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Permalink Reply by Mike on February 28, 2009 at 1:59

Looks like what goes around comes around.Just more egg on their face.They are really doing a world of good now!

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Permalink Reply by sesport on February 28, 2009 at 2:23

Here's one run-down of the case. Interestingly, it also says that the state's O&G has introdueced legislation that would help clarify royalty issues. Heads up ... what do we need to do to be proactive?

http://www.wvjusticewatch.org/news/display_news.cfm?ID=157

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Permalink Reply by Grillin' - MmmMmm on February 28, 2009 at 4:52

The order to pay royalty/landowners is really old, moldy news as this decision was handed down in 2007 and the supreme court appeal was voted down in May 2008. Plus, it didn't involve CHK directly, but a company they bought. The actions that were charged pre-date CHK being involved at all. But since they bought the company, the bought all prior liablities and claims. So to try and push all the way to "CHK cheated landowners" is sort of unfair and a real reach.

The lawmaker quoted as saying "they took our energy and moved out of state" or whatever he said is a glaring example of why peoplle make fun of W Virginians. Obviously, not very well educated or a class-envy kind of guy. With folks like that, I'm glad CHK is moving out of the state. As a stockholder in their company, I wish they would spend zilch more than necessary in that state. At least their guv knows a little bit about business. His comments were based on clear thinking.

The class action lawsuit is one of hundred of thousands filed by ambulance chasing lawfirms. I get hundreds of these in my mail every year. Fishing is all they are doing, hoping to get a settlement to make them go away. The scum sucking lawyers that file these are the only ones who make any real money out of the deal and should be hung by their finger nails! Again, not really a big deal! More worried about $4/mmBtu gas prices than I am some two-bit lawyer trying to drum up some fees.

But I guess they have a good role model in the White House.

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Permalink Reply by Randy on February 28, 2009 at 6:49

It has to do with a few things. 1) They hedged a lot of their production but it included "knockout" provisions that allowed the other party to get out of the deal if natural gas prices fell below a certain rate. 2) They didn't tell that Lehman Bros was involved in a lot of hedging and that they wouldn't get any money out of them of course. 3) In the months leading up to the offering (people who bought the stock in this offering are suing) they claim CHK inflated natural gas prices by all of its aggressive hedging. 4) that Chesapeake's "land men," i.e., lease brokers, had been aggressively bidding up the prices Chesapeake was obligated to pay in leases and royalty agreements in the months leading up to the Offering, causing Chesapeake to pay unreasonably high prices for certain leases and royalty contracts 5) that the Company was failing to write down impaired goodwill on the assets it was acquiring, causing its balance sheet and financial results to be artificially inflated 6) (this is the main kicker) that the Company's internal controls were inadequate to prevent the Company from improperly reporting its goodwill. During late 2008 and early 2009, as these omitted facts were revealed to the market, the price of Chesapeake stock declined to less than $12 per share, approximately 80% below the Offering price.

http://www.csgrr.com/cases/chesapeake/

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Permalink Reply by sesport on February 28, 2009 at 7:53

re. item #6 - wasn't this about the time that AM and other execs acquired shares for $0 and sold for about $17? Oh, but not a lot of their shares ...

And for Mmmmark ... yes, CPK acquired the company with lawsuit in tow ... and I would imagine in doing so (isn't all "business" disclosed before acquisition?) CHK knew of the litigation and, I imagine, thus the liability.

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Permalink Reply by Grillin' - MmmMmm on February 28, 2009 at 7:53

Thanks for the summary of the case Randy. I believe there is no requirement to disclose #2, only that the hedges were in place. #1 they disclosed but investors would have had to read the SEC filings. These two items will be dismissed rather quickly or 100% of the oil/gas companies will be guilty of same and the SEC will be guilty. #3 is a joke; hedging is not against the law and there are many instances where people thought hedging drove up the price. Since CHK doesn't control enough of the market, they don't have market power. That one should go away quickly too. Same argument people are using on crude oil hedgers when prices went to $140.

#4,5 and 6 will be interesting. I'm not sure the actual guidelines around goodwill so I'll have to defer to the financial folks but I do know that COP wrote down $20 something billion in goodwill due to acquisitions. #4, I believe but don't have legal input on it, is a joke. Many of the people on this board think they didn't pay enough. So all of you guys can expect to be called as witnesses to say that $25,000 per acre isn't enough! I'll probably be called cuz I think its too much! In the end, the market is the market and again, CHK wasn't the only player. there were at least 2 other companies in there bidding against them. All in all, though, this case will be interesting but I predict it will never make it to trial. Settled out as most of these Class Action suits are. And of course this was filed in New York. First move will be to get it moved to an Oklahoma court or Federal court. Most Okies are very pro-CHK so it won't go too far. But I'd love to be on that jury! I'd take vacation to be on that jury! I'm guessing defence lawyers would drop me like a hot potato, though. I never make it through the first selection discussions. Go in wearing a suit, tie and answer questions in a conservative way and you usually get booted. I've tried going in undercover but its hard to make non-conservative things come out and still honor the oath of truth! So my mouth usually gives me away.

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Permalink Reply by Grillin' - MmmMmm on February 28, 2009 at 7:40

Don't mean to be condescending. And I don't hold it over anyone's head that my company decided to give me benefits. I do get upset when people think that we need to FORCE companies to offer these benefits and/or as taxpayers we should be forced to pay for them for others. I don't mind paying for those that truly need it, but I do mind paying for people who make bad choices. Like dropping out of school and not being able to get a decent job. Should have stayed in school. Again, there are exceptions but the majority should have and could have stayed in school. Or, paying for healthcare for some gang banger who gets shot. He decided to join the gang and associate with scum. I don't like having to pay his healthcare. I give lots to charities who help people who help themselves and I personally provide for others I know are strapped. But the welfare mom's who keep having kids out of wedlock? c'mon. no sympathy for the mom, just the kid but we gotta do something to stop them having babies.

'Nuff soap box today. I'll try and avoid the topic for a few days as it just gets my blood pressure to boiling.

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Permalink Reply by M. Mcwilliams on February 28, 2009 at 7:59

Well, you actually are paying for the gang banger who gets shot, when he gets taken off to LSU's emergency room. As to those people who "dropped out of school" and therefore aren't able to get decent jobs, well, there are lots and lots of decent jobs that people get that don't offer health insurance benefits. Or, if they do offer health insurance, the premiums are too high for people to actually pay.

You may not think you are being condescending, but when you start trying to generalize about people who don't have enough money for health care or retirement planning, or try to draw lines between those whom you believe "need it" and those whom you believe are "making bad choices", it is condescending.

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Permalink Reply by Antsu-in-Japan on February 28, 2009 at 18:05

I don't mind paying for those who truly need it either. Therefore, I will honestly say that I resent having to help bail out the bankers and car company folks (and any other company begging for tax dollars now in order to stay afloat!!). Who's to say that these were not some of the same privileged folk who possibly complained about having to support others through their own taxes before they got into this financial mess! They will use any and every excuse to set themselves apart from those they consider to be 'beneath' them....you know, those who couldn't pay their own bills and had to receive some kind of "handout" from the government at the taxpayers' expense. Frankly, I believe that a bank and welfare mom's family may take different journeys that result in their need for taxpayer help, but the end result is still the same. They both take the money, which in my opinion, makes one no better or worse than the other.

Those representing the companies DID go to school (probably the finer ones), landed decent jobs (ones that the welfare moms and gang bangers could probably only dream about) and STILL made stupid, STUPID decisions. Decisions that have us all in the worse financial crisis of our times...and globally, at that. In my opinion, if we're going to call out those darn gang bangers and welfare moms for not using their so-called "common sense," then we need to call out those who were too proud, arrogant or indifferent to use their "book smarts," as well.

By the way, Mmmarkkk, it is commendable that you give so to those in need. This world would TRULY be a much better place if all people were as giving of themselves and their resources. Have you ever thought of organizing your own charity to help out those who really do need it in your area? Maybe tutoring at-risk kids or being a mentor for moms who are trying to do better for their kids and families? Giving a fish to a hungry person is admirable; teaching a hungry person to fish is beyond admirable. It creates a sustainable environment in which one learns to rely more on his/her own abilities and capabilities!

You sound like a passionate someone capable of making even more of an amazing difference in our world. Anyway, stay well and keep that blood pressure down!!

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Permalink Reply by Cillian on March 2, 2009 at 19:14

I'm a little behind in this discussion, but this chapped my hiney. I work that chapped hiney off every day and have done so since I was 16. I did the best I could in school and went to college with no help from my parents, who could not afford it. I chose a career, stuck to it and have done everything I can to make it a secure one.
I find it VERY hard not to cuss at statements such as yours above. The cost of my healthcare has gone through the roof over the past few years. Now why is that? Have I been chronically ill? No. Did I quit my job or get fired? No.
So: I'm not a lazy, good for nothing uneducated unemployed welfare mom. And yet here I am feeling forced to choose between hedging that I WON'T get seriously ill anytime soon, or pouring ever-rising co-pays and contributing more and more of my shrinking paycheck.
I am one of those people that has had to think long and hard about keeping dental coverage. That's how tight things are getting.
Oh, and in addition to 'staff reductions' and budget cuts, my employer has also now frozen 401k contributions and pay raises.
So before you go spouting off with really unfounded but conveniently slanted stereotypes, you might want to check yourself. Pretty soon, many more of us working idiots will be sharing the same predicament as those 'people who make bad choices.'
How's the air up there on that soapbox?

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Permalink Reply by Grillin' - MmmMmm on February 28, 2009 at 7:56

Biting tongue as I promised I wouldn't get into the topic for a few days!! But it is not "sore loser".

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Permalink Reply by Grillin' - MmmMmm on February 28, 2009 at 14:00

Sorry to ruin your day Earl. But that's what my day is like every day I open the paper and read what's coming out of Washington these days.

BTW, I believe that the decision to go to war in Iraq was made by one man and that man used the information he had available at the time, gathered for him by one of the best intelligence agencies in the world. Not perfect, but the best. So with that data, he made a choice. Don't think he lied, he just made a decision. Once all the data was out, we found that some of that information/data wasn't accurate. But you know, I have geologists come in my office and tell me that this well they want me to drill is the best there is and we need to drill it. They use the data and intelligence to make a recommendation. I look at their data and their input and I make the deicision. When its dry, I don't call them liars and I'm not a liar. Just the data is not perfect.

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