Replies to This Discussion

Permalink Reply by DrWAVeSport Cd1 on August 20, 2011 at 16:44

Bacon,

 

Something is definitely wrong across the board.  I have been researching the JVs and MLPs that Mr. McClendon has involved himself and Chk with over the past few years.  These look (IMO) like a bait and switch shell game, it is dizzying to read about and even more complex than one could imagine.  The more moneys exchange hands, back and forth, credits and debits and who's zoomin who...McClendon looks like a frenzied pathological gambler...who can't stop the bet.  I have been looking at GIP (Global Infrastructure Partners) and the individuals who run this company...in bed with the McClendon created Chk Midstream Partners, LLC (CMP).

Take a guess where all the GIP folks came from????   Long time high-end employees of Credit Swisse...  Bacon are you following the recent news per indictments and "tax evasion" charges against the Banking Execs at Credit Swisse...All FORMER BANKERS of Credit Swisse...  I believe that ALL (except for one GIP Exec from G.E. and maybe one other Lawyer) GIP Execs spent quite a few years of their investment and BANKING careers at, where else...Credit Swisse...  Strange?  Coincidence? 

Look up Singapore Dunes, LLC., (Saugatuck Township, Lake Michigan); or Pointe Vista Development and Lake Texoma, OK (silent partner...Mr. McClendon); or Alerian MLP Intrstructure; or Chesapeake Granite Wash Trust, Austin-Based Trust; or the newest McClendon project..."Trust for Chk Energy plans $583.6 million IPO, 24.5 million common "units," ticker symbol CHKR. 

Deal after Deal after Deal...  And it looks like the Chk Energy shareholders are non too happy with McClendon either.  They were attempting to get him thrown out as CEO, but a trick in how "Board Members" are "elected"  as a "staggered board" in Oklahoma State law will keep McClendon's Board in tack.  Shareholders can't get rid of them without "years" of determination and due diligence.

If you get a chance, read:  The Motley Fool article, "Chesapeake Flips Its Shareholders the Bird."

Great read and insight as to how McClendon operates this seemingly "Privately Held" Public Corporation Monopoly.

Article came out July 12, 2011

I hope the SEC gets a very good look at "the books." 

Have a Great Weekend, Bacon.

 

DrWAVeSport Cd1  8/20/2011

 

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Permalink Reply by DrWAVeSport Cd1 on August 20, 2011 at 17:10

Bacon,

One more item...  I don't have time to express my concerns here this p.m., but take a look at Chk August 2011 Investor Presentation...  Be sure and read Pages 37 and 38.  Read them twice for good measure. 

These two pages just put a huge ? at the end of this unbelievable "Santa Clause Is Coming Soon" financial forecast.   There is not ONE negative case scenario or negative statement on any place in this HYPED UP Presentation.  There IS ALWAYS another side to all GREAT FINANCIAL things.  Just look at what happened to McClendon in 2008...went broke...margin calls...bets....

And, bet ya Bacon, that WASN'T in any Chk 2008 Investor Presentation!

Excuse me for extra reply.  I am tired and delirious.

Sorry to keep you up so late.  Us retirees need our sleep.  (LOL)

 

DrWAVeSport Cd1 8/20/2011 

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Permalink Reply by Henry on August 21, 2011 at 0:17

I once heard a great line from a mutual fund manager.... He said that when the CEO has to tell you that no one elseunderstands what a great value his company is, but him, and he cannnot understand why everyone else doesn't see this, it's time to sell and run.

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Permalink Reply by DrWAVeSport Cd1 on August 21, 2011 at 6:00

Henry,

LOL Truism.

I have never owned Chk stocks.  I believe I have contributed enough cash to Chk's Charitable Trusts....so to speak.

I wonder if the new Singapore Towers on Lake Michigan will have standing orders from Mr. Chesapeake to give Chesapeake Royalty/Mineral Owners a "discount rate" on room reservations? 

Or maybe Mr. Henry Hood will send out a letter informing us that "company policy changes" will require Singapore Towers to add an additional 25% "post reservation" fee.

Had to take a shot at that.

In the 80s, had a fund manager at Smith Barney "churning" my accounts constantly, in and out every 6 months or so.  Fired him, went somewhere else and never had a problem.

Live and Learn.  And I hate cliches, because some don't live and learn.

Have a great Sunday.

DrWAVeSport Cd1   8/21/2011

 

 

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Permalink Reply by DrWAVeSport Cd1 on August 21, 2011 at 6:43

Per our discussion here, Blogger "Lady TX" writes:

"On Aug. 1st I received a letter from Chesapeake stating that they were now going to take post-production costs out of my royalty check (I live in TX).  When I called to tell them that there was an addendum to my contract that prohibiting this, the customer service rep. said that there was a 1997 court case that allowed them to do this despite the addendum.  Their attorneys had gone through every contract and mine was one that fell into this category. They are sending me a copy of this court case.  Has anyone else encountered this situation? If so, what are you doing about it.  Thanks."

 

Ben Elmore, what court case, if any?

 

DrWAVeSport Cd1 8/21/2011 

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Permalink Reply by DrWAVeSport Cd1 on August 21, 2011 at 7:00

Looks like Chk's Mr. Hood is using 1996 Case Heritage Resources Inc. v. NationsBank. 

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Permalink Reply by Ben Elmore on August 24, 2011 at 2:09

Yep.

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Permalink Reply by Ben Elmore on August 24, 2011 at 2:08

Sorry I am on vacation and sitting here on the beach just reading this. She is talking about Heritage Resources v. nations bank out of the Texas Supreme Court. The case Holds that the typical cost free royalty clause is superfluous language and doesn't accomplish what it says. It was one of the first real signs that the court wasnturning against royalty owners. Thatmis why in Texas if you are going to use a cost free clause you have to add a sentence disclaiming application of this case an it's progeny.

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Permalink Reply by DrWAVeSport Cd1 on August 24, 2011 at 4:35

Thanks Ben,

Spoke to a friend yesterday (lives off Norris Ferry Rd., South Caddo Parish, LA, Chk Territory) who has 5 acres leased with Chk.  In last year, has only seen two Chk royalty checks.  Not a happy camper.  He thought they would be seeing monthly/regular royalty checks... 

Hope you and yours are having great vacation time.  We're to hit 104 today.

Thanks for reply,

DrWAVeSport Cd1 8/24/2011

 

 

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Permalink Reply by Kat Bloomfield on August 24, 2011 at 6:17

uploaded is a 2007 Mineral Law Institute article long ago posted.  It is relevant to the question.  It doesn't "answer" the questions, but shows the industry's perspective on some of the issues.  And, is just generally informative.

Attachments:

• Mineral Law Institute Paper 2007. Financial Market Impact. DAB-LGH Papers.pdf, 294 KB

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Permalink Reply by DrWAVeSport Cd1 on August 24, 2011 at 7:03

Thanks Kat B,

Don't have time to read now, but will this p.m.

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Permalink Reply by DrWAVeSport Cd1 on August 26, 2011 at 9:25

KB,

Re:  Mineral Law Institute Paper, 2007:  Although paper was written with inherent bias per se, authors being "Sklar Exploration Co., Barlow," and "Lemle & Kelleher, Horton," E&P Co. and Lawyers...This paper  does address a few areas concerning joint interests of royalty owner and royalty payor:

"In short, under the now prevailing Louisiana rule, the lessee may not be premitted to calculate royalty payments in such a manner that permits the lessee to receive a greater part of the gross revenues that the fractional division stated in the mineral lease and if the lessee derives an economic benefit that accrues from the leased land, it should be shared in the fractional division set by the lease to be shared between the lessor and lessee in the fractional division contemplated by the lease.  That analysis necessarily involves some application of the 'reasonably purdent operator' standard."

  IMO, sticking point here, greater part of the gross revenues v. how payor gets to gross revenues.

"There is no inherent 'foul play' when affiliates deal with one another.  However, when transactions between affiliates take place, the parties must ensure those affected by the transactions will be treated no less favorably than if the transaction were between non-affiliated entities.  Such transactions will often be subjected to heightened scrutiny."

IMO, complete transaction transparency accounted for per royalty owner check stub needs to be clearly delineated and documented for royalty owner.

"Prices charged to or by affiliates will likely hold up where they appear to be  reasonable and appropriate against other similar transactions between non-affiliates, or where there is a distinct and justifiable added value.  The most reasonable possible price in affiliate situations will likely involve reference to market factors apart from internal negotiations between the affiliates."

IMO, "added value," and "involve reference to market factors apart from internal negotiations between the affiliates," are also important criteria for royaty payors to address.

IMO, In an open/more deregulated market, would one expect and count on a royalty owner receiving a"discount" that provides for the royalty owner of the payor, an "added value" per royalty instead of a "discount" that proves to be an "added value" strictly where the payor/lessee is enriched?  One-sided value added?

DrWAVeSport Cd1  8/26/2011

 

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