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Chesapeake Energy Corporation (CHK)

  • 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.
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  • 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.
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  • 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.
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  • 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
  • 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.
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  • 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.
  • Apr. 1, 2014, 2:51 PM
    • Marcellus shale gas producers will benefit more than producers elsewhere in the U.S. because of several favorable circumstances - including large producing wells in the northeast U.S. conveniently located near major markets - even if prices were to decline to 2012 levels, according to a Moody’s report.
    • Anadarko Petroleum (APC), Southwestern Energy (SWN) and Chesapeake Energy (CHK) - all of which entered the play early during a weak natural gas price environment - especially have benefited, Moody's says.
    • An infrastructural overhaul is still needed as buyers move away from traditional production hubs such as the Haynesville and Barnett, the credit rating agency says; the transition already has caused a decline in credit quality for Exco Resources (XCO), Forest Oil (FST) and Quicksilver Resources (KWK).
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  • Mar. 26, 2014, 3:19 PM
    • Lower than expected production from Chesapeake Energy’s (CHK -1.1%) Sahara natural gas field in Oklahoma is threatening $880M in loans and notes from Barclays under a pair of agreements that repay the borrowings with future supplies of gas, crude oil and gas byproducts, Bloomberg reports.
    • Output from 3,300 CHK-operated wells in the Sahara field was 12% below projections during six months ending in February, Moody’s says; as a result, the production coverage ratio on the Glenn Pool Oil & Gas Trust five-year loan and 10-year notes declined to 1.18 from 1.29.
    • In December, Moody’s had downgraded ratings on $360M in CHK borrowings backed by Barnett Shale wells in Texas after production growth there slowed to 3.4% in 2013 after growing at double-digit rates in 11 of the prior 12 years.
  • Mar. 24, 2014, 6:45 PM
    • Chesapeake Energy (CHK) stock has dropped ~6% over the last six months vs. the S&P 500's 10% rise, but Chairman Archie Dunham is still a buyer, adding another 54K shares last week totaling ~$1.4M.
    • The former ConocoPhillips chairman has spent $17.4M buying CHK shares in the fewer than two years since he came out of retirement to head CHK's board.
    • Dunham isn’t the only board member buying; CHK directors have spent $27.8M buying shares since June 2012, when the company stripped Aubrey McClendon of his chairmanship and installed Dunham and other new directors; those shares now are worth ~$33.3M.
    • The latest buying suggests confidence in CHK's new leadership and strategy; under CEO Doug Lawler, who joined last June, the company cut capital spending in half in 2013 to $7.2B from $14.1B the previous year with plans to trim another 20% in 2014.
  • Mar. 19, 2014, 10:58 AM
    • Chesapeake Energy (CHK -0.4%) and Encana (ECA -1.3%) appear before a Michigan judge today to answer allegations they criminally conspired to lower land leases in the state.
    • Collaboration between the two companies may have caused lease prices to plummet from $1,510/acre at a May 2010 auction to less than $40/acre at an auction conducted five months later, according to the Michigan AG.
    • ECA has expanded its presence in the region’s Collingwood shale formation, controlling ~429K acres by the end of 2012, while CHK withdrew from the area after investing $400M.
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  • Mar. 17, 2014, 9:14 AM
    • Chesapeake Energy (CHK) +2.6% premarket on news that it has filed with the SEC for a possible spinoff of its oilfield services division.
    • CHK says it intends for the spinoff to be tax-free to its shareholders for U.S. federal income tax purposes.
    • The business, which would be called Seventy Seven Energy after the spinoff, operates the fifth-largest U.S. land-based rig fleet, with 77 walking, pad-capable units; it drills, provides oilfield tools and operates fracking services in the Permian Basin, Eagle Ford, Marcellus and other U.S. shale plays.
  • Mar. 12, 2014, 10:19 AM
    • WSJ examines Chesapeake Energy's (CHK -0.7%) deepening dispute with Pennsylvanians over royalty payments to those with CHK wells on their land.
    • Pennsylvania requires oil and gas drillers pay royalties of at least 12.5%, but lets drillers deduct costs for transporting, processing and marketing - and CHK appears to take a much more aggressive approach to those deductions than other energy companies operating there, including Anadarko (APC) and Statoil (STO).
    • "I'm paying them to take my gas," says one landowner who claims his royalties don't cover the added taxes for owning commercial property.
    • The public outcry has grown so loud that Pennsylvania Gov. Corbett, who has received campaign contributions from the company, wrote an open letter last month asking the state attorney general to investigate.
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Company Description
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.