Thought ya'll might be interested in this item.
Exclusive: Chesapeake CEO took out $1.1 billion in unreported loans
Anna Driver and Brian Grow
April 18 2012, 6:45 AM CDT
HOUSTON (Reuters) - Aubrey McClendon, the CEO of Chesapeake Energy Corp, has borrowed as much as $1.1 billion over the last three years against his stake in thousands of company wells - a move that analysts, academics and attorneys who reviewed loan documents say raises the potential for conflicts of interest.
The complete article can be viewed at:
Here is a much longer version of the same story. I don't know why they have dif titles, but this one has more info. It's not CHK who is loaning him the money - it's a large investment group who has loaned both Aubrey and CHK money. A link to a story about them is below.
also, here is a story about the group who has loaned Aubrey and CHK a lot of $$$
Out of curiosity, I'd like to know one type of thing: When Chesapeake pays royalties to everyone else, we are paid based on some price that is diluted through some holding company they also own. If I have my guess, this isn't the way Aubrey gets paid. I'd bet a donut that he has gotten the hedge prices supposedly only available to Chk and that his reporting is different from everyone else. If he is just an investor in those wells and it's seperate from Chesapeake itself, every shmoe out there ought to get paid the same. I'd like to compare the reports they send me to the ones they use to pay McClendon. The rules are always different for Aubrey. Of course no one will ever know since none of those records get seen without court order.
He is, in my opinion, a pig. Doesn't know when enough is enough. Puts his assets and those of the company at excessive risk with his continual leveraging and money lust. He is a pig.
Maybe you know something I don't. But my understanding is the problem that CHK and Aubrey have is because of the fall in NG prices not because of any pigging on his part as you put it. I may have a perspective on this that you may not. I'm in commercial real estate. The market has gone south and the only way to maintain the property is for me to personally back it. That I equate to him backing his company. Its just a matter of scale. He works in the billions and I work in the thousands. But I understand the concept of trying to save the company.
Joe is right. A year ago, we all thought Aubrey had such a great deal, when he got to buy 2.5% of every CHK well. It sure doesn't look so great, now that the wells are losing money. Just goes to show you that not even CEO of a natural gas firm can predict the price of natural gas.
My mind goes back to CHK's Investor Presentations over the last 3 years, when Aubrey would try to convince us of the great value in CHK stock, by showing the book-value of the company if gas were $6, $7, or $8.... He would complain that the investing public just couldn't see the great value in CHK stock. He never showed the value for gas going the downward direction.
Good question. Since CHK is booking a lot more profit on "hedging activities" than on oil and gas well drilling and production, and hedging is a largely unregulated side business per the reuters article.
I think they make a contract between CHK and a party that needs a large volume of gas (like a power plant that generates electricity for instance). I think the difference received between the actual amount received and the spot price is booked as the profit or loss from hedging activities.
This may all occur after CHK marketing purchases the raw gas or gas and products from you as a RI owner, likely at prevailing rates or spot or they may hedge only the fraction they own and add outside purchases later to round out the promised delivery volume. These contracts are for such large volumes, I think it would be impossible to say which contract a lessors share wound up in on any given day, but still, It's a very good question. I hope someone can clarify it.
DOW JONES NEWSWIRES
Chesapeake Energy Corp.'s (CHK) board and chief executive have agreed to terminate a controversial contract 18 months before it had been scheduled to end.
The program had provided current Chairman and Chief Executive Aubrey K. McClendon with the right to participate and invest as a working interest owner of up to 2.5% in new wells. Chesapeake said Tuesday that McClendon will receive no compensation of any kind in connection with the contract's early termination.
Shares surged 9.4% to $20.16 as the company also reported it intends to name a new independent chairman to replace McClendon. It intends to consider candidates "with no previous substantive relationship with Chesapeake," adding it will be soliciting input from major shareholders.
"The board appreciates Aubrey's cooperation in these measures and has confidence in Chesapeake's future," said Merrill A. Miller Jr., Chesapeake's lead independent director.
CNBC REPORT just few minutes ago..McClendon stepped down as Chairman of Cheasapeak and stock went up some
"and stock went up some"
Wow, is that the understatement! As of my writing this, CHK's stock price is currently up over +7% on more than three times the average daily volume! Too bad Aubrey still gets to keep his other titles though.
The stock may have been up on the news of Aubrey's "demotion." But it's still too risky for me. I have no idea what new information will emerge during the course of the SEC investigation. Could the stock price double after all this mess clears up? Of course. But could it fall by 50%? Yes. Right now, CHK is a gamble. It's not an investment.
I wonder what all the CHK employees, who have that stock in their 401k, are thinking.....
This was just reported on CNBC... through Reuters.
Here's the link.
one more observation. what ever happened to CEMI... Chesapeake Energy Marketing Inc.? Remember when royalty owners received a much lower price for NG when sold through CEMI? Was just wondering if that got worked out.
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