Chesapeake Business Practices

[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.