Chesapeake Urged to Sell (WSJ)

By RUSSELL GOLD

Chesapeake Energy Corp.'s CHK -1.50% largest shareholder urged the company's board to consider selling the company after criticizing management's focus and current strategy.

Previously

Southeastern Asset Management, which owns 13.6% of Oklahoma City-based Chesapeake, said in a letter to the board and management that was filed with regulators Monday that Chesapeake should "be open to any offers to acquire the whole company."

The investment firm also expressed unhappiness with management's handling of shareholder communications and its plans to hold to "an arbitrary target" for reducing debt and increasing oil and gas production.

The past three weeks have not been good for Chesapeake and its co-founder and CEO Aubrey McClendon. The stock has been battered, in part because the company cut its forecasted oil production. Revelations that Mr. McClendon arranged for $1.4 billion in loans from a private-equity firm that Chesapeake was selling assets to led the board of directors to remove him as chairman in favor of an independent chairman to be named later.

Michael Kehs, a spokesman for Chesapeake, said, "We appreciated receiving the letter and look forward to further discussions with our largest shareholder in the days and weeks to come."

Write to Russell Gold at russell.gold@wsj.com

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Permalink Reply by Roy on May 8, 2012 at 4:50

Chesapeake is as ghetto as it gets they flash their name around and spend money like water. Yet they never have the cash to pay the bills. Instead they borrow more and more digging the hole deeper daily. They are known for spending more on litigation rather than doing the right thing. Their PR machine work hard to be creative to make the company look good. Yet the continue to set up dummy companies to hide the truth its a house of cards. Henry Hood is Aubrey's puppet always looking for excuses as to why the company is losing money. But fact is they work hard to cheat owners and end up stepping on dimes to save pennies.  

Permalink Reply by Henry on May 8, 2012 at 9:38

Oh that Henry Hood!  He blames all of CHK's problems on the greedy Louisiana landowner.  Don't get me going on that guy.... 

Permalink Reply by kittycatmama on May 10, 2012 at 3:35

Rumor mills are flying about a buy out of Chesapeake. Word is that BHP is going to make a run at Chesapeake.

Permalink Reply by GoshDarn on May 10, 2012 at 4:39

KCM:

Let's hope so.

Go Aussies.  And, um, I can truly say that many folks I know in La. will welcome BHP with open arms and tremendous support.  HK has a good rep with me and with others I know, reflecting BHP's savvy gobble-up intel.

So -- as I coined the phrase many moons ago:  "ABC."

"A . . . B . . . C."

"Anyone but Chesapeake."

Go OZ.  Take 'em down.  We're with ya.  Maybe someone could get good-ol'-boy Mr. Bobby (Jindal) to do a photo-shoot hugging a 'roo for the press on the steps of the state capitol.  Y'know, those Baton Rouge High boys have this thing for koalas and kangaroos (i.e., an ol' magnet high Gov. Street tradition).

Pull the trigger and do the deed, Melbourne. 

Hey, as they say in South Louisiana -- "Laissez les bons temps rouler."



Permalink Reply by JHH on May 10, 2012 at 10:28

Maybe we ought to have a post and rate the top 5 O/G companies and the possibility which one will get Chesapeake.  Sorry, don't mean to me cruel about it.

Permalink Reply by Henry on May 10, 2012 at 12:51

JHH,

Nothing cruel about it.  If I were a CHK stock holder, I'd be thrilled to have a good, solid o&g company come in and make an offer for CHK.  Heck, maybe there would even be a bidding war.  I would only hope that the Board would not fight a takeover offer.  They need to remember that they are supposed to  operate in the interest of the shareholders, and not Aubrey.

Permalink Reply by Krkyoldhag on May 10, 2012 at 13:10

I know some Royalty owners who would be there to cheer a company that they could see at least tried to pretend they were treating them fairly.

And these are NOT the ones that got $20,000 an acre sign on bonuses.

I was in Shreveport today and saw the city buses.....with the signs they run on NG and has Cheasapeak sign on it.  We thank them for that...Maybe they can clean up their operation at the top and continue to operate.

But again..its like the Monopoly game ..if they mortgaged all their properties and hit the go to jail square  losing their Pass Go income..(the futures to the banks) might not can meet obligations and keep operations going.

I am surprised there have been no press conferences from management.

Permalink Reply by JHH on May 10, 2012 at 13:22

Henry,

You're correct as usual.  Fortunately/unfortunately...  I still have 137 shares of CHK.  Not a big player... but voting shares nonetheless!  

jhh

Permalink Reply by Henry on May 10, 2012 at 23:32

JHH,

I wish you luck for a good buyout offer. 

Permalink Reply by Martin on May 10, 2012 at 9:35

Folks --

  This is a brief quote from today's (5/10/12) WSJ.  My question is: are the VPPs  in current market value or in barrels and cubic feet?

BY RUSSELL GOLD

Struggling Chesapeake Energy Corp. has saddled itself with about $1.4 billion of previously unreported liabilities over the next decade through off-balance-sheet financial deals. Most of this liability occurs this year and next year, at a time when Chesapeake is scrambling to raise cash to cover its operating costs and move into the more lucrative oil business.

The company has made a number of long-term commitments to Wall Street banks that require it to deliver specific amounts of oil and natural gas each month through 2022. These deals, known as volumetric production payments, or VPPs, are essentially debts with interest payments ...

Permalink Reply by Hopeful About Natural Gas on May 11, 2012 at 8:55

down another 12% today. i hope the market is over-reacting

and, then there is Chase Bank with its 2 billion dollar boo boo.

But, look at our little GHS natgas price checker - we are up to $2.50!!!

Permalink Reply by Krkyoldhag on May 11, 2012 at 9:11

I know ...I am watching the market and smiling big time.  $2.50 ...and if it continues to climb like this next week we might be at $3  and then on up up up.

The fact that it not only climbing today but holding tight with the market down today is very encouraging to me.

The "boo boo"  ...I was warned two weeks ago that all was not well at Chase...I did not discount that info ..

I really "assumed" that banks knew to stay away from derivatives but guess not. 

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