Jun. 30, 2014, 12:42 PM
- New York’s cities and towns can block fracking within their borders, the state’s highest court rules, upholding the dismissal of lawsuits challenging bans in two small upstate towns.
- The ruling could lead the oil and gas industry to abandon fracking in New York, or it could mean that a patchwork of rules eventually may govern whether exploration can take place across the state; the case also may invigorate local challenges to the practice in states across the U.S.
- Parts of New York sit above the Marcellus Shale, some of whose top producers are: CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN.
Jun. 25, 2014, 3:43 PM
- Michigan's AG files another 12 charges in its land-leasing case against Chesapeake Energy (CHK +2.1%), bringing the total number of counts filed against CHK to 20 counts of false pretenses and conducting a criminal enterprise.
- According to the complaint, land options in northern Michigan were obtained to keep competing companies from leasing, and the leases later were canceled when competition for land ended.
- Encana last month agreed to pay $5M to settle civil litigation over its leasing activities and to not contest a charge it tried to collude with CHK, which has denied all charges.
Jun. 16, 2014, 4:28 PM| 5 Comments
Jun. 9, 2014, 12:58 PM
- Mac is back, as former Chesapeake Energy (CHK) CEO Aubrey McClendon's American Energy Partners announces $4.2B in acquisitions across shale formations in Texas, West Virginia and Ohio.
- The biggest deal is a ~$2.5B acquisition of ~63K net acres of oil and gas properties in Texas' southern Permian Basin from Enduring Resources.
- In two other acquisitions totaling $1.75B, he’s acquiring 27K net acres (with 40M cf/day of natural gas production) in the Utica shale region of Ohio, and he’s taking 48K acres (with 135M cf/day of nat gas production) in the Marcellus shale of West Virginia, both from Shell's (RDS.A, RDS.B) East Resources division and an unnamed private company.
- “He’s making bets on the same type of assets he did at Chesapeake," Oppenheimer's Fadel Gheit says. "The guy is consistent.”
Jun. 9, 2014, 11:49 AM
- EOG Resources' (EOG +1.1%) crude oil production surged 42% in Q1, and if business stays on course, as expected, the E&P company could enjoy a 32% jump in earnings this year, according to a weekend profile in Barron's.
- EOG's enterprise value is 6.9x this year's estimated EBITDA, roughly in line with the EV/EBITDA multiples accorded competitors Chesapeake Energy (CHK) and Devon Energy (DVN), but the story says it deserves a loftier multiple than the group, given its significant drilling inventory, superior production growth, lower debt ratio, and 15.6% return on equity vs. an average of 9.5% among peers.
- EOG raised its 2014 goal for growth in crude oil production to 29% from a prior 27%, and for total energy production to 12% from an earlier 11.5%, but its estimates often prove conservative, sparking expectations for more upward revisions as the year unfolds.
Jun. 9, 2014, 7:30 AM
- Chesapeake Energy's (CHK) board approves the spinoff of its oilfield services operations into a separate, publicly traded company called Seventy Seven Energy.
- The two companies will be separated through the distribution of SSE stock to CHK shareholders following the close of business June 30, as expected.
- CHK said in March it planned a spinoff of its oilfield services operations, which generated $2.2B in revenue last year.
Jun. 5, 2014, 12:57 PM
- Chesapeake Energy (CHK +1.8%) faces additional criminal charges from Michigan's AG for racketeering and fraud for "victimizing private land owners across northern Michigan."
- The complaint alleges that CHK tied up landowners in 2010 by telling them existing mortgages were no barrier to leasing their properties, then citing those same mortgages as justification for canceling almost all the leases after competition for them ceased.
- The allegations follow earlier accusations that CHK colluded with Encana (ECA +0.3%) to divide the Michigan counties in which they had bid for exploration rights in 2010, driving down prices.
Jun. 5, 2014, 11:59 AM
- Rose Rock Midstream (RRMS +0.2%) agrees to acquire crude oil trucking operations from Chesapeake Energy (CHK +1.1%) for an undisclosed sum, in a deal that will expand RRMS' reach into key oil producing shale basins.
- The deal includes 124 trucks, 122 trailers and other equipment in Texas, Oklahoma and Ohio; following the closing, RRMS will operate a fleet of more than 250 trucks with ~350 employees, servicing the Bakken, DJ/Niobrara, Eagle Ford, Granite Wash, Mississippi Lime, Permian, San Juan and Utica plays.
Jun. 2, 2014, 3:31 PM
- Walter Energy (WLT -6.3%) shares aren't helped by the coal producer's statement that new EPA proposals aimed at controlling carbon emissions from U.S. power plants should have no material impact on the company; in fact, WLT is down more than peers: CNX +1.1%, BTU +0.1%, CLD -0.3%, ACI -2.8%, ANR -4.6%.
- Long-term losers also will include electric companies that burn lots of coal - such as American Electric Power (AEP +0.1%), Duke Energy (DUK -0.3%), Southern Co. (SO -0.3%) and NRG Energy (NRG -0.1%) - but stiff regulations have been expected for some time.
- Likely winners include companies that pump natural gas and those that use it as their primary fuel, such as Calpine (CPN +0.3%), and companies that operate nuclear plants that generate little carbon but have been expensive to run, such as Exelon (EXC -1%), hope that their aging plants will become more competitive.
- A reduction in coal-fired capacity would increase utilities' demand for natural gas by 3B-10B cf/day from 22B cf/day now, potential benefiting major natural gas producers like Chesapeake Energy (CHK +2.1%), Cabot Oil & Gas (COG -0.8%) and Range Resources (RRC -0.6%).
- ETFs: XLE, XLU, TAN, ERX, KOL, IDU, VDE, OIH, ERY, FCG, VPU, DIG, GASL, DUG, IYE, GASX, PXJ, FENY, RYE, UPW, FUTY, RYU, FXN, FXU, DDG, SDP
May 29, 2014, 8:42 AM
- Oklahoma Gov. Fallin signed legislation yesterday that will raise taxes on the state's oil and gas wells but was supported by the state's largest oil and gas producers, Devon Energy (DVN), Continental Resources (CLR) and Chesapeake Energy (CHK).
- The new law takes effect in 2015 and will tax energy companies at a 2% rate on a well's oil and gas output for the first three years of its life; after that, the tax rate rises to 7%.
- Critics say the higher rate still falls short of what's needed to help fund education and infrastructure improvements.
May 27, 2014, 2:42 PM
- Chesapeake Energy (CHK +2.1%) is fighting back against collusion charges, accusing Michigan authorities of cherry picking internal documents to support their contention it colluded with Encana (ECA -0.9%) in dividing up oil and gas lease bids in the state.
- Michigan authorities have charged the companies with driving down the price of oil leases by conspiring over which counties each would seek resource exploration rights during a May 2010 auction.
- Among the evidence the state's lawyers say back up their accusations are CHK e-mails suggesting the firms "throw in 50/50" on the bids, but in new court filings, CHK cites other parts of the same e-mails to show former CEO Aubrey McClendon was open to competition.
May 19, 2014, 7:17 PM
- Mexico, Iran and other countries that once played hardball with big oil companies are now rolling out the welcome mat, offering generous deals in the hope they will bring capital to stimulate output.
- But it isn't certain the big oil firms will want to return to all those countries, as the economics of the oil business may be changing to favor different kinds of exploration projects elsewhere in the world, WSJ reports.
- The biggest shake-up is coming in Mexico, where production has been falling steadily while rising electricity demand has forced dependency on imported natural gas and sent prices soaring; Total (TOT), Chesapeake (CHK) and Chevron (CVX) have expressed interest in entering the country.
- Iran is considering big changes to its current stringent oil terms, but some analysts say "it will be a slow process to get Western oil companies back to Iran... Iran's reservoirs are prolific, but they are also complex and in poor shape."
- Also, he Ukraine crisis has reinforced the trend in thinking about geopolitical risk as being a big factor.
- ETFs: XLE, ERX, VDE, OIH, ERY, FCG, XOP, DIG, GASL, DUG, XES, IYE, IEO, IXC, IEZ, GASX, PXE, IPW, PXJ, BARL, PXI, PSCE, FENY, RYE, FXN, GNAT, DDG, IOIL, FILL
May 19, 2014, 2:59 PM
- Chesapeake Energy (CHK +1.1%) gets votes of confidence from at least three market analysts after last Friday's negative reaction to news of the details surrounding the planned spinoff of its oilfield services business.
- Analysts at Tudor Pickering upgrade CHK's rating to Hold from Trim, KLR Group raises its rating to Buy from Accumulate with a $37 price target (from $33), and Jefferies maintains its Buy rating while lifting its price target on the shares to $35 from $31.
- The firms cite improved capital productivity and say Friday's dropoff was an overreaction.
May 16, 2014, 9:59 AM
- Chesapeake Granite Wash Trust (CHKR -7.3%) is under pressure after Chesapeake Energy (CHK -3.8%) revealed plans to proceed with a spinoff of its oilfield services operations by the end of next month as it also plans other asset sales.
- Shares are also going ex-dividend today.
- CHKR revenues and distributions depend on the timing of initial sales from CHK's development wells in which the trust receives an interest, as well as the sales volume and prices attributable to the Trust's royalty interests.
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
CHK vs. ETF Alternatives
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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