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 Parkdota on May 7, 2012 at 12:06

Chesapeake, the most infamous producer in the country.  The producer that sets up dummy companies to commit fraud on mineral sellers, some how didn't hedge one penny for all of 2012, and yet sells all their natgas one whole dollar BELOW going rates.  All this while the other big players showed a 2012 first quarter natgas production decline yet they showed an 18% increase.  Yeah, I think I'd be upset if I was at the mercy of McClendon's decisions as well.  They are fast becoming the WorldCom of energy.

Permalink Reply by GoshDarn on May 7, 2012 at 13:17

Didn't Fortune rank CHK as a top-18 company to work for this year?

Yeah, those sweetheart perks must be nice (an average salary over $100K for the workers), and maybe that's why the employees are/were loyal to a fault to McClendon.

So even though the "cult of Aubrey" was cash sweet for the CHK insiders, it was a "house of crooked cards" for us landowners and royalty payees.  Even the other operators knew to stay clear of CHK.      

So now the plucked chickens have come home to roost.

The silver-tongued snake oil salesman's days are numbered.  Just goes to show you that treating folks with lies and cheating words will eventually catch up with you, as it did with Enron.

Bad mojo.

Yep, Fortune  sure made a spot-on call on that best-place-to-work list, that's for sure.

So Wall Street.

Permalink Reply by RONNY on May 7, 2012 at 13:40

I heard BHP Billiton was interested.

Permalink Reply by JHH on May 7, 2012 at 13:45

BHP?  That would be something!  I suspect there will be several consolidations in the coming months.  The analysts have been talking about them for about a year.  It will be a wild ride.

Permalink Reply by Henry on May 7, 2012 at 23:28

I feel sorry for the employees who have a 401k filled with CHK stock.  Let's hope they learned enough from Enron, and diversified their retirement plans.  The best thing that could happen to them is to have a strong buyer come in (XOM??), pay good money for the stock, and let everyone move on. 

CHK's market cap is down to $11B.  To a major oil company, that's chump change.  If I recall, XOM paid something like $40B for XTO.  What a cheap way to get a tremendous set of assets.  Maybe there would even be a bidding war.

Time to go enter my limit order for CHK!  (Only kidding. It's still too risky for me.  Aubrey and his puppy-dog board of directors could fight a takeover attempt.  And in the process, they might just firesale some of theiir assets to raise enough money to fight it.)

Permalink Reply by JHH on May 8, 2012 at 0:50

I was thinking about buying again... but as you said... it's too risky!  Hopefully things will work out well for everyone.  But i'm not sure anyone (royalty owners) will ever recover from receiving $1 less per mcf from their leases. 

Permalink Reply by Krkyoldhag on May 8, 2012 at 0:48

Anybody that put CHK in their 401K should have gone to the casinos instead.  Same with Facebook and those other too good to be true stocks.

I have a drawer full of worthless paper myself ..Braniff, is only one of them.

Did you hear Buffet say he didn't invest in Gold?  So funny.  He doesn't have to ..he probably owns the gold mine.

Does anybody else think that life is more  than ever like the Monopoly game I love?  The guy that owns all the railroads and utilities wins.  Oh with Boardwalk thrown in.  Know why?  NO fees or taxes on RR and utilities.  Guess who owns a railroad now? 

I hope the stuff I hearing about CHK is only gossip.    Figure we will know in few weeks one way or other.  It will hit lots of us hard if it turns out to be true.  

I listened to the talking heads yesterday tell me all about what Hollande' winning in France means.  I think it only means France is France.  The grand children of the people who threw flowers and hugs at the Nazis as they entered Paris now run the place.  We will end up being  begged to fight for their freedom again. 

As before in History the smart money will leave France and go to England. 

Has anyone noticed how our options for safe vacation destinations have narrowed? 

Permalink Reply by Max on May 8, 2012 at 2:47

Krkyoldhag,

Put your money into caned beer.  Aluminum is growing in value each year and you could watch your investment grow, a six pack at a time...Oh, and beer is in the food group, you wouldn't have to buy bread any more.

CHK? If you see one of those commercial Vacuum Trucks back up to their main office and run a hose into the top floor window, get your ear plugs in and hold on to a street sign.

Permalink Reply by Krkyoldhag on May 8, 2012 at 2:57

buy my beer by the keg...but good advice.  thanks.

Pasture Parties R Us here.

Permalink Reply by Parkdota on May 8, 2012 at 1:27

Check out the side projects of Aubrey McClendon, as documented by the Wall Street Journal:

  • Chairman andCEO of a Fortune 500 Company
  • Working interest owner of thousands of gas and oil wells
  • 19% owner of the Oklahoma Thunder NBA team
  • Resort real estate developer in Texas/Oklahoma and Michigan
  • Part-owner of a cancer treatment center
  • Owner of a cattle ranch
  • Part-owner of several restaurants
  • Part-owner of a TV station 
  • Investor/owner/manager of a hedge fund and two venture capital firms
  • Oenophile extraordinaire 
Permalink Reply by JHH on May 8, 2012 at 1:37

Here's the TV station.  At least i think it is.

http://cleanskies.tv/index.html

Permalink Reply by Krkyoldhag on May 8, 2012 at 3:02

I notice he doesn't outright own anything.  Is it that cancer treatment center that is always advertising on TV?  The one that claims can cure cancer by just treating you like you somebody?

Just had a friend's mom call to complain that his doctor wouldn't talk to the family over weekend at hospital..  he has no manners.  I have to laugh..I don't care if my doctor is cranky...or has no bedside manner ..I want him to be good at his job, diagnosis and treatment of whatever ails me.

Why do people think that all that touchy feely stuff is a cure? 

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