Chesapeake Business Practices

[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?