May 16, 2014, 7:29 AM
- Ahead of its investor day, Chesapeake (CHK) says it plans to spin off its Oilfield Services Business to shareholders in a tax-free transaction that will remove $1.1B in debt from the parent company's balance sheet.
- The division will be renamed Seventy Seven Energy and will grant Chesapeake a dividend of $400M to repay inter-company debt.
- Chesapeake also intends to divest its ownership of CHK Cleveland Tonkawa, which will improve its balance sheet, mostly by eliminating $1B of equity attributable to third parties.
- In addition, Chesapeake has agreed to sell various non-core assets for $600M.
- The transactions will lead to a net leverage reduction to Chesapeake of nearly $3B but only lower its 2014 output by 2% and its operating cash flow by $250M. The deals will also cut Chesapeake's 2014 interest expense and dividend payments by $70M and eliminate $200M of projected capex.
- Following these deals, Chesapeake expects 2015 production to grow 7-10% and capex of $5.5-6B. The company is targeting five-year annual production growth of 7-9%.
- Shares are -3.8%. (PR)
May 9, 2014, 11:58 AM
- Wall Street’s idea of investing in climate change means investors are piling into natural gas - the least polluting fossil fuel - as energy have accounted for nearly two-thirds of the $8B of inflows into sector-based ETFs this year.
- A White House advisory panel said this week that global warming already is blighting the U.S. with more intense coastal flooding, rainstorms and wildfires, but “weather extremes are good for the energy business," says money manager Skip Aylesworth.
- Climate change is proving to be a boon for energy investment; on the day the report was issued, the S&P Energy Index hit a record, and $322M flowed into ETFs that specialize in energy.
- "Natural gas is a potential bridge to new technologies that are green or clean,” says State Street's David Mazza, which he says has sparked investor interest in companies such as Nabors Industries (NBR), EOG Resources (EOG), Anadarko Petroleum (APC) and Chesapeake Energy (CHK).
- ETFs: XLE, ERX, VDE, OIH, ERY, FCG, DIG, DUG, GASL, IYE, GASX, PXJ, PXI, PSCE, FENY, RYE, FXN, DDG
May 8, 2014, 8:15 AM
- The SEC has ended an investigation of Chesapeake Energy (CHK) and former CEO Aubrey McClendon and does not intend to recommend enforcement action, according to the company's latest 10-Q filing.
- The two-year probe concerned a perk that allowed McClendon to invest in oil and gas wells CHK drilled; McClendon pledged his stakes in the wells as collateral to borrow more than $1B, much of it from financial firms that also invested in CHK.
- McClendon is now running American Energy Partners, a new private company that has hired CHK to drill wells in Ohio.
May 7, 2014, 8:23 AM
- Chesapeake Energy (CHK) +2.6% premarket and may be poised to begin trading at a 52-week high after Q1 earnings and revenues skyrocket Y/Y and easily beat Wall Street expectations.
- Q1 oil and gas production totaled 675.2K boe/day, up 11% Y/Y after adjusting for asset sales, consisting of 109.5K barrels of oil, 84.2K bbl of natural gas liquids and 2.9B cf of natural gas.
- Average price it received for its gas during Q1 was $3.27/M cf, up from $2.13/M cf a year ago.
- Raises 2014 total production growth outlook 9%-12%, up from an earlier forecast of 8%-10% growth, to reflect higher than expected natural gas liquids volumes; raises the midpoint of 2014 operating cash flow outlook by 13% to $5.8B-$6B from prior $5.1B-$5.3B due primarily to the increased production outlook.
May 7, 2014, 7:02 AM
May 6, 2014, 5:30 PM
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May 6, 2014, 10:58 AM
- Chesapeake Energy (CHK +0.6%) CEO Doug Lawler may take the company he inherited from founder Aubrey McClendon to the one place his deals-obsessed predecessor never wanted to go: overseas.
- According to a Bloomberg profile, Lawler’s immediate goals are to curb spending and sell enough gas fields and side businesses so CHK’s expenses aren’t outstripping its cash flow for the first time in more than a decade, but his long-term ambition is to amass foreign fields and transform CHK from a U.S. shale driller into a global oil explorer in the mold of his former employer Anadarko.
- The question for now is whether Lawler can ever get there: Despite the drastic cost-cutting, CHK's net debt has stubbornly hovered ~$12B, triple the size of Chevron’s, a company more than 10x larger by market value.
May 5, 2014, 3:58 PM
- Encana (ECA -1.5%) pleads no contest and agrees to pay Michigan a $5M settlement that could clear it of criminal antitrust charges stemming from its role in a 2010 land leasing spree, while Chesapeake Energy (CHK +0.2%) said at a hearing today it would continue to fight its own criminal antitrust charges (earlier).
- As part of ECA's settlement, the company agrees to cooperate with prosecutors in Michigan who are still pursuing a criminal case against CHK, which they allege was ECA's co-conspirator during the leasing spree.
May 5, 2014, 11:59 AM
- Michigan prosecutors plan to call a former Encana (ECA) executive to testify on behalf of the state in a multi-day hearing in their criminal antitrust case against Chesapeake Energy (CHK) and Encana that begins today.
- Kurt Froistad, a former land acquisition specialist at ECA's U.S. unit until Aug. 2011, exchanged emails with a counterpart at CHK about dividing up bidding responsibilities between the two companies in nine Michigan counties ahead of an Oct. 2010 state land auction.
- Last week, the companies said they had received closure letters from the Department of Justice ending its federal investigation of possible antitrust violations related to their Michigan land-leasing activities.
May 2, 2014, 4:55 PM
- Chesapeake Energy (CHK) must pay $121M to three Texas leaseholders 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.
- CHK had agreed in 2008 to buy ~500 oil and gas leases from Preston Exploration and two affiliates, but backed out after gas prices plunged more than 50% shortly before the deal was to close.
- The lawsuit is one of hundreds of landowner claims filed in federal and state courts in Texas, Michigan, Pennsylvania and other states alleging CHK broke contracts for oil and gas leases.
Apr. 30, 2014, 7:18 PM
- The Department of Justice ends its probe of possible antitrust violations by Chesapeake Energy (CHK) and Encana (ECA) related to their land-leasing activities in Michigan, the companies say.
- ECA says "The conclusion of their investigation is consistent with the findings of our independent investigation, and of our Board of Directors, that Encana did not engage in collusion with competitors in Michigan in 2010."
- CHK and ECA still face state charges in Michigan; both have denied the Michigan charges and said they would fight the allegations.
Apr. 17, 2014, 11:15 AM
- The outlook for Chesapeake Energy (CHK +1.7%) is on the upswing because CEO Doug Lawler has made substantial progress since taking the helm last June, top shareholder Southeastern Asset Management says in a letter today.
- Lawler’s “capital discipline and operational effectiveness will reward shareholders,” according to the owner of ~10% of CHK shares.
- Lawler has voiced plans to cut spending 20% this year, bringing it down to less than half of 2012 levels as CHK sells assets and spins off its oilfield services division.
Apr. 12, 2014, 8:25 AM
- Ohio geologists for the first time have linked earthquake activity in the Marcellus Shale to fracking, a new connection that could have implications for oil and gas drilling in the state and beyond.
- As a result, Ohio is setting new permitting conditions in quake-sensitive areas and has halted drilling indefinitely at the site of five quakes last month in the Youngstown area.
- Earthquakes recently rattled residents in Oklahoma, putting that state on track for record quake activity this year, which some seismologists say may be tied to oil and gas exploration.
- Among companies drilling in the Marcellus and Utica shales: RRC, CHK, COG, ACMP, APC, ATLS, CVX, CNX, DTE, EOG, EQT, XCO, XOM, MWE, NBL, RGP, REXX, RICE, RDS.A, RDS.B,SWN, STO, SXL, TLM, WMB, WPX.
Apr. 10, 2014, 2:24 PM
- Chesapeake Energy (CHK +1.3%) says it is planning a record $3B bond offering in three parts to refinance debt, as the cost to protect its bonds against default approaches a six-year low.
- CHK intends to issue floating-rate notes due 2019 and fixed-rated securities maturing in 2022 and 2026; proceeds will be used to repay a term loan that matures in 2017, fund a tender offer for debt due 2015 and redeem 2018 securities.
- CHK's debt has gained 6.47% in the last year, better than the 5.6% gain among peers in Bloomberg's USD High Yield Corporate Bond Index.
Apr. 10, 2014, 10:46 AM
- Oklahoma is experiencing a noticeable increase in earthquakes near drilling sites, according to the Oklahoma Geological Survey, suggesting a potential link between fracking and seismic activity.
- The state already has experienced as many earthquakes YTD than all of last year combined: 109 earthquakes with a magnitude 3 or higher through April 6, the same number of earthquakes as in all of 2013.
- The incidents pose a conundrum for regulators in a state that has fully embraced oil and gas drilling.
- Among drillers with a significant Oklahoma presence: CHK, CLR, APA, DVN, SD, EOG, MRO, OKE, OKS, GPOR, WPX, WMB, WPZ, LPI, CWEI, NFX, NGL, COG, WLL, NBL, MPO, PQ, XEC
Apr. 8, 2014, 6:21 PM
- Drilling fees on nearly 6,500 natural gas wells in the Marceluus Shale will bring more than $630M to Pennsylvania's coffers by the end of the year, three years after the state passed the fees into law, but critics say the oil and gas companies aren’t paying enough.
- Range Resources (RRC) paid the most with $27M in fees last year, followed by Chesapeake Energy (CHK) with $26.6M; among others, Cabot Oil & Gas (COG) forked over $13.2M, Anadarko Petroleum (APC) paid $12.3M, and EOG Resources (EOG) coughed up $4.5M.
- Critics who want the companies to pay more point to a report from the state’s independent fiscal branch that found Pennsylvania’s drilling fees were lower than severance tax rates on gas production in Texas and other states, which do not have drilling fees.
Chesapeake Energy Corp is a natural gas and oil exploration and production company. It explores, develops and acquires properties for the production of natural gas and crude oil from underground reservoirs and also provides marketing & midstream services.
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