AP

https://www.bloomberg.com/news/artic...n?srnd=premium

----------


## Pete

They let go about 50 employees today and last week.

I believe they are below 1,500 workers now.


Still, that's a lot of high-paying jobs and it would pretty bad if they had to fold.

----------


## Pete

BTW, that article says that market value for CHK was once over $37 billion and is now down to $2.6B.

They also once employed about 5,000.

----------


## gopokes88

Some of that is CHK fault, some of it is they were valued $37 billion on the assumption nat gas is rare and valuable. It is now no longer either.

----------


## RedDollar

And CHK has sold a lot of assets, much smaller company.

Also divested the oil field service companies and the midstream

----------


## gopokes88

They will likely go bankrupt within 2 years, reorganize, and emerge with a much stronger balance sheet. 

They issued a going concern in their earnings release today

----------


## RedDollar

Btw, from what I'm reading,  the world will soon be awash with oil, 
*
Flood of Oil Is Coming, Complicating Efforts to Fight Global Warming*


https://www.nytimes.com/2019/11/03/b....co/Re9tVFdkJw

----------


## RedDollar

> They will likely go bankrupt within 2 years, reorganize, and emerge with a much stronger balance sheet. 
> 
> They issued a going concern in their earnings release today


CHK wont be the Lone Ranger

----------


## gopokes88

> Btw, from what I'm reading,  the world will soon be awash with oil, 
> *
> Flood of Oil Is Coming, Complicating Efforts to Fight Global Warming*
> 
> 
> https://www.nytimes.com/2019/11/03/b....co/Re9tVFdkJw


I’m not sold on this. All these projections assume us production is going to keep growing, and the very leading indicators are saying it’s going to flatline very soon. Rig count is down, efficiencies are stalling, shale’s are cut off from capital.

----------


## gopokes88

> CHK wont be the Lone Ranger



50% of shales will go chap 11 in the next couple years

----------


## PhiAlpha

> They will likely go bankrupt within 2 years, reorganize, and emerge with a much stronger balance sheet. 
> 
> They issued a going concern in their earnings release today


Yeah it definitley wasn't a positive release.

----------


## PhiAlpha

> I’m not sold on this. All these projections assume us production is going to keep growing, and the very leading indicators are saying it’s going to flatline very soon. Rig count is down, efficiencies are stalling, shale’s are cut off from capital.


This

----------


## chuck5815

> Btw, from what I'm reading,  the world will soon be awash with oil, 
> *
> Flood of Oil Is Coming, Complicating Efforts to Fight Global Warming*
> 
> 
> https://www.nytimes.com/2019/11/03/b....co/Re9tVFdkJw


lol, those guys don't know their ass from a hole in the ground.

----------


## RedDollar

> lol, those guys don't know their ass from a hole in the ground.


Clifford Kraus does, you're right about the NYT as a whole though.

Did you read the article ?    Ya don't have to be a petroleum geologists to see what's gonna happen.

----------


## RedDollar

> I’m not sold on this. All these projections assume us production is going to keep growing, and the very leading indicators are saying it’s going to flatline very soon. Rig count is down, efficiencies are stalling, shale’s are cut off from capital.


Guyana will be huge.    XOM has that locked up.

And whether shale production holds up , or not.  It does not look good for domestic US producers.

----------


## Richard at Remax

I'd say the vast majority was their fault. This is what happens when you overpay for things 10 fold when you didn't need to in the first place.

----------


## Pete

And long after Aubrey was gone, they handled the disposition of all the excess real estate in a very bizarre manner, never really putting any of it on the open market and selling mainly to local cronies for less than market value....  After often having paid many multiples of the real value in the first place.

There are many instances where they've sold to an OKC insider who then turned around and sold for a profit.  So strange.

----------


## gopokes88

> Guyana will be huge.    XOM has that locked up.
> 
> And whether shale production holds up , or not.  It does not look good for domestic US producers.


All those projections assume part of the “flood” has us prod growing by 800k, in reality it will grow by 200-400k. It eases the flood. 

They’ve been predicting Brazil is going to take off for 4 years and production has been flat since then. 

Guyana is going to be a monster no argument there but in the scheme of the global oil supply it’s going to offset some other deep water declines, there’s growth but not tons.

----------


## chuck5815

Stock down 27% today. The investors seem particularly shook.

----------


## gopokes88

It’s going to 0. 

They may enter into a pre packaged chapter 11. Cancel 90-100% of the common shares, swap the debt for equity and emerge on very solid footing. 

Honestly they should do it sooner rather than later. 

I highly doubt they go 7 and get auctioned off.

----------


## Pete

Yeah, once you make a public announcement that it's likely you are not going to meet you debt covenants, you might as well file and get on with things.

----------


## RedDollar

> Yeah, once you make a public announcement that it's likely you are not going to meet you debt covenants, you might as well file and get on with things.


They made that statement being contingent upon commodity prices,  which they may not see improving.

Since 2010,  company has been working to transition from nat gas to oil.   IDK where they stand now since they traded the Utica for the Wildhorse acreage.   But they may see that oil flood coming also and are preparing stockholders.

And it does not appear that nat gas exports are doing much for nat gas demand.

----------


## RedDollar

And btw, everything about oil and gas companies is based upon the price of the underlying commodity.

----------


## PhiAlpha

> It’s going to 0. 
> 
> They may enter into a pre packaged chapter 11. Cancel 90-100% of the common shares, swap the debt for equity and emerge on very solid footing. 
> 
> Honestly they should do it sooner rather than later. 
> 
> I highly doubt they go 7 and get auctioned off.


Frankly it's shocking that its taken this long for them to get to this point which I guess is a testiment to the effort that Lawler put in over the last few years. Just too much to overcome with very little help from the commodity market.

----------


## okatty

https://seekingalpha.com/article/430...ch-ado-nothing

----------


## Rover

Wait.... the sky isn't falling?

----------


## TheTravellers

Man, I can't imagine a worse thing than the weather for your product and its prices to be tied to.

----------


## Rover

> Man, I can't imagine a worse thing than the weather for your product and its prices to be tied to.


Smart companies engage in all kinds of hedging strategies and have been dealing with pricing fluctuations for a very long time.  They play the long game instead of trying to live day to day or month to month.  Most banks and other institutions that lend to them understand that and try to help smooth the curves.

----------


## RedDollar

Its not just a price risk,  there's also a risk of drop in production.    Cutting CAPEX 30% has to impact production.   Shale wells deplete quickly. 

And on the whole, just in Oklahoma,  I'm sort've surprised that the rig count can drop in half,  but we've not seen a drop in production, at least by the last numbers I saw.

----------


## TheTravellers

> Smart companies engage in all kinds of hedging strategies and have been dealing with pricing fluctuations for a very long time.  They play the long game instead of trying to live day to day or month to month.  Most banks and other institutions that lend to them understand that and try to help smooth the curves.


Yep, but I wouldn't want any part of that, still too much weirdness and uncertainty, like farming.

----------


## chuck5815

> Its not just a price risk,  there's also a risk of drop in production.    Cutting CAPEX 30% has to impact production.   Shale wells deplete quickly. 
> 
> *And on the whole, just in Oklahoma,  I'm sort've surprised that the rig count can drop in half,  but we've not seen a drop in production, at least by the last numbers I saw*.


Couple points. The folks who are still drilling are either better operators or possess a superior acreage position such that the wells being drilled and competed are better performers on average than the wells turning on line in 2018. 

Also, there is typically a lag period between the rig count dropping and production beginning to fall. I think we're probably getting into the end of the lag period and should start to see some very sharp declines in statewide production. The GPT numbers at Christmas are going to be absolutely brutal.

----------


## PhiAlpha

> Smart companies engage in all kinds of hedging strategies and have been dealing with pricing fluctuations for a very long time.  They play the long game instead of trying to live day to day or month to month.  Most banks and other institutions that lend to them understand that and try to help smooth the curves.


Tough to hedge when your primary product price has been at historic lows without much change for a decade

----------


## Rover

> Tough to hedge when your primary product price has been at historic lows without much change for a decade


Hedging isnt all just about getting the highest prices. It can stabilize cash flow and you can adjust expenses and predict budgets better.  There are financial tools. You dont have to be completely at the mercy of spot pricing.  Theres a difference between commodity speculation and hedging strategies.

----------


## RedDollar

> Hedging isn’t all just about getting the highest prices. It can stabilize cash flow and you can adjust expenses and predict budgets better.  There are financial tools. You don’t have to be completely at the mercy of spot pricing.  There’s a difference between commodity speculation and hedging strategies.


Yes,  wheat farmers in Oklahoma hedge 60% of their crop.    Pizza Hut hedges wheat because flour is their largest purchase.

But if prices are near or below cost of production, there's no hedging strategy that's gonna help.    Ya can't get past the basic fact that this country has na gas out the wazzoo, no pun intended.

----------


## PhiAlpha

> Yes,  wheat farmers in Oklahoma hedge 60% of their crop.    Pizza Hut hedges wheat because flour is their largest purchase.
> 
> *But if prices are near or below cost of production, there's no hedging strategy that's gonna help.*    Ya can't get past the basic fact that this country has na gas out the wazzoo, no pun intended.


Exactly, no one is going to hedge their natural gas production when prices are so low that they’re barely making or losing money on it. Predictability is great but not when you’re locking yourself into a marginal profit at best or a loss.

----------


## Rover

> Exactly, no one is going to hedge their natural gas production when prices are so low that theyre barely making or losing money on it. Predictability is great but not when youre locking yourself into a marginal profit at best or a loss.


Hedging isn't just locking in current prices.  There are many hedging strategies involving futures.

----------


## chuck5815

> Hedging isn't just locking in current prices.  There are many hedging strategies involving futures.


haven’t looked at gas lately but the oil futures strip is just complete trash.

----------


## RedDollar

I'm thinking about buying 500 shares of CHK.

This time next year I could've lost all of it  .................... or have doubled my money.    

I'm trying to convince myself to strike a match to the $455 it would take to purchase 500 shares, cuz that's how I'd have to look at it.  Just figure its gone and forget about it.

----------


## gopokes88

That’ll end in tears

----------


## catch22

> That’ll end in tears


Are you thinking they'll go under?

----------


## chuck5815

> Are you thinking they'll go under?


no. Chapter 11 to shore up the balance sheet and then sell to a big player with a somewhat congruent acreage position, like XTO. Probably move most of the remaining folks to Texas.

----------


## Edmond Hausfrau

> I'm thinking about buying 500 shares of CHK.
> 
> This time next year I could've lost all of it  .................... or have doubled my money.    
> 
> I'm trying to convince myself to strike a match to the $455 it would take to purchase 500 shares, cuz that's how I'd have to look at it.  Just figure its gone and forget about it.


You won't double your money, likely. Especially if reverse split after you buy.
You could take a short position if you think they'll keep tumbling. Fees on penny stocks trades can also eat up any profit.

----------


## gopokes88

> no. Chapter 11 to shore up the balance sheet and then sell to a big player with a somewhat congruent acreage position, like XTO. Probably move most of the remaining folks to Texas.


They’ll still be a huge gas player when no one wants gas. XTO = ExxonMobil and they’re are focused on drilling the Delaware. 

They’ll re-emerge a pretty healthy and strong company that keeps drilling their eagle ford and PRB assets.

----------


## pw405

Talking with friends that still work there, the outlook among employees is pretty grim.  They knew that Q3 was going to be bad and the planned rig count drop was announced internally before the street knew.  However on earnings day when the "Going Concern" was released, it solicited quite a bit of concern.    Some are theorizing that there was a big deal that fell through last minute.  One friend claiming the CEO came and talked with a small group a few weeks back where the CEO said they're looking at MORE acquisitions in oil plays - Permian, Bakken, and even more Eagleford.   Everybody assumes that they would sell the operations in Haynesville, or any of the 750,000 OK acres, and they even mentioned on Q2 call that their trying to divest some non-core land in PA.  Seems selling shale assets at the moment is certainly easier said than done.

----------


## gopokes88

Going concern could also be a way to drive down bond prices so they can retire the bonds at a significant discount. 

The company is in poor enough shape they can reasonably issue a going concern, so it’s not fraudulent either.

It’s also a way to get some leverage for a pre packaged chapter 11

----------


## gopokes88

Down another 10% today. No stopping this freight train

----------


## Pete

CHK is laying off people in the field offices today.  Not sure of the number.

----------


## gopokes88

Down another 17% today. 

Corporate layoffs as well.

----------


## RedDollar

Why did CHK gap up today ?

----------


## Anonymous.

The stock is swarmed with scalpers right now. I would expect random pumping and dumping to continue in this range. Option volatility is pretty wild right now.

----------


## gopokes88

> Why did CHK gap up today ?


The dump yesterday was an NGP share distribution to partners who dumped it. Market it took it as a sign that the crash wasn’t anything material related to the business

----------


## Pete

This is a great podcast on the rise and fall of Aubrey and Chesapeake; also has some great insights into the modern O&G industry:

https://podcasts.apple.com/us/podcas...r/id1486637630

----------


## RedDollar

> This is a great podcast on the rise and fall of Aubrey and Chesapeake; also has some great insights into the modern O&G industry:
> 
> https://podcasts.apple.com/us/podcas...r/id1486637630


I think I'll not waste my time with Yahoo Finance ,   who most likely, don't know chit from shinola about the oil and gas industry.

----------


## Pete

> I think I'll not waste my time with Yahoo Finance ,   who most likely, don't know chit from shinola about the oil and gas industry.


Your loss.  The main person is Bethany McClean who has written a few books on this topic and is generally brilliant.

----------


## RedDollar

> Your loss.  The main person is Bethany McClean who has written a few books on this topic and is generally brilliant.


If she's an oil and gas expert, why is she not in the business ?   Why would I need this " journalist " to tell me about McClendon ?

Carl Icahn thought he knew oil and gas better than McClendon.................... and lost his arse.

This " journalist " is about selling books, I trust those people no further than I could throw them.

----------


## HangryHippo

> If she's an oil and gas expert, why is she not in the business ?   Why would I need this " journalist " to tell me about McClendon ?
> 
> Carl Icahn thought he knew oil and gas better than McClendon.................... and lost his arse.
> 
> This " journalist " is about selling books, I trust those people no further than I could throw them.


Holy ****.

----------


## RedDollar

> Holy ****.


yes, I guess I am.

----------


## king183

> If she's an oil and gas expert, why is she not in the business ?   Why would I need this " journalist " to tell me about McClendon ?
> 
> Carl Icahn thought he knew oil and gas better than McClendon.................... and lost his arse.
> 
> This " journalist " is about selling books, I trust those people no further than I could throw them.


This post provides valuable insight into how a significant portion of the population thinks--it's illogical, conspiratorial, impassioned, and sincerely-held--and demonstrates why those who care about the future of this country need to be vigilant in protecting our sources of truth.

----------


## okatty

> Your loss.  The main person is Bethany McClean who has written a few books on this topic and is generally brilliant.


YEP!  Enron; 2008 Financial Crisis, and so on.  She's a big deal by all accounts.

----------


## RedDollar

> This post provides valuable insight into how a significant portion of the population thinks--it's illogical, conspiratorial, impassioned, and sincerely-held--and demonstrates why those who care about the future of this country need to be vigilant in protecting our sources of truth.


Thank you !

I came by this view honestly.

----------


## RedDollar

> YEP!  Enron; 2008 Financial Crisis, and so on.  She's a big deal by all accounts.


There's no comparison between Enron and CHK.    None.

Carl Icahn called these " journalists "  ...   " short sellers in the media " .

The biggest crooks alive are in the business media.

----------


## RedDollar

I saw the term " ponzi scheme " and knew I'd gone as far I needed to go .

----------


## okatty

The point is she is a very well regarded writer, reporter and analyst with a long history.   You on the other hand.....

----------


## Pete

And as a side note, Bethany McLean came from the investment banking world and really knows business; she did not come up as a traditional journalist which has allowed her to have great insights.  In fact, she was the very first person to question the business model of Enron, and went on to write the authoritative book on that historic scandal; Enron: The Smartest Guys in the Room.

In this particular podcast, she talks about how Chesapeake and most other companies engaged in fracking never had positive cash flow; they never made money from their business, they merely kept raising funds from investors.  It's a form of Ponzi scheme (although not necessarily illegal) and she backs it up with very in-depth and intelligent financial analysis.

For those who are interested in learning, I think you'll find it fascinating.

----------


## RedDollar

> And as a side note, Bethany McLean came from the investment banking world and really knows business; she did not come up as a traditional journalist which has allowed her to have great insights.  In fact, she was the very first person to question the business model of Enron, and went on to write the authoritative book on that historic scandal; Enron: The Smartest Guys in the Room.
> 
> In this particular podcast, she talks about how Chesapeake and most other companies engaged in fracking never had positive cash flow; they never made money from their business, they merely kept raising funds from investors.  It's a form of Ponzi scheme (although not necessarily illegal) and she backs it up with very in-depth and intelligent financial analysis.
> 
> For those who are interested in learning, I think you'll find it fascinating.


Ponzi scheme = non existence business.   Oil and gas is a going concern.     I've also heard that term used by anti oil and gas protestors,  or anti fracking protesters, or other liberal media who are looking for a way to attack fossil fuel production.

Very few of these domestic independents are showing a positive cash flow or have ever shown one.   They have to constantly reinvest to replace depletion.    Why aren't they also getting drug through the mud ?   Why single out McClendon ?

Its because McClendon became a bigger than life character that sells well in the media.   He was a " Tycoon " ................yeah , right.

----------


## TheTravellers

> There's no comparison between Enron and CHK.    None.
> 
> Carl Icahn called these " journalists "  ...   " short sellers in the media " .
> 
> The biggest crooks alive are in the business media.


You're starting from a flawed premise - nobody connected Enron and CHK, it was just said that the podcast author wrote a book about Enron.  Unbelievably broad brush you're using there, so *all* business journalists are "the biggest crooks alive"?  Man...  

Can't put the emoji I wanted to here because the "More" emoji link doesn't work anymore (and I don't know the keyboard shortcut), Pete.  :Frown:

----------


## RedDollar

McClendon lost his fortune because he foolishly had his CHK stock leveraged and had to meet margin calls when the market crashed from the Great Recession.     

But there's nothing sexy about that.

----------


## RedDollar

> You're starting from a flawed premise - nobody connected Enron and CHK, it was just said that the podcast author wrote a book about Enron.  Unbelievably broad brush you're using there, so *all* business journalists are "the biggest crooks alive"?  Man...  
> 
> Can't put the emoji I wanted to here because the "More" emoji link doesn't work anymore (and I don't know the keyboard shortcut), Pete.


OK , maybe there's some naive simpletons who are not using their position to talk their book.

But me, I won't trust any of them, as far as I can throw them.

----------


## RedDollar

Hey, last time I looked a little deeper, back in 2013 ..............  Exxon showed a 24 million dollar profit.    And they pay a nice dividend, I think its $2 per share.

And they had capex spending of $38 billion dollars.

So I guess Exxon is a ponzi scheme ?

----------


## Pete

> Ponzi scheme = non existence business.


This is 100% false and demonstrates a breathtaking lack of knowledge.

So, I will debate with you no further.

----------


## RedDollar

> This is 100% false and demonstrates a breathtaking lack of knowledge.
> 
> So, I will debate with you no further.


Good for you

Ponzi scheme
/ˈpnzē ˌskēm/
noun
noun: Ponzi scheme; plural noun: Ponzi schemes

    a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

----------


## RedDollar

Ponzi scheme
Description
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means, and they remain unaware that other investors are the source of funds. Wikipedia

----------


## RedDollar

Investopedia 


Ponzi Scheme
Reviewed by James Chen
Updated Jun 25, 2019
What Is a Ponzi Scheme?

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers. Both Ponzi schemes and pyramid schemes eventually bottom out when the flood of new investors dries up and there isn't enough money to go around. At that point, the schemes unravel.

----------


## RedDollar

I've seen years when Exxon's capex spending exceeds their net income.   Its not uncommon.

And capex budgets in oil and gas, are funded by either profits or debt , or most usually , a combination of both.

They don't go searching for " investors " to use their investment to create net income.

The debt is bonds,  junk bonds, that pays a high interest rate and the people buying the junk bonds know dam well what they're buying.

----------


## Pete

> Ponzi scheme
> Description
> A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means, and they remain unaware that other investors are the source of funds. Wikipedia


Tons of people have been convicted of Ponzi schemes which had actual business with some revenue, including Enron BTW.  And that's why this definition is written the way that it is.

Anyway, this is a bizarre tangent.

----------


## RedDollar

hey Pete, stick to real estate and whatever else you do .

----------


## AP

What's the point of the personal attacks?

----------


## RedDollar

> What's the point of the personal attacks?


Yeah, I know, I was told I was stupid, earlier..............but you did not complain about that.

----------


## runOKC

> Hey, last time I looked a little deeper, back in 2013 ..............  Exxon showed a 24 million dollar profit.    And they pay a nice dividend, I think its $2 per share.
> 
> And they had capex spending of $38 billion dollars.
> 
> So I guess Exxon is a ponzi scheme ?


They paid $8 billion in dividends on $24 million in profit?

----------


## RedDollar

> They paid $8 billion in dividends on $24 million in profit?


I don't know how that got posted,  I thought I cancelled it.    This message board software is buggy.

That's $24 billion in profit, on $500 billion sales.

----------


## CloudDeckMedia

> I don't know how that got posted,  I thought I cancelled it.    This message board software is buggy.


You dont have to use it.

----------


## jedicurt

> Yeah, I know, I was told I was stupid, earlier..............but you did not complain about that.


no one has called you stupid.   there was a statement about  illogical and conspiratorial thinking of part of the population.  not specifically directed only at you, and also not inaccurate.

a statement that you are not  a very well regarded writer, reporter and analyst with a long history...   perhaps that is incorrect as i do not know your background, but it not calling you stupid.

and a statement that your comment showed a lack of knowledge.  this is not calling someone stupid, it is merely pointing out a comment that was not based upon all available knowledge and facts.  and based upon the statement that was in response to, was also accurate.

those are not personal attacks, nor were they comments calling you stupid.

your comment clearly was a personal attack, not only at a fellow commenter, but an admin and very well respected owner of this site.

----------


## Jersey Boss

> McClendon lost his fortune because he foolishly had his CHK stock leveraged and had to meet margin calls when the market crashed from the Great Recession.     
> 
> But there's nothing sexy about that.


And the reason he was brought up on criminal charges?

----------


## Pete

The point in all this is not about Aubrey's lost fortune(s) (he failed multiple times, not just with the one margin call incident) but how CHK got into a massive mess that is still such a deep hole that they may have to declare bankruptcy many years after McClendon was forced out.

Much of that past is interesting to understand as CHK tries to find a way forward and how many other O&G concerns are facing similar challenges, including Aubrey's old partner Tom Ward.

----------


## king183

> hey Pete, stick to real estate and whatever else you do .


You need to relax and cool down. Not sure what's going on with you, but you're unnecessarily antagonistic to everyone else. Your points would be much better taken if you'd argue from a position of facts and logic.

----------


## RedDollar

> And the reason he was brought up on criminal charges?


And the rest of the oil / gas industry breathed sigh of relief when Aubrey died and DOJ dropped the charges  ( which , also,  why did they also drop the charges against Tom Ward ? , I never saw an explanation for that )  .    

What he and Ward did in NW Oklahoma was common practice in oil/gas for forever.   The DOJ accused him of cheating mineral rights owners,  everybody who competed against McClendon got a good laugh out of that, because he always over paid.   He drove up lease prices.   In fact, he over paid for every thing.    

DOJ under Obama was a political JOKE  !

In oil and gas, there's always been an overlap between the business world and the political world,  McClendon got caught up in that,  and it was his own fault.   He was too visible,  too public ........... he became a target politically.   That was the very first advise given to him by Carl Icahn was to lower his profile and stay off CNBC, and McClendon ignored it.

----------


## RedDollar

> You need to relax and cool down. Not sure if you're in the middle of some type of episode or event, but you're unnecessarily antagonistic to everyone else. Your points would be much better taken if you'd argue from a position of facts and logic.


Thanks, I'll consider that .........now can we cease with the personal attacks ?

----------


## RedDollar

> no one has called you stupid.   there was a statement about  illogical and conspiratorial thinking of part of the population.  not specifically directed only at you, and also not inaccurate.
> 
> a statement that you are not  a very well regarded writer, reporter and analyst with a long history...   perhaps that is incorrect as i do not know your background, but it not calling you stupid.
> 
> and a statement that your comment showed a lack of knowledge.  this is not calling someone stupid, it is merely pointing out a comment that was not based upon all available knowledge and facts.  and based upon the statement that was in response to, was also accurate.
> 
> those are not personal attacks, nor were they comments calling you stupid.
> 
> your comment clearly was a personal attack, not only at a fellow commenter, but an admin and very well respected owner of this site.


And I may be stupid, but not stupid enough to buy into what your selling   LOL

----------


## TheTravellers

> You dont have to use it.


To be fair, the site has had multiple problems for the past few days, since it was infected/whatever happened, some of which still aren't resolved.

----------


## RedDollar

> The point in all this is not about Aubrey's lost fortune(s) (he failed multiple times, not just with the one margin call incident) but how CHK got into a massive mess that is still such a deep hole that they may have to declare bankruptcy many years after McClendon was forced out.
> 
> Much of that past is interesting to understand as CHK tries to find a way forward and how many other O&G concerns are facing similar challenges, including Aubrey's old partner Tom Ward.


In 2019 ...........still blaming McClendon.

Carl Icahn must not have thought McClendon's  " mess " was that bad, because he bought millions of shares when the stock price was $16 a share.    

And sold it all at $8 .

The problems with CHK today, are the same problems many other domestic oil/gas companies are facing.   McClendon is long gone, time to quit draggin him through the mud.

----------


## Pete

> The problems with CHK today, are the same problems many other domestic oil/gas companies are facing.   McClendon is long gone, time to quit draggin him through the mud.


He saddled the company with incredible debt and they are still being crushed under that weight and his decisions to keep doubling down on natural gas.

It's not about dragging anyone through the mud, it's about learning and understanding -- for those who are open to those concepts.

It's absurd to claim that CHK's current problems aren't directly linked to the decisions Aubrey made.

----------


## RedDollar

> He saddled the company with incredible debt and they are still being crushed under that weight and his decisions to keep doubling down on natural gas.
> 
> It's not about dragging anyone through the mud, it's about learning and understanding -- for those who are open to those concepts.
> 
> It's absurd to claim that CHK's current problems aren't directly linked to the decisions Aubrey made.


Except there's plenty of other companies with the same problem.    

And did not keep doubling down on nat gas.

In 2010, he changed the direction of the company to become an oil producer rather than a nat gas producer.   At that time, they were about 75% nat gas.   Company owned good oil producing property and he redirected the capex budget to those plays,  primarily the Eagle Ford.   

 Problem was, they can't turn it on a dime, it was gonna take time and more capex spending.   Stockholders wanted them to drastically cut the capex budget and just make a profit from existing wells,  stockholders who thought that,  should never have owned the stock cause it was not gonna work that way.

Its a little too late for learning and understanding

The big mistake McClendon made early on ,  the company was too good at finding nat gas.   But it was not just CHK ,  there were plenty of others involved in that rush to lock down future reserves.

----------


## Pete

"In 2018, the company produced 521 thousand barrels of oil equivalent (3,190,000 GJ) per day, of which 73% was natural gas, 17% was petroleum, and 10% was natural gas liquids."

After all this time, effort, money and new strategies, CHK is still very heavily weighted on a product that is way over-supplied and selling at incredibly low rates.

That was the strategy that Aubrey gambled on -- wrongly -- and borrowed heavily to do so.

----------


## RedDollar

> "In 2018, the company produced 521 thousand barrels of oil equivalent (3,190,000 GJ) per day, of which 73% was natural gas, 17% was petroleum, and 10% was natural gas liquids."
> 
> After all this time, effort, money and new strategies, CHK is still very heavily weighted on a product that is way over-supplied and selling at incredibly low rates.
> 
> That was the strategy that Aubrey gambled on -- wrongly -- and borrowed heavily to do so.


And the same strategy advocated by Carl Icahn and Doug Lawler.    They've not varied from that course when there's plenty of opportunity to do so.

But they've not been drilling for nat gas,  as you imply when you state he " doubled down " .   If they drilled any nat gas wells, its been to hold the lease,  and they probably quit doing that some time ago, I'm not privy to that info.

They have sold a lot of their nat gas properties, in fact,  I hear that there's a company who wants the Haynesville right now, but probably for way below its value.

Last year, they sold the Utica and bought an oil producing company called Wildhorse.    They could not have made the deal without first owning the Utica.

----------


## RedDollar

Another impediment into shifting from nat gas to oil ............. was the oil price crash of 2014.   That drastically reduced their income, and thus less ability to reduce debt and fund capex .

----------


## jedicurt

> Another impediment into shifting from nat gas to oil ............. was the oil price crash of 2014.   That drastically reduced their income, and thus less ability to reduce debt and fund capex .


so sounds like whomever was the CEO at that time acted too late... thus helped to create the situation they are now in... who was CEO at that time?

and at that time, would be the years leading up to 2014

----------


## chuck5815

I think Lawler has done about as well as any other reasonably competent executive might have done, given the mess he inherited. Probably has a few too many former Anadarko idiots running around The Campus, but any good CEO will have some latchkey kids. 

Sure, CHK would love to be weighted 50/50 NG to oil but thats very difficult to pull off in an accretive, value driven way. Permian is an extremely expensive entry, Oklahoma really doesnt have a scalable play thats economic at these pricing levels, and there has been a significant amount of competition to gain positions in the Powder and Eagleford.

----------


## PhiAlpha

> If she's an oil and gas expert, why is she not in the business ?   Why would I need this " journalist " to tell me about McClendon ?Carl Icahn thought he knew oil and gas better than McClendon.................... and lost his arse.This " journalist " is about selling books, I trust those people no further than I could throw them.


I actually had several people who worked pretty closely with CHK bring this podcast up at an industry luncheon about 20 minutes ago saying how interesting it was and that it was well worth the listen. While I agree that many journalists who try to talk about the O&G industry dont know near enough or do near enough research to knowledgeably comment on it... that doesnt seem to be the case here.

----------


## RedDollar

> I actually had several people who worked pretty closely with CHK bring this podcast up at an industry luncheon about 20 minutes ago saying how interesting it was and that it was well worth the listen. While I agree that many journalists who try to talk about the O&G industry dont know near enough or do near enough research to knowledgeably comment on it... that doesnt seem to be the case here.


They lost me when I saw "  ponzi scheme " .   No more time for it, after that.

----------


## PaddyShack

I know this might be a little off topic, but how come we don't see a decline in our gas bills when NG prices are so low? All I hear is how low nat gas prices are but yet I feel like my gas bill remains the same.

----------


## sooner88

> They lost me when I saw "  ponzi scheme " .   No more time for it, after that.


You may want to give it a listen before you critique it. It's a quick listen and pretty informative without the bias that you're implying.

----------


## LakeEffect

> I know this might be a little off topic, but how come we don't see a decline in our gas bills when NG prices are so low? All I hear is how low nat gas prices are but yet I feel like my gas bill remains the same.


The actual gas portion of your bill may be relatively low, especially during the warmer months of the year. Also, gas has been "cheap" now for a decade, so we haven't felt the impact much... https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm

The 20 year chart on that page shows how we've been low over the past decade compared to pre-recession prices.

----------


## Pete

ONG also charges a minimum of $35 / month whether you use any gas or not.

This was not at all the case when I lived in California.  It's a significant extra cost here as otherwise, there would be virtually no charge at all for almost half the year, at least for those of us who only have gas for heat.

----------


## chuck5815

> ONG also charges a minimum of $35 / month whether you use any gas or not.
> 
> This was not at all the case when I lived in California.  It's a significant extra cost here as otherwise, there would be virtually no charge at all for almost half the year, at least for those of us who only have gas for heat.


thats odd. Ive never noticed a minimum service charge on my ONG bill. September was roughly $14

----------


## CloudDeckMedia

> To be fair, the site has had multiple problems for the past few days, since it was infected/whatever happened, some of which still aren't resolved.


And how many people launched on Pete about it? One.

----------


## TheTravellers

> And how many people launched on Pete about it? One.


Fully aware, I believe I've dealt with RedDollar before and I'm no fan, and his reply to Pete was definitely over the line, just making an observation (mainly because some of the features that have gone missing are very frustrating, and haven't heard from Pete whether they'll come back - no "More" emojis and not being able to view ignored posts are big things that need fixing, opening up a whole new page to reply to a post instead of just the little box under the post you're replying to, I'd think).

----------


## jonny d

> ONG also charges a minimum of $35 / month whether you use any gas or not.
> 
> This was not at all the case when I lived in California.  It's a significant extra cost here as otherwise, there would be virtually no charge at all for almost half the year, at least for those of us who only have gas for heat.


May need to call ONG about your bill. Mine has never been above $32. Not doubting you, at all, though.

----------


## TheTravellers

I just happen to have my bill handy, there's a line item for "Service Charge (Cost of Oklahoma Natural Gas service)" that's $32.60.

----------


## catch22

> I just happen to have my bill handy, there's a line item for "Service Charge (Cost of Oklahoma Natural Gas service)" that's $32.60.


Wow. I forgot about that. Here in Colorado Springs, your access charge is partly based on usage. 

Here's from my last bill:

Access Chg: 29 days x $0.393 
Access Chg: 41 CCF x $0.1645

Came out to about $17 for access charge in October.

Compare to July bill it was about $12:

Access Chg: 30 days x $0.393
Access Chg: 10 CCF x $0.1645

----------


## Pete

Yep, a monthly service fee of $32.91 plus a franchise fee or $1.  So, $33.91 for not using a bit of natural gas (units delivered: 0) in August or July or June.

----------


## Teo9969

> May need to call ONG about your bill. Mine has never been above $32. Not doubting you, at all, though.


Do you have ONG as well? If so, what major section roads are you close to? I wonder if base service/connection charge has to do with your location in their network.

Mine is about the same as Pete and we both live in the Belle Isle area.

----------


## jonny d

> Do you have ONG as well? If so, what major section roads are you close to? I wonder if base service/connection charge has to do with your location in their network.
> 
> Mine is about the same as Pete and we both live in the Belle Isle area.


I am out near Tinker. I also rarely use the gas for heating, so my usage is low.

----------


## PaddyShack

I too have the $32.60 service charge and I live out in Yukon, about a mile north of Rt. 66. With all of the different taxes on top push it to over $35. We only use gas for heating as well. Would having other gas operators help with pricing? Would it even be possible to have multiple gas providers for a given neighborhood?

----------


## gopokes88

> I too have the $32.60 service charge and I live out in Yukon, about a mile north of Rt. 66. With all of the different taxes on top push it to over $35. We only use gas for heating as well. Would having other gas operators help with pricing? Would it even be possible to have multiple gas providers for a given neighborhood?


not really. The infrastructure costs to put in a competition gas line are way too high. OneGas' profits are regulated, the $32.60 is the cost to run the company itself because they can't mark up the gas.

----------


## BoulderSooner

is there any other option for home NG   ??

----------


## gopokes88

> is there any other option for home NG   ??


Put a propane tank in your yard and tie the house into it.

Granted you'll still have to pay someone to come fill it, and they unlike OneGas can sell their product at a profit. Probably close to a wash.

----------


## Edmond Hausfrau

CHK down 8% today, I think at close was 64 cents. If Jerry Jones is making a play, he's going to get it dirt cheap.

----------


## gopokes88

> CHK down 8% today, I think at close was 64 cents. If Jerry Jones is making a play, he's going to get it dirt cheap.


Doubtful. The rumor youre referring too is Jerry Jones through Comstock buying their Haynesville asset. Which will delay the inevitable by a year. 

Its going straight up bankrupt and chapter 11. Just a matter of when. 

All their debt made sense at $7-$8/mcf when they took it on. Its even workable at $4. 

Its not possible at $2.50 and gas cant get to $4 for any sustained period of time. (Like averaging $4 for more than a Q) Theres an enormous supply and potential supply available, that even outstanding demand growth cant quench.

----------


## chuck5815

Definitely seems like the Market is moving firmly against Doug & Company. Down another 8% in early trading.

----------


## PaddyShack

> Doubtful. The rumor youre referring too is Jerry Jones through Comstock buying their Haynesville asset. Which will delay the inevitable by a year. 
> 
> Its going straight up bankrupt and chapter 11. Just a matter of when. 
> 
> All their debt made sense at $7-$8/mcf when they took it on. Its even workable at $4. 
> 
> Its not possible at $2.50 and gas cant get to $4 for any sustained period of time. (Like averaging $4 for more than a Q) Theres an enormous supply and potential supply available, that even outstanding demand growth cant quench.


So why did NG die on the vine for consumer vehicles and such? I was always looking at converting my vehicle but I would always have to drive out of my way to get to a station with NG.

----------


## gopokes88

> So why did NG die on the vine for consumer vehicles and such? I was always looking at converting my vehicle but I would always have to drive out of my way to get to a station with NG.


Switching sources of energy takes decades. Even the switch to electric is still 20 years out best case.  It cant happen quickly. Capital, behaviors, supply chains, etc etc

Just as nat gas started to get a smidge of momentum, oil prices crashed and electric vehicles started gaining traction.

----------


## chuck5815

> Switching sources of energy takes decades. Even the switch to electric is still 20 years out best case.  It cant happen quickly. Capital, behaviors, supply chains, etc etcJust as nat gas started to get a smidge of momentum, oil prices crashed and electric vehicles started gaining traction.


i don't ever see myself buying an electric car unless the government forces me to buy one at gunpoint. just have zero interest. and Elon Musk is a total ****face.

----------


## OkieNate

> i don't ever see myself buying an electric car unless the government forces me to buy one at gunpoint. just have zero interest. and Elon Musk is a total ****face.


okay.... how shocking a completely over the top and irrationally opinion from clearly a stable genius.

----------


## Rover

> i don't ever see myself buying an electric car unless the government forces me to buy one at gunpoint. just have zero interest. and Elon Musk is a total ****face.


They'll have to pry this gas guzzler from my dead cold hands....

Yep, spoken like a true oily.  

As batteries keep improving, electric cars will continue to become more and more feasible.  Small gasoline engines are inherently inefficient converters of energy to power while large generators of electricity are more efficient.  Even with electrical transmission/distribution losses, electricity eventually wins.  Electric cars are gaining focus and markets all over the world.  Get ready.

----------


## chuck5815

> okay.... how shocking a completely over the top and irrationally opinion from clearly a stable genius.


 i'm surprised you'd throw your support behind a carnival barker like Musk?

----------


## gopokes88

> They'll have to pry this gas guzzler from my dead cold hands....
> 
> Yep, spoken like a true oily.  
> 
> As batteries keep improving, electric cars will continue to become more and more feasible.  Small gasoline engines are inherently inefficient converters of energy to power while large generators of electricity are more efficient.  Even with electrical transmission/distribution losses, electricity eventually wins.  Electric cars are gaining focus and markets all over the world.  Get ready.


I mean heres the thing were at least 10 years from peak demand potentially 20. Puts world demand at 110-120 million barrels a day. 

Were not done growing demand, and theres still a long way to go down. The transition will take decades, multiple, not years.

----------


## Rover

> I mean heres the thing were at least 10 years from peak demand potentially 20. Puts world demand at 110-120 million barrels a day. 
> 
> Were not done growing demand, and theres still a long way to go down. The transition will take decades, multiple, not years.


Mr. Ford, no one will buy those iron horses.

----------


## gopokes88

> Mr. Ford, no one will buy those iron horses.


Do you understand rover 

That if tomorrow, every single person bought an electric car as their next vehicle, were 10 years away from an all electric fleet? (Average vehicle is used 10 years in the US, much longer across the world) 

This speaks 0 to the FACT that the lithium production isnt there, they arent building that many electric cars tomorrow, the supply chains arent built, the charging infrastructure hasnt been built, the capital to fund the transition isnt there yet.  

Youre the opposite side of chuck, a knuckle dragging head in the sand lefty. 

Its going to happen. 

Its going to take decades. Energy transitions historically always have. This one is no different.

----------


## Edmond Hausfrau

Down almost 14%. What is the rule on how long a stock can stay below one dollar before it gets delisted from NYSE?

----------


## SEMIweather

> i'm surprised you'd throw your support behind a carnival barker like Musk?


Musk is incredibly smug and self-important, but I'm extremely amused at using this as a reason to not buy an electric car. Like Oklahoma's oil barons are a paragon of humility lmao.

Who founded the company that this thread is about, again?

----------


## chuck5815

> Musk is incredibly smug and self-important, but I'm extremely amused at using this as a reason to not buy an electric car. Like Oklahoma's oil barons are a paragon of humility lmao.Who founded the company that this thread is about, again?


Thats fair. And Ill give Musk credit for paypal. He got to that space well before his peers. But theres just a lot about the guy that rubs me the wrong way (i.e., the subsidy chasing, the flamethrower building, the rampant conflicts of interest, the complete disregard for his fiduciary duties to shareholders, etc.). The going private bit on Twitter was just a complete fiasco, but I suppose the country is now firmly in the business of giving Billionaires passes for stupid **** they say on Twitter. Looking forward to the formatting on this site being fixed.

----------


## gopokes88

> Down almost 14%. What is the rule on how long a stock can stay below one dollar before it gets delisted from NYSE?


30 days theyll receive a delisting notice for being below $1.  Theres a few options from there, one of which is a reverse spilt, IE converting 10 shares into 1

----------


## Rover

> Do you understand rover 
> 
> That if tomorrow, every single person bought an electric car as their next vehicle, were 10 years away from an all electric fleet? (Average vehicle is used 10 years in the US, much longer across the world) 
> 
> This speaks 0 to the FACT that the lithium production isnt there, they arent building that many electric cars tomorrow, the supply chains arent built, the charging infrastructure hasnt been built, the capital to fund the transition isnt there yet.  
> 
> Youre the opposite side of chuck, a knuckle dragging head in the sand lefty. 
> 
> Its going to happen. 
> ...


Of course it takes decades, but we arent just starting now.  10-20 yrs go by really quickly.  There is great momentum worldwide....Oklahoma, well we arent really the most aware state.

----------


## chuck5815

> Of course it takes decades, but we arent just starting now.  10-20 yrs go by really quickly.  There is great momentum worldwide....Oklahoma, well we arent really the most aware state.


Yea, given the myriad of state and federal subsidies made available, the market penetration to date is effectively zero, and most of those subsidies are set to roll off in the near future. And on the point of Oklahomans being unaware, Id note that we do have a handful of oil executives who fully subscribe to the theory of Not Getting High Off Their Own Supply: https://evadoption.com/ev-market-sha...t-share-state/

----------


## Rover

> Yea, given the myriad of state and federal subsidies made available, the market penetration to date is effectively zero, and most of those subsidies are set to roll off in the near future. And on the point of Oklahomans being unaware, Id note that we do have a handful of oil executives who fully subscribe to the theory of Not Getting High Off Their Own Supply: https://evadoption.com/ev-market-sha...t-share-state/


There will always be people doubling down on buggy whips.  Oklahoma, where we have surreys with fringe on top. Deny climate change.  Deny technology progress. Ignore market sentiment shifts.  Dont know exactly when the snowball starts rolling downhill, but it will happen.  Debating whether it is 10 years or twent is a fools exercise.... but it will come.

----------


## RedDollar

MIT study,  says cost of raw matierial for batteries will continue to climb.    If they can't bring the cost of EV's down,  EV's will continue to serve a niche of the green wealthy.


https://www.eenews.net/energywire/20...ies/1061595837




3-year study raises doubts about EVs' future

The future of transportation may be less electric and less shared than some think, and millennials won't change that, according to a study published yesterday by the MIT Energy Initiative.

The initiative's engineers, economists and transportation planners spent three years investigating how technology, policy, infrastructure and consumer choice would affect the transportation sector of the future. They came away with a dim view about the pace of global change toward the most low-carbon forms of travel.

Within the next decade, EVs aren't likely to reach parity with gas cars on the upfront cost  a projection that contradicts much of the settled wisdom among energy researchers and would likely dampen the competitiveness of all-electric models, according to the Massachusetts Institute of Technology report.

The problem is that lithium-ion batteries, the chief source of cost for EVs, are "very unlikely" to hit their key price threshold of $100 per kilowatt-hour by 2030, the researchers wrote.

Battery packs were about two to three times that cost in 2017, and the Energy Department is aiming to bring the price to $125 per kilowatt-hour by 2022.

The $100 target could be reached only if the prices of battery minerals  cobalt, lithium and nickel  remain at the level they were at in 2016

----------


## Rover

And thirty years ago all energy experts said oil was going to $200 per barrel.  Yep, these guys are so right.  Lol.

So, here is an article saying electric car price parity in three years.  https://e360.yale.edu/digest/electric-cars-could-be-as-affordable-as-conventional-vehicles-in-just-three-years

----------


## soonermike81

Someone please educate me on this, as I am very unfamiliar with electric vehicles and the batteries. Lets assume that at some point in the near future, the infrastructure is in place and electric vehicles are competing with gasoline vehicles. Wont natural gas be the primary source to recharge these batteries? If so, seems like many oil and gas companies would start concentrating their efforts on nat gas.

----------


## gopokes88

> Someone please educate me on this, as I am very unfamiliar with electric vehicles and the batteries. Lets assume that at some point in the near future, the infrastructure is in place and electric vehicles are competing with gasoline vehicles. Wont natural gas be the primary source to recharge these batteries? If so, seems like many oil and gas companies would start concentrating their efforts on nat gas.


Ignore rover hes just gaslighting a huge national energy transition to take a shot about how Oklahoma sucks. Its super helpful. 

The scenario that eventually plays out is cars switch to electric. 

Power generation slowly switches to a mix of nat gas wind solar. The wind and solar need to have battery fields that store power when the wind doesnt blow, and the sun doesnt shine. And where are they going to get these batteries? Used cars. Once an electric cars battery depletes down to 80% capacity. It needs to be replaced. That doesnt matter quite as much when storing excess energy from the grid and provides a steady cheap supply.

----------


## Pete

There was an article yesterday about a Bill Gates-backed solar energy company that has achieved a serious breakthrough in being able to generate enough heat to drive big industrial processes, including the manufacturing of concrete and steel.  And can do if for less money.

That looks like a big inflection point because those two industries alone are responsible for a significant amount of CO2 emissions.

Cars are relatively clean these days anyway.  In my 25 years in California, it went from frequent, escalating smog alerts to smog almost being nonexistent due to the stricter Cali emission standards.

https://www.cnn.com/2019/11/19/busin...tes/index.html

----------


## Plutonic Panda

Gas prices are also highest in the United States.

----------


## Edmond Hausfrau

> Gas prices are also highest in the United States.


You mean California has the highest gas prices. You don't mean that US has highest gas prices, right?

----------


## Plutonic Panda

> You mean California has the highest gas prices. You don't mean that US has highest gas prices, right?


Yes. California has the highest gas prices in the US is what I meant.

----------


## Edmond Hausfrau

Real estate sign in front of the white and glass CHK building at NW 63 and Classen. That's a whole lot of office space for sale or lease.
Since the original design was supposed to mimic a college campus, wonder if any private universities or for profit schools will look at this area for expansion, or put a law school or MBA program here.

----------


## Rover

> Ignore rover hes just gaslighting a huge national energy transition to take a shot about how Oklahoma sucks. Its super helpful. 
> 
> The scenario that eventually plays out is cars switch to electric. 
> 
> Power generation slowly switches to a mix of nat gas wind solar. The wind and solar need to have battery fields that store power when the wind doesnt blow, and the sun doesnt shine. And where are they going to get these batteries? Used cars. Once an electric cars battery depletes down to 80% capacity. It needs to be replaced. That doesnt matter quite as much when storing excess energy from the grid and provides a steady cheap supply.


Au Contrere. I love Oklahoma.  I just dont buy into the fossil fuel propaganda. Ive done projects involving large scale wind and solar plants. One of my good friends is The Godfather of wind power in China. Another an advanced solar panel and absorption panel manufacturer in Germany. I have much firsthand knowledge of technologies in the field. 

Btw, storage of energy takes many forms. The idea that it is only batteries in the conventional thinking like flashlight or cell phone batteries is ignorant of the other technologies which make wind and solar more efficient and effective. And solar takes the top off the demand peaks making even traditional power production more efficient.

Btw, solar isnt just about photovoltaic panels. Concentrated solar is huge.  And, Solar additions to such things as hvac systems and hot water systems cut electric consumption considerably.

----------


## jn1780

> Au Contrere. I love Oklahoma.  I just dont buy into the fossil fuel propaganda. Ive done projects involving large scale wind and solar plants. One of my good friends is The Godfather of wind power in China. Another an advanced solar panel and absorption panel manufacturer in Germany. I have much firsthand knowledge of technologies in the field. 
> 
> Btw, storage of energy takes many forms. The idea that it is only batteries in the conventional thinking like flashlight or cell phone batteries is ignorant of the other technologies which make wind and solar more efficient and effective. And solar takes the top off the demand peaks making even traditional power production more efficient.
> 
> Btw, solar isnt just about photovoltaic panels. Concentrated solar is huge.  And, Solar additions to such things as hvac systems and hot water systems cut electric consumption considerably.


There's not that many practical ways of storing energy for a vehicle with current technology. You have more options when storing excess energy for from the grid because most of those options require a large of space. Maybe there will be advances in some form of biological battery.  I guess if lithium prices go through the roof, hydrogen will be more economical again. We can all drive around in our personal Hindenburg.

----------


## Rover

> There's not that many practical ways of storing energy for a vehicle with current technology. You have more options when storing excess energy for from the grid because most of those options require a large of space. Maybe there will be advances in some form of biological battery.  I guess if lithium prices go through the roof, hydrogen will be more economical again. We can all drive around in our personal Hindenburg.


Just curious as to what range you think an electric car needs to be practical and desirable.

Part of the overall efficiency of electric cars is that it can shift electrical demand on the grid from peak times to off peak times, thereby reducing the demand for more generation.  Cars can be charged in non-peak (ie, overnight) hours thereby making our current generation system more effective.

----------


## C_M_25

These energy and ev arguments all go the same way with no real conclusion. Its interesting to me that people tend to trench themselves into their side and the discussion becomes emotional and pointless. Kinda like political conversations on these forums. 

The transition to EVs and green energy will not happen at the drop of the hat. As of 3rd quarter 2018, EVs only made up less than 1% of all cars in the US. Im sure that number has climbed some, but not significantly. I do agree that EVs will be a phenomenal option for those who commute to work and back primarily. Especially in large cities like LA or Houston. We live in Oklahoma though where most people have to travel large distances from town to town. These towns are often in rural areas, are of low socioeconomic status, and have limited modern infrastructure. Because of this, it will be some time before they truly take off here and other flyover states. 

The other issue with EVs is that there are few making them. Tesla is the primary vendor and it seems like they are constantly having production issues. Well see if they can get it figured out. I believe, that the big 3 will be the catalysts to get things moving faster. They have the resources. Speaking of...resources are another limiting factor for batteries. Well simply need to find new sources of lithium. There isnt currently enough to ultimately supply the growth for the world that is needed. 

Finally, green energy will take some time to phase in. Over the past decade, we have seen a huge surge of wind turbines all over the state and Midwest. They have progressed so far that we can see the impinging on the west side of okc. Even still, wind energy supply still hasnt caught up with hydro. We only get 6.5% of our power from wind...which is a nice jump from several years ago. Hydro supplies 7%, solar is at a measly 1.5%, and all petroleum gives us about 68%. 

All that said, we arent quite there yet. Youll probably see a slow transition over the next decade or so. I would be really surprised to see a mix of 50-50 for EVs and ICE by 2030. Regardless, oil and gas will be around for a while longer yet.

----------


## C_M_25

I dont know why, but there is a weird symbol on all of my apostrophes and quotes up above. Sorry about that...

----------


## Pete

"There are few making them..."

These companies have electric cars currently available and all have many more in the production queue:

Audi, BMW, Chevy, Fiat, Ford, Honda, Hyundai, Jaguar, Kia, Mercedes, Mitsubishi, Nissan, Peugot, Reunalt, Smart, Telsa, VW.

And there are a bunch of other electric-only companies that have cars out now with a bunch more in the works.


It's a fair point that as a percentage there aren't a ton of EV's on the road right now, but the change with new production is well underway.

----------


## C_M_25

> "There are few making them..."
> 
> These companies have electric cars currently available and all have many more in the production queue:
> 
> Audi, BMW, Chevy, Fiat, Ford, Honda, Hyundai, Jaguar, Kia, Mercedes, Mitsubishi, Nissan, Peugot, Reunalt, Smart, Telsa, VW.
> 
> And there are a bunch of other electric-only companies that have cars out now with a bunch more in the works.
> 
> 
> It's a fair point that as a percentage there aren't a ton of EV's on the road right now, but the change with new production is well underway.


Ah yeah. I dont know how all those companies slipped my mind. Tesla seems to be the dominant focus for these conversations it seems. It will be interesting to see how this all ramps up. It will also be interesting to see how demand for these vehicles changes over the years. Personally, I like the idea of hybrids, but thats just me.

----------


## RedDollar

> "There are few making them..."
> 
> These companies have electric cars currently available and all have many more in the production queue:
> 
> Audi, BMW, Chevy, Fiat, Ford, Honda, Hyundai, Jaguar, Kia, Mercedes, Mitsubishi, Nissan, Peugot, Reunalt, Smart, Telsa, VW.
> 
> And there are a bunch of other electric-only companies that have cars out now with a bunch more in the works.
> 
> 
> It's a fair point that as a percentage there aren't a ton of EV's on the road right now, but the change with new production is well underway.


Two common themes among those companies ......... they are producing a high end luxury EV to compete with Tesla ........... or they're putting an EV into their product line to help them meet the MPG standard set by CAFE.     

There won't be mass adaption of EV's until battery costs drop dramatically and battery range increases a lot.    Until then,  they will fill a niche market of the wealthy greenies.  

And EV's will continue to be powered by electricity generated by coal and nat gas,  until the enviro left gets out of the way of nuclear generation.     Wind and solar will never generate enough to over come the intermittency problem.     That's not my opinion, that's the opinion of the Father of Global Warming,  Dr James Hansen and others.    When Hansen was head of NASA , he was the first person to testify about the problem of global warming to Congress in 1989.   He says nuclear is the only path forward to an electric economy.

----------


## Pete

> There won't be mass adaption of EV's until battery costs drop dramatically and battery range increases a lot.    Until then,  they will fill a niche market of the wealthy greenies.


Virtually every car company and many other very motivated (by money) scientists are working on these issues and that's when big breakthroughs happen.

In 2011, no car had a range over 100 miles.  As of 2018, several could go over 300 miles on a single charge, representing a huge increase in just 7 years.

The issue is not how many EV's are on the road now, it's that everyone in this business is now focused on electric.  That is the big pivot point; the tech is just a matter of time.

----------


## RedDollar

> Virtually every car company and many other very motivated (by money) scientists are working on these issues and that's when big breakthroughs happen.
> 
> In 2011, no car had a range over 100 miles.  As of 2018, several could go over 300 miles on a single charge, representing a huge increase in just 7 years.
> 
> The issue is not how many EV's are on the road now, it's that everyone in this business is now focused on electric.  That is the big pivot point; the tech is just a matter of time.


The  " battery brreakthrough " has been promised for 10 years now and they're no closer.    

And I believe those range numbers, when I actually experience them.   Range is like MPG ,  every body lies about it.   Range also varies with climate,  it might get those range numbers if the car is operated in San Diego,  but in harsher climates,  the heater, a/c ,  defroster, et al  are gonna drag down the range.    

But it doesn't matter, cuz unless a lot of money gets invested in nuclear generation,  these EV's will forever be coal/nat gas cars.   Renewables will never power the transporation sector.

Here ya go,  see what the greenies have to say about renewables 

https://environmentaljusticetv.wordp...bles-enough-2/

----------


## Pete

Actually this has changed dramatically...   Range and MPG numbers are now routinely underestimated.

Most tests done by car mags and other testers have demonstrated that.

----------


## RedDollar

> Actually this has changed dramatically...   Range and MPG numbers are now routinely underestimated.
> 
> Most tests done by car mags and other testers have demonstrated that.


And those range numbers are on a brand new battery, which degrades with every charge.

But it doesn't matter if the electricity is generated by a nat gas plant.  

Renewables will never power the transportation sector, never.    The scale needed is immense and the intermittency problems will never be solved.    People have been working on ways to store large amounts of electricity since Franklyn flew his kite.

Bill Gates spoke to this several months ago ..........

https://www.youtube.com/watch?v=9xe3BWPsBTU

Here in Oklahoma , we get wind energy when we don't need it and don't get it when we do.    In March and April, the wind really blows here and we get a lot of wind generation.     But we don't need it, those months are our lowest months of usage.

But in July, when high pressure weather systems move over the state and bring 100+ temps,  there's no wind with that high pressure.   And that's when our usage is the highest.

Wind is a waste of time and money,  just build one nuclear generator and they can haul off all those wind turbines to the junk pile.

----------


## Rover

> .
> 
> Wind is a waste of time and money,  just build one nuclear generator and they can haul off all those wind turbines to the junk pile.


Youve obviously never studied basic finance or economics. Just keep reading all the fossil fuel and tea party press releases.

----------


## Plutonic Panda

I agree with wind and solar being a poor and wasteful choice for large scale energy production. Nuclear is the best choice and even then it needs more R&D. Salt reactors are interesting though Cold Fusion would be one of the most innovations ever brought forth by man. 

I would argue electric cars are hardly good for the environment and they simply shift the pollution and environmental impact elsewhere. I see potential in EVs but until a better way of making batteries is had or better yet if we can pioneer hydrogen production being more sustainable it is a bit disingenuous to suggest EVs are so much better than combustion engines.

----------


## chuck5815

> Youve obviously never studied basic finance or economics. Just keep reading all the fossil fuel and tea party press releases.


You seem upset, buddy. You okay?

----------


## Plutonic Panda

> Youve obviously never studied basic finance or economics. Just keep reading all the fossil fuel and tea party press releases.


The fossil fuel conglomerate supports nuclear energy? Thats funny considering that fossil fuels are needed to back up renewables on down time and that has proven with each shut down nuke plant. Read about Germanys phasing out nuclear energy and how that has gone.

----------


## catch22

Batteries can even take a different form than what you might think. I saw a concept to use excess grid energy to drive motors
to lift heavy blocks, then when the energy is needed those blocks are lowered by gravity and the cables spin generators to convert that energy back into electricity. While I am uncertain of how feasible that is, it does show that there are outside the box ways of storing energy that is produced by the grid.

----------


## Rover

> Batteries can even take a different form than what you might think. I saw a concept to use excess grid energy to drive motors
> to lift heavy blocks, then when the energy is needed those blocks are lowered by gravity and the cables spin generators to convert that energy back into electricity. While I am uncertain of how feasible that is, it does show that there are outside the box ways of storing energy that is produced by the grid.


There are planned projects for using solar and/or wind to pump water to higher elevation lakes and then releasing for hydro generation during peak hours.  Lots of inventive ways to store energy.

----------


## Rover

> You seem upset, buddy. You okay?


Not upset, just more objective.
People need to travel the world more and see what is actually out there working and what isnt instead of just watching Fox opinion news.

----------


## gopokes88

Get. Back. On. Topic.

----------


## Plutonic Panda

> Not upset, just more objective.
> People need to travel the world more and see what is actually out there working and what isnt instead of just watching Fox opinion news.


Even if people travel the world most tourist areas dont have large scale power productions plants right next door and even if they did that doesnt mean that tourist are going to be paying attention to the source of the power or the grid. 

I agree that people should open their eyes and not rely on Fox News for their information all the time. But dont pretend that someone who has traveled around the world is somehow educated or cultured by that fact alone.

----------


## Rover

> Even if people travel the world most tourist areas dont have large scale power productions plants right next door and even if they did that doesnt mean that tourist are going to be paying attention to the source of the power or the grid. 
> 
> I agree that people should open their eyes and not rely on Fox News for their information all the time. But dont pretend that someone who has traveled around the world is somehow educated or cultured by that fact alone.


You would probably be surprised then at how much you can actually learn from traveling and being inquisitive.  Going to London to see Abby Road isnt what Im talking about.  People seriously interested in real issues can benefit from the observations gained by traveling, observing, and interacting with the locals... even on vacation.  Theres a lot going on in the world that a great number of people know nothing about except what is fed to them.

----------


## gopokes88

http://www.rbcrichardsonbarr.com/Ind...PR_____DA56443


So if you dont understand whats going on here Ill explain it in very simple terms. 

CHK issued a going concern. (Rightly, they do have one)
That drove the value of their bonds wayyyyyyyy down. 
CHK secured a 1st lien rights loan to buyback the bonds whose value got driven down. 
According to this offer, CHK is offering $.70 to or value. 

Long story short CHK can spend $.70 of the new loan to wipe out $1 of debt. Not out of the woods but its a start.

----------


## RedDollar

It ain't over ,  till its over

----------


## gopokes88

More color

https://www.forbes.com/sites/jimcoll.../#650aa3db72c7

----------


## Pete

^

Things certainly look more optimistic.  Hope they can keep it together until prices inevitably head upward once again.

----------


## RedDollar

There's been a bunch of insider share purchases in the last two or three weeks.

----------


## gopokes88

https://oklahoman.com/article/565023...on-dec-19-2019

Spent 2.2 billion to wipe out 3.2 billion in debt. 

1 billion down 9 to go. 

Selling Haynesville to jerry Jones would be worth at least a billion, and eliminate the liquidity event they have coming in 2021

----------


## Edmond Hausfrau

Trading at 60cents. They have been given the formal notification from NYSE for delisting. It appears to allow six months time to get it back above $1.
Any bets being placed on when the reverse split happens?

----------


## gopokes88

> Trading at 60cents. They have been given the formal notification from NYSE for delisting. It appears to allow six months time to get it back above $1.
> Any bets being placed on when the reverse split happens?


They already announced they’re doing a 10 for 1 soon. 

The question is do they file for chapter 11 before they even get the chance. Gas is going to continue to fall until May-June.

----------


## RedDollar

> *They already announced they’re doing a 10 for 1 soon*. 
> 
> The question is do they file for chapter 11 before they even get the chance. Gas is going to continue to fall until May-June.


I find this announcement nowhere .   Its my understanding , they have till May to make this split.    The reverse split is no big deal, its just a symptom of the problem that got them to this point. 

The low NG price hurts but its not a major factor.    CHK has 49% of their 2020 nat gas hedged, I've read two figures,  some at over three and some at just below three.  But that's not from CHK,  just chat on the internets.    I've not dug back into the conference calls to verify that. 

And even if nat gas is still 70% of their production by BOE ,  oil is 50% of their revenues, according to what I'm reading, again , I've not verified that. 

So if what I'm reading is correct,   they're not that exposed to low spot prices of NG.

----------


## gopokes88

> I find this announcement nowhere .   Its my understanding , they have till May to make this split.    The reverse split is no big deal, its just a symptom of the problem that got them to this point. 
> 
> The low NG price hurts but its not a major factor.    CHK has 49% of their 2020 nat gas hedged, I've read two figures,  some at over three and some at just below three.  But that's not from CHK,  just chat on the internets.    I've not dug back into the conference calls to verify that. 
> 
> And even if nat gas is still 70% of their production by BOE ,  oil is 50% of their revenues, according to what I'm reading, again , I've not verified that. 
> 
> So if what I'm reading is correct,   they're not that exposed to low spot prices of NG.


Cool. 

Wonder why they’re stock fell 7% yesterday if they’re in such wonderful shape. 

http://www.rbcrichardsonbarr.com/Ind...PR_____DA66045

----------


## The Shadow

> They already announced theyre doing a 10 for 1 soon. 
> 
> The question is do they file for chapter 11 before they even get the chance. Gas is going to continue to fall until May-June.


In order for CHK to issue a reverse stock split, they would need approval from their shareholders (a proxy vote). Their annual meeting isn't until May.

----------


## Edmond Hausfrau

> In order for CHK to issue a reverse stock split, they would need approval from their shareholders (a proxy vote). Their annual meeting isn't until May.


I don't think so in this case. The board of directors should be sufficient.
Someone with more SEC knowledge may wish to chime in.

----------


## RedDollar

> Cool. 
> 
> Wonder why they’re stock fell 7% yesterday if they’re in such wonderful shape. 
> 
> http://www.rbcrichardsonbarr.com/Ind...PR_____DA66045


Where did I say that they were in wonderful shape ?

I think maybe you goin into a panic.

And oh yeah,  PPS usually goes down on a reverse split.

----------


## The Shadow

> I don't think so in this case. The board of directors should be sufficient.
> Someone with more SEC knowledge may wish to chime in.


Straight from the horse's mouth...

_OKLAHOMA CITY, Dec. 13, 2019 /PRNewswire/ -- Chesapeake Energy Corporation (NYSE:CHK) ("Chesapeake" or "the Company") announced that on December 10, 2019 it received written notice from the New York Stock Exchange ("NYSE") of its noncompliance with the standard set forth in Rule 802.01C of the NYSE Listed Company Manual that requires listed companies to maintain an average closing share price of at least $1.00 over a consecutive 30 trading-day period.

The Company intends to regain compliance with the NYSE listing standards by pursuing measures that are in the best interests of the Company and its shareholders, including: (i) executing on its current capital and operating program, which includes a planned 30% reduction in 2020 capital expenditures and ongoing implementation of operating cost efficiencies; (ii) continued debt reduction through capital market transactions and asset sales; and potentially (iii) consummation of a potential reverse stock split, subject to shareholder approval at the May 2020 Annual Meeting of Shareholders.

As required by the NYSE, the Company intends to respond to the NYSE within ten business days with respect to its intent to cure the deficiency. The Company has six months following the receipt of the noncompliance notice to cure the deficiency and regain compliance.

During this period, the Company's common stock will continue trading on the NYSE under its existing ticker symbol, with the addition of a suffix indicating the "below compliance" status of its common stock, as "CHK.BC."

The notice does not affect the Company's business operations, or its Securities and Exchange Commission reporting requirements, and does not conflict with or cause an event of default under any of the Company's material debt agreements._

----------


## Pete

CHK has had about 175 layoffs in the last two days.

Around a hundred in the field and 75 at corporate in OKC.

----------


## jedicurt

> CHK has had about 175 layoffs in the last two days.
> 
> Around a hundred in the field and 75 at corporate in OKC.


i have heard that several (not sure how many, but know of at least a few) of the corporate positions where layoffs but then rehire as private contractors for the same role.

----------


## chuck5815

> i have heard that several (not sure how many, but know of at least a few) of the corporate positions where layoffs but then rehire as private contractors for the same role.


I wonder how they sneak that type of stuff past the DOL. Seems like a very easy case if the government decided to pursue misclassification

----------


## mugofbeer

> i have heard that several (not sure how many, but know of at least a few) of the corporate positions where layoffs but then rehire as private contractors for the same role.


That is a common practice.

----------


## gopokes88

Adopted a poison pill. Protects them from being bought and losing the ability to carry their tax losses forward. Whiting did the same then filed bankruptcy a few days later. Any day now CHK will file. 

But hedges or something. 

http://investors.chk.com/2020-04-23-...erating-Losses

----------


## RedDollar

> Adopted a poison pill. Protects them from being bought and losing the ability to carry their tax losses forward. Whiting did the same then filed bankruptcy a few days later. Any day now CHK will file. 
> 
> But hedges or something. 
> 
> http://investors.chk.com/2020-04-23-...erating-Losses


I'm havin a bloody mary tonight.

Then I might have an Old Fashioned ..... or something .

----------


## gopokes88

Expect a bankruptcy filing soon.

----------


## Anonymous.

Yep news hit 10 minutes before you posted. Stock is diving to sub-$20, post-split.

And just like that a new wave of bagholders were born.

----------


## gopokes88

https://www.reuters.com/article/us-c...-idUSKBN22B31M

----------


## securityinfo

I bid 400 Quatloos

----------


## securityinfo

@gopokes88  I'll give it to ya... you do seem to be able to call the oil biz

----------


## Edmond Hausfrau

> @gopokes88  I'll give it to ya... you do seem to be able to call the oil biz


Yes. I agree. I'm trying to see the upside to this. The campus really is attractive and I hope an institution of higher education considers buying it, maybe a law school or an MBA program? Maybe a prep boarding school?

----------


## Pete

They have been trying to lease out one of the buildings along 63rd for quite a while now and to my knowledge, without success.

They've also closed that rooftop dining facility.

They could easily share those buildings and facilities with other businesses, and I'm sure that's what will happen.  Even if they survive, they could consolidate further and then lease out the excess structures.  It's really no different than any other office park.

----------


## gopokes88

> Yes. I agree. I'm trying to see the upside to this. The campus really is attractive and I hope an institution of higher education considers buying it, maybe a law school or an MBA program? Maybe a prep boarding school?


The upside is CHK emerges from this with 0 debt. They’ll never have the headcount they once did but we’ll have a fiscally strong Fortune 500 company in okc. CHK still does $10,000,000,000 (well pre crash) in annual revenue. They are far from a small company. They won’t be broken up.

----------


## Teo9969

How much money did Chesapeake funnel into OKC all these years with dollars invested by individuals/entities outside of Oklahoma who are left holding a bag of poo?

----------


## gopokes88

Bankruptcy probably next week now that the board has paid all the execs huge bonus’. Same playbook Whiting followed. 

https://twitter.com/javierblas/statu...186576384?s=21

----------


## Mott

> Bankruptcy probably next week now that the board has paid all the execs huge bonus’. Same playbook Whiting followed. 
> 
> https://twitter.com/javierblas/statu...186576384?s=21


Would make the robber barons proud!

----------


## gopokes88

Lol $CHK stock is up 200% today because....reasons

----------


## Edmond Hausfrau

> Lol $CHK stock is up 200% today because....reasons


Is bankruptcy still on the table?

----------


## gopokes88

> Is bankruptcy still on the table?


Yep. Happening any minute now. Wild.

https://twitter.com/GabeHoff/status/...952785920?s=20

----------


## The Shadow

> They have been trying to lease out one of the buildings along 63rd for quite a while now and to my knowledge, without success.
> 
> They've also closed that rooftop dining facility.
> 
> They could easily share those buildings and facilities with other businesses, and I'm sure that's what will happen.  Even if they survive, they could consolidate further and then lease out the excess structures.  It's really no different than any other office park.


The Red Brick buildings are plumbed for multi-family.

One of the smarter things Aubrey did.

----------


## chuck5815

Do we short the pants off of this one tomorrow?

----------


## mugofbeer

What's Inhofe doing?

----------


## Edmond Hausfrau

> Do we short the pants off of this one tomorrow?


Pump and dump is real. Extended trading will kill anyone who doesn't know exactly what they are doing.
I'm including myself as an "anyone".
I feel bad for the CHK employees who banked on stock options benefits to fund their retirement.

----------


## gopokes88

Halted this morning pending news which is likely Chap 11 plans.

----------


## liirogue

> Lol $CHK stock is up 200% today because....reasons


There was a massive short squeeze and margin call on shorts.

----------


## pw405

No news is good news?  Or bad news?

----------


## PhiAlpha

> No news is good news?  Or bad news?


Here’s your news: https://www.wsj.com/articles/frackin...le_email_share

CHK just filed for Chapter 11

----------


## PoliSciGuy

> Here’s your news: https://www.wsj.com/articles/frackin...le_email_share
> 
> CHK just filed for Chapter 11


Well that's not ideal

----------


## gopokes88

> Well that's not ideal


Actually kinda is. They needed a clean slate

----------


## chuck5815

After shedding $7B in debt, these dudes might actually be an interesting acquisition for someone.

But hopefully not for OKC’s sake. The CRE and labor markets already have enough structural issues as it is.

----------


## gopokes88

> After shedding $7B in debt, these dudes might actually be an interesting acquisition for someone.
> 
> But hopefully not for OKC’s sake. The CRE and labor markets already have enough structural issues as it is.


Nah. Don’t have good enough assets. No Permian. Eagle ford mostly drilled out. Oklahoma assets even worse. Their nat gas assets are meh given pricing will be forever depressed.

----------


## PhiAlpha

> Well that's not ideal


For them, it’s the closest thing to an ideal situation that they’re going to get.

----------


## pw405

> Here’s your news: https://www.wsj.com/articles/frackin...le_email_share
> 
> CHK just filed for Chapter 11


Wow, incredible timing!  Haha.... I had no idea! at the time I posted!

----------


## pw405

> Nah. Don’t have good enough assets. No Permian. Eagle ford mostly drilled out. Oklahoma assets even worse. Their nat gas assets are meh given pricing will be forever depressed.


Rumors on Twitter/Stock twits they are shopping Permian bankrupt deals and will try to do another Wildhorse type acquisition.

----------


## gopokes88

> Rumors on Twitter/Stock twits they are shopping Permian bankrupt deals and will try to do another Wildhorse type acquisition.


That wouldn’t surprise me. Companies like oasis, CDEV, Laredo are all in trouble long term.

----------


## Executionist

And here comes Paycom Arena.

----------


## gopokes88

Interesting. This could get ugly. 

https://mobile.reuters.com/article/amp/idUSKBN2401W7

----------


## chuck5815

> And here comes* Paycom Arena*.


i would certainly hope that Chad lands on an edgier name than that. if you're going to pay for naming rights, you might as well take the opportunity to virtue signal on a major league level. Bezos sure as hell did.

----------


## PhiAlpha

> Wow, incredible timing!  Haha.... I had no idea! at the time I posted!


You smelled blood in the water!

----------


## gopokes88

Layoffs today.

----------


## Richard at Remax

All employees told to stay home tomorrow and wait for phone call to see if you get let go. Rumor is 200.

----------


## OKCretro

They used to give pretty decent compensation packages, are they still doing that?  Like 3 months salary and 10 months of healthcare or is that a thing of the past?

----------


## gopokes88

> They used to give pretty decent compensation packages, are they still doing that?  Like 3 months salary and 10 months of healthcare or is that a thing of the past?


Probably has been cut way back.

----------


## gopokes88

https://oklahoman.com/article/567182...rkforce-friday

----------


## thunderbird

> Probably has been cut way back.


I assume, as long as youve been there a while youd get a year of salary but insurance would drop at the end of the month.

----------


## Jersey Boss

Doesn't the bankruptcy court have to approve of severance packages?

----------


## mugofbeer

> Doesn't the bankruptcy court have to approve of severance packages?


It was probably included in the guidelines.

----------


## Anonymous.

So the 200 laid off last week was 15% of the workforce. That is surprising to me that there is even that many still there.

I am surprised there hasn't been a severance package leak by now. (or at least I haven't seen/heard of it)

----------


## Pete

^

If 15% is 200, then the total number of employees was about 1,300 and after the most recent layoffs down to approximately 1,100.

That is total employees, not just on the OKC campus.

OKC campus now has under 1,000 people working there, down from over 5,000 several years ago.


The slow, steady drip of job losses from SandRidge, CHK and Devon has ended up being a massive total, and that is not counting the dozens of other O&G firms like Chaparral, Echo, Tapstone and many others.

And then there are the related companies (midstream, field equipment)...  

It's all just played out over several years rather than one big jolt.

----------


## BG918

Curious where all of the high-income earners at those companies now work?  I'm sure some left OKC but many probably went into a different sector.

----------


## thunderbird

> Curious where all of the high-income earners at those companies now work?  I'm sure some left OKC but many probably went into a different sector.


All the ones I know just got jobs at other O&G companies. One went back to lawyering but is nowhere near his previous pay. It's hard to get a total compensation of $300k+ in OKC.

----------


## StrongCider

Tapstone awarded Mid-Con assets at bankruptcy sale for $134mm. BCE-Mach will be the back-up-bidder. At least part of the CHK empire will stay in OK for now...

----------


## sooner88

CHK's entire campus is about to be put on the market for sale. After years of speculation with what will happen to it if they go under, it looks like we're about to find out.

----------


## Pete

> CHK's entire campus is about to be put on the market for sale. After years of speculation with what will happen to it if they go under, it looks like we're about to find out.


Not all of it, just the part east of Classen.

I'll have a story on this soon.

----------


## BG918

> CHK's entire campus is about to be put on the market for sale. After years of speculation with what will happen to it if they go under, it looks like we're about to find out.


Wow end of an era.  A far cry from the high-flying days in the early 2010's.

----------


## dankrutka

It really would be a great college campus.

----------


## Teo9969

I wonder if this wouldn't be a good target for the city to try and get on the cheap and then use in a bid to lure a headquarters. Not that the city is exactly swimming in cash, but this is quality office space and would be the kind you would want to be able to offer to prospective candidates.

----------


## SEMIweather

I also think it would be a great setup for a tech incubator, sort of like a mini Denver Tech Center. Plenty of room for growth as well between 57th, Shartel, 63rd, and the railroad tracks.

----------


## Teo9969

Pete, can you post the most recent map you have of CHK owned land?

I'd like to see what's about to get divvied up.

----------


## Teo9969

Another argument for the city to buy (a part of) it, if it can be had at a good price, is that it is basically hanging out at the terminus of where the proposed Street Car line is going to go up Classen. Additionally, if the commuter rail is going to run BNSF, the lot bordered by 59th/Lee/61st/BNSF is ripe for a station + mixed use (or residential at the very least) development.

----------


## BG918

> Another argument for the city to buy (a part of) it, if it can be had at a good price, is that it is basically hanging out at the terminus of where the proposed Street Car line is going to go up Classen. Additionally, if the commuter rail is going to run BNSF, the lot bordered by 59th/Lee/61st/BNSF is ripe for a station + mixed use (or residential at the very least) development.


Good point on the commuter rail station, that is a great spot for a dense TOD in between the future station and the CHK campus.

----------


## bombermwc

> Good point on the commuter rail station, that is a great spot for a dense TOD in between the future station and the CHK campus.


With the massive reduction in the CHK workforce, does the route potentially change now?

----------


## Bits_Of_Real_Panther

Are there Christmas lights this year in the trees on the CHK campus, haven't been by lately?

----------


## securityinfo

> Are there Christmas lights this year in the trees on the CHK campus, haven't been by lately?


No, not really.  There may be a few lights here and there, but nothing like the old days.

----------


## Dob Hooligan

> With the massive reduction in the CHK workforce, does the route potentially change now?


I gotta hope that with soooo much office space built the number of bodies per square foot will eventually fill out within my lifetime. Different owner, but still using good space.

----------


## mugofbeer

The fact they built multiple smaller buildings vs. a massive single structure should help it lease out once Covid is up and business starts to recover.  It may be 3 or 4 years though.

----------


## SEMIweather

> With the massive reduction in the CHK workforce, does the route potentially change now?


No, because the route pretty much has to follow the existing rail line that runs from Norman to Guthrie.

----------


## Teo9969

> No, because the route pretty much has to follow the existing rail line that runs from Norman to Guthrie.


On top of that, there's absolutely nothing between CHK and 23rd that is anywhere near ready for a stop, since between 23rd and 50th the tracks are on the industrial side of 235.

You could argue no other area that could potentially be served by any potential commuter route has more to gain than the CHK area from TOD.

----------


## bombermwc

Fair enough. I am hoping the commercial real estate market picks back up after COVID. So many companies have decided that they can reduce their footprint and have people stay home permanently, it's really a grave concern for this market. My fear is that we're going to end up with a massive amount of empty space across the country for a decade. 

Yes, a lot of people have worked from home, but i'm also hoping that corporate America does stop and think about the impact that has on the employees. The more entry level they are, the less room they have. It was one thing to go home thinking it was going to be a couple of months of setting the PC up on their dining room table. It's another thing to do it permanently when they don't have room. I'm fortunate that my wife and I have the space that we could both set up desks at home but that's made our home feel more "full" than it has ever before. I do not want to work from home permanently if I dont have to. Yeah the lack of a commute is great, but I need people!!!!! My pessimistic side says that the "stay home" view will take hold though and we'll have either a massive reduction in real estate prices to try to attract tenants, or we'll just have empty spaces all over the place. 

I agree that the smaller CHK spaces could work, but that only really works if they were built as commercial structures and not cottage homes. Does anyone know if that's an empty floor plate or are those "sticks" load baring? It makes a huge difference in the place being easily leased again if the space is flexible. If it has to stay the way it is, it's more difficult to match a tenant that has a need, with how the space is stuck.

----------


## PaddyShack

I would think any business that owns their space would be quick to move colleagues back in to justify their ownership costs, as is the case with my company. I wouldn't mind keeping a part-time office, part-time home schedule, just to reduce the amount of commute I have as well as giving me a couple of get-work-done-with-no-office-distractions days.

----------


## gopokes88

CHK will emerge from BK soon. 5.1B valuation, 1.8B in debt. Equity will be wiped out. Won't have their Oklahoma assets as those were already sold, but the rest of the company will be kept in tact. All the M&A activity as of recent has hovered around Permian so don't think they'll be a target for that.

----------


## gopokes88

https://dm.epiq11.com/case/chesapeake/dockets

----------


## AMinEdmond

> CHK will emerge from BK soon. 5.1B valuation, 1.8B in debt. Equity will be wiped out. Won't have their Oklahoma assets as those were already sold, but the rest of the company will be kept in tact. All the M&A activity as of recent has hovered around Permian so don't think they'll be a target for that.


 Great info gopoke! So help us folks not in O&G translate some of this info.. Are they primed to get bought out?  Or are they healthy enough to stick around for a while?

----------


## gopokes88

I’d be really surprised if they got bought. Maybe by another gas player, they don’t have Permian and all M&A activity has been in the Permian.

----------


## gopokes88

As far as health financially they’re very healthy now having ejected about 7 billion in debt.

----------


## gopokes88

They were also able to renegotiate midstream contracts which will free up additional cash. 

Doug Lawler is pretty young too, I’d be surprised if he wanted to sell it. Hard to find another job after that.

----------


## gopokes88

Chesapeake is set to emerge from bankruptcy February 8th

----------


## Pete

They just sent an email to employees announcing 220 more job cuts.

Impacted personnel will be notified by phone tomorrow morning.

----------


## David

Another empty building?

----------


## Pete

They had already stated their intentions to consolidate employees to the west side of Classen (all the smaller, mainly brick buildings) and then market all the big buildings and a parking garage or two for sale or lease.

So, I don't believe this changes anything.

My understanding is that campus consolidation is already planned and should be relatively complete this summer.

Then, we'll see if they can find interested parties for most everything east of Classen.

----------


## Richard at Remax

Oh how the mighty have fallen. Really sad when you think of where they were not just 15 years ago.

----------


## SouthOfTheVillage

> Oh how the mighty have fallen. Really sad when you think of where they were not just 15 years ago.


You can only outspend your Operating Cashflow for so many years before the Investors get pissed. The renewable energy players are on the same trajectory but in the honeymoon phase.

----------


## gopokes88

CHK has emerged from CH11. New stock will start trading tomorrow.

(All the old stock was cancelled, hope you sold)

----------


## gopokes88

http://investors.chk.com/2021-02-09-...-Restructuring

----------


## Rover

> You can only outspend your Operating Cashflow for so many years before the Investors get pissed. The renewable energy players are on the same trajectory but in the honeymoon phase.


The renewable energy people don't have to go speculate on huge chunks of leases that will either expire or cost huge amounts to keep.  Way different dynamics and economics.  Keep writing off the renewables at your own peril.

----------


## gopokes88

> The renewable energy people don't have to go speculate on huge chunks of leases that will either expire or cost huge amounts to keep.  Way different dynamics and economics.  Keep writing off the renewables at your own peril.


BP did just pay 80% higher for a wind project than the next closest bidder so he's not totally off base

----------


## gopokes88

Good start for the new stock. up almost 7%. $4.6 billion market cap. Puts them between Cimarex and EQT value wise.

https://finance.yahoo.com/quote/CHK/

----------


## SouthOfTheVillage

> The renewable energy people don't have to go speculate on huge chunks of leases that will either expire or cost huge amounts to keep.  Way different dynamics and economics.  Keep writing off the renewables at your own peril.


Apparently so profitable that they’re still begging for federal subsidies. 

And NextEra just posted a quarterly GAAP loss. Kind of a bad look for a regulated utility, no?

----------


## Rover

> Apparently so profitable that they’re still begging for federal subsidies. 
> 
> And NextEra just posted a quarterly GAAP loss. Kind of a bad look for a regulated utility, no?


I'd say NextEra at 945% total shareholder return over the last 15 years is pretty good.

Let's look at Exxon:

----------


## Pete

APRIL 27, 2021
Chesapeake CEO Lawler to step down months after bankruptcy exit
By Reuters Staff

(Reuters) - Chesapeake Energy Corp said on Tuesday that Chief Executive Officer Doug Lawler would leave at the end of April, just months after the company emerged from a highly watched bankruptcy reorganization.

Once the second-largest U.S. natural gas producer, Chesapeake filed for court protection last June, reeling from overspending on assets and a sudden decline in demand and oil prices spurred by the COVID-19 pandemic.

It emerged from bankruptcy in February, through a plan that saw it shedding about $7.7 billion in debt.

Lawler took the reins at Chesapeake in 2013 after the company’s wildcatter founder Aubrey McClendon stepped down amid investigations into possible antitrust violations. McClendon died in a car accident in 2016.

In an interview with Reuters in February, Lawler had said the company was unable to invest enough in operations to turn a profit while simultaneously paying down $9 billion in debt, and that “led us to make decisions that weren’t always the best”.

The company said on Tuesday board chair Mike Wichterich would serve as interim CEO, while it searches for a permanent replacement.

Wichterich intends to continue in his role as chair after a new CEO is appointed in the “coming months”, Chesapeake said in a statement.

While Wichterich handles the additional role of interim CEO, Matt Gallagher will be lead independent director, the company said.

----------


## Rover

> BP did just pay 80% higher for a wind project than the next closest bidder so he's not totally off base


Pretty apples to oranges off base.

----------


## Pete

All of the buildings east of Classen are now empty, apart from the child care center and the core lab.  The latter doesn't have many/any employees but they store core samples there.

That is a ton of empty office space.

I haven't heard a peep about who may be taking it over, especially since CHK wants a development partner to take all of it as well as all that undeveloped land.

For a while, the state was interested but that seems to have died.

----------


## ChrisHayes

> All of the buildings east of Classen are now empty, apart from the child care center and the core lab.  The latter doesn't have many/any employees but they store core samples there.
> 
> That is a ton of empty office space.
> 
> I haven't heard a peep about who may be taking it over, especially since CHK wants a development partner to take all of it as well as all that undeveloped land.
> 
> For a while, the state was interested but that seems to have died.


I still like the idea of those buildings turning into space for IT, engineering, and bio firms. Turn it into a mini innovation district. That whole area of the city would fit well with something like that.

----------


## Bits_Of_Real_Panther

Any idea what the maximum # of employees for the company was?

I'm seeing 1300 total currently, not all office workers  though

----------


## Pete

> Any idea what the maximum # of employees for the company was?
> 
> I'm seeing 1300 total currently, not all office workers  though


It was over 5,000 in OKC at one point.

And I think they have less than 1,000 at HQ now.

Ironically, they are now starting to make some profit.

----------


## Bits_Of_Real_Panther

They should market that campus to some crypto companies, along with a big city/ state subsidy and tax deferral.

----------


## Bits_Of_Real_Panther

Maybe a bad idea actually,  when looking at crypto companies, many are embracing remote first approaches. 

Who is needing a sprawling physical campus these days?

Maybe a Hobby Lobby type of indoctrination college would work in this part of the country.

----------


## gopokes88

Chesapeake buying Haynesville producer Vine Energy. Great news. Probably not much in terms of adding jobs in okc, but also means they are the one looking to acquire. Not being acquired.  http://www.rbcrichardsonbarr.com/Ind...PR_____DA71736

----------


## Dustin

This isn't the thread for this, but does anyone know when the Christmas lights are supposed to come on? We drove by at sundown and they weren't on, but Whole Foods had theirs on...

----------


## DowntownMan

> This isn't the thread for this, but does anyone know when the Christmas lights are supposed to come on? We drove by at sundown and they weren't on, but Whole Foods had theirs on...


They stated they would be turned on starting dec 3

----------


## sooner88

> This isn't the thread for this, but does anyone know when the Christmas lights are supposed to come on? We drove by at sundown and they weren't on, but Whole Foods had theirs on...


The lights on Western aren't done by CHK anymore, but rather was organized by a group called Winter on Western. There was a lighting ceremony Friday evening in honor of Aubrey. They were having some issues with the generators Friday, so I imagine they should be back on soon.

----------

