Chesapeake empire marches on

[bwana_bob]

I have no problem with that purchase.

Whew!

Sincerely,

Aubrey K. McClendon
Chairman of the Board
Chief Executive Officer
Chesapeake Energy Corporation

[Pete]

Here's another aerial that shows the Bekins purchase in relation to other properties they own in that area (shown in yellow):

[metro]

Anyone notice their other purchases facing I-44 between Western and Broadway? They painted those buildings black and now have the new Cheasapeake logo on them (used to be the old Skrivner buildings way back in the day).

[Saberman]

They have also purchased property along Broadway Ext. Looks like its going to be a pretty major development plan.

[metro]

I'm confident it will be so, as long as the economy doesn't collapse against their favor. Oil should stay high for awhile despite a bad economy so hopefully they will press through with development. I'm confident they will have grand plans for the area.

[jbrown84]

People seem to forget the Chesapeake is natural gas, not oil.

[John]

People seem to forget the Chesapeake is natural gas, not oil.

Exactly. They're not going anywhere.

[metro]

True, although I do believe they dabble just a tad in oil (sometimes natural gas/oil are the byproduct of another). But yes, for the most part they are a natural gas company.

[solitude]

True, although I do believe they dabble just a tad in oil (sometimes natural gas/oil are the byproduct of another). But yes, for the most part they are a natural gas company.

"Chesapeake Energy Corporation (Chesapeake) is the largest independent producer of natural gas in the United States, and owns interests in approximately 34,600 producing oil and natural gas wells that are producing approximately 1.7 billion cubic feet equivalent (bcfe) per day, 92% of which is natural gas."

Yes, I'd say that is "for the most part."

[Easy180]

Exactly. They're not going anywhere.

Now Devon on the other hand...Afraid it's only a matter of time before a check with an insane amount of zeroes on it takes out one of our last quality employers

[shane453]

I think it's funny that we can only compare this to "real life Monopoly" and "real life SimCity"... because it's true... That's exactly what they're able to do. We can't possibly imagine the kind of money they're able to throw around acquiring properties because they have a vision. Hopefully it's a real cool vision, and hopefully we get to find out soon...

Maybe they'll just buy all of Oklahoma City!

[Kerry]

I think the oil consolidation business at the top of the food chain is over. With the consolidations of Exxon-Mobil, Phillips-Conoco, and others the benefit of consolidating never made it to the consumer level and has reduced competition for oil. Thus high prices. I don't think the government will be allowing any more mega-mergers in the oil industry.

[bombermwc]

Devon isn't the typical oil company like many of the consolidation folks either. Devon deals in the wholesale market, not the consumer market. We saw most of the consolidation/merger efforts in the consumer companies, not with the wholesellers. I would bet that most people don't even have any idea of the names of the companies like Devon out there because we don't see them on a day to day basis like the consumer brands.

[BDP]

I'm betting that is so that most of the people in management at Chesapeake could walk to work from the hills

Ha ha.

Actually, I'm betting no one has ever walked to Chesapeake from anywhere to go to work... no one... ever.

[BG918]

^ Maybe this secret plan is going to change that? With all of this land under CHK not all of it can be retail and office space, it must somehow include residential.

[Dustbowl]

Not to rain on the CHK parade, but if we are going into a national recession oil and gas prices will drop. They have decreased in every recession. The most severe drop has been 50% and the mildest was the 200-2002 recession where natgas prices dropped 33%. Facts are facts. See charts at Natural Gas (NG, NYMEX): Monthly Price Chart Let's keep it real. Anybody here during the last oil bust? I was and it ain't pretty.

[Pete]

And since we are talking about high-end real estate development here, if the oil industry was to tank that would be a major downer on the OKC economy even if Chesapeake wasn't directly affected.

The market for high-end retail, office and residential units in Oklahoma is directly tied to the oil biz. I sure wish CHK had already taken advantage of the current run-up by getting some properties built and leased before now. Who knows if there'll be a strong market for what they want to build by the time they get around to it?

[TheImmortal]

On a similar note, I have a friend who works at Pops out in Arcadia. He has met Mr. McClendon a few times and apparently he owns about 95% of that town(this I knew) but what I did not know is he bought out the towns only true restaurant and paid a couple cool million for this run down shack. His plan is to now open his own true restaurant serving steaks, burgers and whatever else and phase that part out of Pops. It sounded real shady to me but money talks and it this case it won. Lets the hope he doesn't decide to buy out the round barn and then replace it with his own "square barn*...sigh.

[Dustbowl]

The Mclendon's give $5.5 million to Duke University and they placed cartoon gargoyles on the facade of a residence hall in their honor. Hilarious!!!

Gargoyles Honoring Duke Donors To Be Taken Down :: WRAL.com

[bornhere]

Strictly speaking, those aren't gargoyles. They're sculptures that aren't out of place for a building of that style. I hope the McClendons weren't offended by those, because my impression from looking at them is that they were done in good faith.

That story appears to have been posted in 2002, by the way.

[Dustbowl]

Strictly speaking, those aren't gargoyles. They're sculptures that aren't out of place for a building of that style. I hope the McClendons weren't offended by those, because my impression from looking at them is that they were done in good faith.

That story appears to have been posted in 2002, by the way.

They were offended and they were replaced with a simple plaque.

[Dustbowl]

I know people who have sold offices and condos to CHK in the Western area. CHK paid unbelievable prices for these properties. Up to 4X market value. I also know some old timers in the gas business in Western Arkansas who tell me the same thing out there. CHK is a joke to these old guys. They keep saying "remember Enron young man". Throwing money around like drunken sailors. Makes me worry about this deal. What would happen to "the campus" if gas prices drop for a long period? What the heck would you do with it?

[jbrown84]

What would happen to "the campus" if gas prices drop for a long period?

Natural gas. Natural gas. Nothing to do with gasoline prices.

[adaniel]

I know people who have sold offices and condos to CHK in the Western area. CHK paid unbelievable prices for these properties. Up to 4X market value. I also know some old timers in the gas business in Western Arkansas who tell me the same thing out there. CHK is a joke to these old guys. They keep saying "remember Enron young man". Throwing money around like drunken sailors. Makes me worry about this deal. What would happen to "the campus" if gas prices drop for a long period? What the heck would you do with it?

That doesn't surprise me. I had an internship this previous summer with a major oil company in Houston and I definitely heard some "whispers" about CHK, very little of it positive. Pretty much the same thing, that they are spending money like nobody's business all the while creating a "sham" for wall street investors. I wouldn't compare them to Enron but I would agree that paying 4 and 5 times for property while being involved in a highly volatile industry like energy is eyebrow raising at the least. If I were a stockholder I would be wanting answers.

If I am correct, CHK was started in 1989 or 1990, well after the first energy bust so they don't really know truly lean times. On the other hand, I have noticed that they have really slowed down some of their acquisitions and have actually sold off some of their less productive properties, so maybe there getting the message to start being a little more conservative. And I have to hand it to Aubrey for really getting out there and trumping natural gas as "a fuel of the future." I think it is starting to pay off. So hopefully CHK will be around a while.

[sdsooners]

I find it funny that people compare Enron and Chesapeake. The only real similarity is they both participate in the broad energy industry. Enron was a company that made a vast majority of their "profits" from energy trading and spent billions of dollars on risky capital projects (bottled water, nuclear energy, etc) all over the world. They became successful simply because they were able to outsmart Wall Street and convince them of success even during failure. Most of their "profits" never actually resulted in cash coming in the door and the company value was primarily based on trading positions that were valued using their own pricing curves! It would be like CHK being able to value their reserves at a $20 NG price just because they think that’s what they should be worth.

CHK on the other hand is a natural gas production company. They do participate in trading but it is for hedging purposes rather than speculation, which explains why the company actually loses money on trading when the price of NG rises. All of CHK's assets (rigs, leasehold property, 3-D seismic, and producing properties) have an actual value that can be accurately determined. The company is primarily valued based on "proved" reserves, which doesn't include the trillions of cubic feet of gas CHK thinks they have found but can't be 100% certain. CHK is also a very concentrated company that doesn't overextend themselves in various business or geographical areas. Yes, CHK definitely overpays on property acquisition and spends a lot of money on its campus, landscaping, and surrounding areas; but the extravagant spending is nowhere near the levels of Enron. I could go on and on….

As for the recession and future oil price drop worries, CHK is 8% oil and has no retail sales of gasoline. People don't realize that while oil and natural gas come from the same hole in the ground, their industrial uses, supply/demand curves, and pricing patterns no longer mimic one another. Most believe oil prices will return to lower prices one day, but that doesn't automatically mean natural gas will follow.