After years of acquiring enormous assets which made Chesapeake Energy Corporation (CHK) second only to Exxon Mobil (XOM) in natural gas production, CEO and Chairman Aubrey McClendon, who founded the company, was forced to leave April 1, and has now been replaced by Anadarko Petroleum (APC) executive Robert Douglas Lawler.
Who you may ask? We'll get into why the question itself, and the answer to the underlying premise of the question is important to this new CEO choice for Chesapeake.
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Showing posts with label Chesapeake Energy. Show all posts
Showing posts with label Chesapeake Energy. Show all posts
Saturday, June 1, 2013
Wednesday, January 30, 2013
IAMGOLD (IAG) (AKS) (CHK) (CPNO) (HES) (MT) (XOM) Ratings Changes
IAMGOLD Corp (IAG), AK Steel Holding Co. (AKS), Chesapeake Energy (CHK), Copano Energy, L.L.C. (CPNO), Hess Corp (HES), ArcelorMittal (MT) and Exxon Mobil (XOM) had ratings on them adjusted by analysts.
Macquarie upgraded AK Steel Holding Co. (AKS) from an Underperform rating to a Neutral rating.
Stifel Nicolaus upgraded Chesapeake Energy (CHK) from a Hold rating to a Buy rating.
Societe Generale upgraded IAMGOLD Corp. (IAG) from a Sell rating to a Hold rating.
RBC Capital downgraded Copano Energy, L.L.C. (CPNO) from an Outperform rating to a Sector Perform rating.
Capital One downgraded Hess Corp. (HES) from an Add rating to a Neutral rating.
HSBC downgraded ArcelorMittal (MT) from a Neutral rating to an Underweight rating.
Macquarie downgraded Exxon Mobil (XOM) from an Outperform rating to a Neutral rating.
Macquarie upgraded AK Steel Holding Co. (AKS) from an Underperform rating to a Neutral rating.
Stifel Nicolaus upgraded Chesapeake Energy (CHK) from a Hold rating to a Buy rating.
Societe Generale upgraded IAMGOLD Corp. (IAG) from a Sell rating to a Hold rating.
RBC Capital downgraded Copano Energy, L.L.C. (CPNO) from an Outperform rating to a Sector Perform rating.
Capital One downgraded Hess Corp. (HES) from an Add rating to a Neutral rating.
HSBC downgraded ArcelorMittal (MT) from a Neutral rating to an Underweight rating.
Macquarie downgraded Exxon Mobil (XOM) from an Outperform rating to a Neutral rating.
Tuesday, January 29, 2013
Chesapeake's (CHK) McClendon Stepping Down
As of the time of this writing, a review into the behavior of Chesapeake Energy Corp. (CHK) founder and CEO Aubrey McClendon by the board said that "to date found no improper conduct," but nonetheless the embattled executive will be stepping down from his position on April 1.
Almost immediately after the announcement shares of the company jumped 9 percent. He had already been forced out as Chairman of the company he founded.
There have been a lot of investigations of McClendon by different entities concerning a number of his ways of doing business, although none to this day have unveiled anything illegal.
Most of the controversy surrounding McClendon is in regard to deals he entered into which appeared to too closely blend the personal and professional business interests he held.
Even though some of his questionable activities and decisions opened him up to intense media scrutiny, in the end what probably really did him in was overextending his acquisitions, which caught up with the company once the price of natural gas plunged because of the huge supply available to the market.
Carl Icahn, who holds a significant stake in Chesapeake said he believes McClendon will ultimately be proven right on his estimate of the value of the natural gas assets of the company.
Reasons for the departure weren't released or commented on by the company, and McClendon said in an email to employees that it was based on "philosophical differences" with the board.
Assuming the benefit package and terms of departure are the same as presented to shareholders in 2012, McClendon could walk away with a package worth up to $53 million over a five-year period.
Almost immediately after the announcement shares of the company jumped 9 percent. He had already been forced out as Chairman of the company he founded.
There have been a lot of investigations of McClendon by different entities concerning a number of his ways of doing business, although none to this day have unveiled anything illegal.
Most of the controversy surrounding McClendon is in regard to deals he entered into which appeared to too closely blend the personal and professional business interests he held.
Even though some of his questionable activities and decisions opened him up to intense media scrutiny, in the end what probably really did him in was overextending his acquisitions, which caught up with the company once the price of natural gas plunged because of the huge supply available to the market.
Carl Icahn, who holds a significant stake in Chesapeake said he believes McClendon will ultimately be proven right on his estimate of the value of the natural gas assets of the company.
Reasons for the departure weren't released or commented on by the company, and McClendon said in an email to employees that it was based on "philosophical differences" with the board.
Assuming the benefit package and terms of departure are the same as presented to shareholders in 2012, McClendon could walk away with a package worth up to $53 million over a five-year period.
Wednesday, September 26, 2012
Potash (POT) (RIG) (CCJ) (CHK) (EPL) (UDRL) (AGU) Ratings Changes and Initiations
Shares of Potash Corp (POT), Transocean (RIG), Cameco Co. (CCJ), Chesapeake Energy (CHK), Energy Partners, Ltd. (EPL), Union Drilling, Inc. (UDRL) and Agrium (AGU) had ratings on them adjusted or initiated by analysts.
Goldman Sachs (GS) upgraded Transocean (RIG) from a "Sell" rating to a "Neutral" rating. They have a price target of $54.00 on the company.
TD Securities downgraded Cameco Co. (CCJ) from a "Buy" rating to a "Hold" rating. They have a price target of $24.00 on the company.
Stifel Nicolaus downgraded Chesapeake Energy (CHK) from a "Buy" rating to a "Hold" rating. They have a price target of $22.00 on the company.
Stifel Nicolaus downgraded Energy Partners, Ltd. (EPL) from a "Buy" rating to a "Hold" rating.
Gabelli downgraded Union Drilling, Inc. (UDRL) from a "Buy" rating to a "Hold" rating.
Dundee Securities initiated coverage on Agrium (AGU). They placed a "Buy" rating on the company.
Dundee Securities initiated coverage on Potash Corp. (POT). They placed a "Buy" rating on the company.
Friday, May 18, 2012
Pickens Sells Shares of Chesapeake (CHK)
For the first time since 2008, Texas billionaire T. Boone Pickens holds no shares in embattled natural gas producer Chesapeake Energy (NYSE: CHK).
According to Bloomberg News, Pickens sold his remaining shares in Chesapeake on May 10, which numbered just under five hundred thousand. Another 71,000 shares in the energy company were sold in the first quarter.
Pickens has been a staunch supporter of Chesapeake CEO Aubrey McClendon, and offered support for him, even though it appears Pickens abandoned the stock because of possible conflicts of interest McClendon is being investigated for by U.S. Securities and Exchange Commission in regard to personal loans.
This is probably the case because Pickens picked up other natural gas stocks in the first quarter of the year, including Devon Energy (DVN) and Encana (ECA).
Chesapeake, the second-largest natural gas producer in America, has recently gone even further into debt by securing a bridge loan from Goldman Sachs (NYSE: GS) of $4 billion.
The company hopes the loan will strengthen its bargaining position as it attempts to sell off quality assets, which have been getting low ball offers because potential suitors know the weakened position Chesapeake is in.
Chesapeake was trading at $14.23, up $0.68, or 5.04 percent, as of 1:34 PM EDT.
According to Bloomberg News, Pickens sold his remaining shares in Chesapeake on May 10, which numbered just under five hundred thousand. Another 71,000 shares in the energy company were sold in the first quarter.
Pickens has been a staunch supporter of Chesapeake CEO Aubrey McClendon, and offered support for him, even though it appears Pickens abandoned the stock because of possible conflicts of interest McClendon is being investigated for by U.S. Securities and Exchange Commission in regard to personal loans.
This is probably the case because Pickens picked up other natural gas stocks in the first quarter of the year, including Devon Energy (DVN) and Encana (ECA).
Chesapeake, the second-largest natural gas producer in America, has recently gone even further into debt by securing a bridge loan from Goldman Sachs (NYSE: GS) of $4 billion.
The company hopes the loan will strengthen its bargaining position as it attempts to sell off quality assets, which have been getting low ball offers because potential suitors know the weakened position Chesapeake is in.
Chesapeake was trading at $14.23, up $0.68, or 5.04 percent, as of 1:34 PM EDT.
Monday, February 13, 2012
Noble (NBL) (CHK) (PQ) (CIE) (COP) (HERO) (LNKD) Ratings, Price Targets
Noble Energy (NYSE: NBL), Chesapeake Energy (NYSE: CHK), PetroQuest Energy, Inc. (NYSE: PQ), Cobalt International Energy (NYSE: CIE), ConocoPhillips (NYSE: COP), Hercules Offshore, Inc. (NASDAQ: HERO) and Linkedin Co. (NASDAQ: LNKD) had ratings and price targets on them adjusted by analysts.
Noble Energy (NBL) had its price target raised by Wunderlich from $118.00 to $129.00. They have a “Buy” rating on the company.
Chesapeake Energy (CHK) was downgraded by FBR Capital from an “Outperform” rating to a “Market Perform” rating.
PetroQuest Energy, Inc. (PQ) was downgraded by Global Hunter Securities from a “Buy” rating to an “Accumulate” rating. They have a price target of $7.60 on the company, down from $14.00.
Cobalt International Energy (CIE) was upgraded by Howard Weil from a “Market Perform” rating to an “Outperform” rating. They have a price target of $41.00 on the company, up from $23.00.
ConocoPhillips (COP) was upgraded by Deutsche Bank (NYSE:DB) from a “Hold” rating to a “Buy” rating. They have a price target of $90.00 on the company, up from $82.00.
Hercules Offshore, Inc. (HERO) was upgraded by Pritchard from a “Neutral” rating to a “Buy” rating.
Linkedin Co. (LNKD) had its price target raised by Goldman Sachs (NYSE:GS) from $70.00 to $80.00. They have a “Neutral” rating on the company.
Noble Energy (NBL) had its price target raised by Wunderlich from $118.00 to $129.00. They have a “Buy” rating on the company.
Chesapeake Energy (CHK) was downgraded by FBR Capital from an “Outperform” rating to a “Market Perform” rating.
PetroQuest Energy, Inc. (PQ) was downgraded by Global Hunter Securities from a “Buy” rating to an “Accumulate” rating. They have a price target of $7.60 on the company, down from $14.00.
Cobalt International Energy (CIE) was upgraded by Howard Weil from a “Market Perform” rating to an “Outperform” rating. They have a price target of $41.00 on the company, up from $23.00.
ConocoPhillips (COP) was upgraded by Deutsche Bank (NYSE:DB) from a “Hold” rating to a “Buy” rating. They have a price target of $90.00 on the company, up from $82.00.
Hercules Offshore, Inc. (HERO) was upgraded by Pritchard from a “Neutral” rating to a “Buy” rating.
Linkedin Co. (LNKD) had its price target raised by Goldman Sachs (NYSE:GS) from $70.00 to $80.00. They have a “Neutral” rating on the company.
Monday, November 8, 2010
Chesapeake Energy (NYSE:CHK) Continues to Struggle with Low Natural Gas Prices
Struggling in the midst of depressed natural gas prices, Chesapeake Energy (NYSE:CHK) has its rating downgraded by BMO Capital from "Outperform" to "Market Perform."
Over the last six months Chesapeake has dropped in share price, and over the last several months they've pretty much remained level.
Chesapeake closed Friday at $22.27, losing $0.02, or 0.09 percent. BMO dropped their price target on them from $30 to $26.
A growing number of natural gas companies have looked to the oil sector to drive up margins and earnings in the tough natural gas conditions, which have far too much supply at this time, and probably will have for years.
Over the last six months Chesapeake has dropped in share price, and over the last several months they've pretty much remained level.
Chesapeake closed Friday at $22.27, losing $0.02, or 0.09 percent. BMO dropped their price target on them from $30 to $26.
A growing number of natural gas companies have looked to the oil sector to drive up margins and earnings in the tough natural gas conditions, which have far too much supply at this time, and probably will have for years.
Tuesday, October 5, 2010
Barclays (NYSE:BCS) Affilate Acquires Future Production from Chesapeake (NYSE:CHK)
Chesapeake Energy Corp. has sold some of the future production at its wells in the North Texas Barnett Shale field to a Barclays (NYSE:BCS) affiliate for $1.15 billion.
The natural gas producer said they're going to use the capital to shrink borrowing on a revolving credit facility, but ratings agencies in many cases consider volumetric production payment (VPP) deals as a form of debt as well.
About 8 percent of production for 2011 and 3 percent of year-end 2010 reserves are included in the deal by Chesapeake.
Included with the five-year deal will be close to 280 million cubic feet of daily production and 390 billion cubic feet of proven reserves in 2011.
Ticonderoga Securities analyst Daniel Pratt said this could lead to an underperformance of Chesapeake shares.
The natural gas producer said they're going to use the capital to shrink borrowing on a revolving credit facility, but ratings agencies in many cases consider volumetric production payment (VPP) deals as a form of debt as well.
About 8 percent of production for 2011 and 3 percent of year-end 2010 reserves are included in the deal by Chesapeake.
Included with the five-year deal will be close to 280 million cubic feet of daily production and 390 billion cubic feet of proven reserves in 2011.
Ticonderoga Securities analyst Daniel Pratt said this could lead to an underperformance of Chesapeake shares.
Monday, September 27, 2010
Williams (NYSE:WMB), Devon (NYSE:DVN), Noble (NYSE:NBL), Apache(NYSE:APA), Williams (NYSE:WMB) Cutting Spending
Natural gas companies like Devon Energy Corp (NYSE:DVN), Noble Energy Inc (NYSE:NBL) Williams (NYSE:WMB) and Apache Corp (NYSE:APA) are all expected to lower their capital expenditures in 2011 in light of ongoing low natural gas prices.
A large portion of the lower capex will be from cutting back on drilling for natural gas by the companies, and other companies with natural gas exposure.
Some of those cuts could be offset by transferring spending to oil exploration and cash generation from free-flowing debt markets.
Williams has already confirmed they're going to cut spending in 2011, and the others mentioned are sure to follow. Lower prices and lower margins, which will result in lower earnings are the reasons behind the spending cuts. That means less money to spend, as too much debt spending would crush the performance of the companies.
One positive area for gas companies is liquids, where companies holding those assets will be able to sell it at premium prices.
An area that will demand capital expenditure are those holding leases on acreage that must be drilled unless they expire.
But based on the price of natural gas, some experts in the industry say supply is so abundant it could be many years before natural gas prices turn around.
The smart companies are increasing their exposure to oil and the liquids mentioned above. Those companies which don't adapt are going to struggle to increase earnings and be profitable.
EOG Resources Inc (NYSE:EOG) and Chesapeake Energy (NYSE:CHK), among others, have already moved in that direction.
Another strategy recently has been for companies heavily exposed to natural gas to raise capital through debt, with Linn Energy (Nasdaq:LINE) and Anadarko Petroleum Corp (NYSE:APC) among the most recent.
They are doing that for the time when the natural gas market recovers, which will probably be a long wait. But they will be prepared for it whenever it does happen.
A large portion of the lower capex will be from cutting back on drilling for natural gas by the companies, and other companies with natural gas exposure.
Some of those cuts could be offset by transferring spending to oil exploration and cash generation from free-flowing debt markets.
Williams has already confirmed they're going to cut spending in 2011, and the others mentioned are sure to follow. Lower prices and lower margins, which will result in lower earnings are the reasons behind the spending cuts. That means less money to spend, as too much debt spending would crush the performance of the companies.
One positive area for gas companies is liquids, where companies holding those assets will be able to sell it at premium prices.
An area that will demand capital expenditure are those holding leases on acreage that must be drilled unless they expire.
But based on the price of natural gas, some experts in the industry say supply is so abundant it could be many years before natural gas prices turn around.
The smart companies are increasing their exposure to oil and the liquids mentioned above. Those companies which don't adapt are going to struggle to increase earnings and be profitable.
EOG Resources Inc (NYSE:EOG) and Chesapeake Energy (NYSE:CHK), among others, have already moved in that direction.
Another strategy recently has been for companies heavily exposed to natural gas to raise capital through debt, with Linn Energy (Nasdaq:LINE) and Anadarko Petroleum Corp (NYSE:APC) among the most recent.
They are doing that for the time when the natural gas market recovers, which will probably be a long wait. But they will be prepared for it whenever it does happen.
Wednesday, September 8, 2010
Citigroup (NYSE:C) Initiates Coverage on Chesapeake (NYSE:CHKM)
Citigroup (NYSE:C) has initiated coverage on Chesapeake Midstream Partners, L.P (NYSE:CHKM), one of a coterie of financial institutions which have been attracted to the company.
Citi started off with a "Buy" rating on the company, which transports natural gas from the well head to the pipelines of the companies it serves. Their price target is $28.50.
It's largest customers are Chesapeake Energy (NYSE:CHK) and Total (NYSE:TOT)
Chesapeake Midstream is a venture between Chesapeake Energy and Global Infrastructure Partners LP.
Citi particularly likes the fee-based contracts of Chesapeake, which provides a steady cash flow which has little risk to commodity price fluctuations.
Chesapeake Energy and Total have a minimum volume commitment with Chesapeake Midstream which is contracted over a period of ten years, and increases annually through 2018.
Operating in a low cost region, the company should be able to enjoy solid margins which won't be affected by declining prices of natural gas because of the structure of their revenue.
Citi said even with all that positive for the company, it's probably their relationship with Chesapeake Energy which will be most beneficial, and there is some risk if Global Infrastructure Partners LP were to leave the venture, although that would probably be more of a weight on the share price than risk to the business.
Citi started off with a "Buy" rating on the company, which transports natural gas from the well head to the pipelines of the companies it serves. Their price target is $28.50.
It's largest customers are Chesapeake Energy (NYSE:CHK) and Total (NYSE:TOT)
Chesapeake Midstream is a venture between Chesapeake Energy and Global Infrastructure Partners LP.
Citi particularly likes the fee-based contracts of Chesapeake, which provides a steady cash flow which has little risk to commodity price fluctuations.
Chesapeake Energy and Total have a minimum volume commitment with Chesapeake Midstream which is contracted over a period of ten years, and increases annually through 2018.
Operating in a low cost region, the company should be able to enjoy solid margins which won't be affected by declining prices of natural gas because of the structure of their revenue.
Citi said even with all that positive for the company, it's probably their relationship with Chesapeake Energy which will be most beneficial, and there is some risk if Global Infrastructure Partners LP were to leave the venture, although that would probably be more of a weight on the share price than risk to the business.
Friday, August 27, 2010
Chesapeake (NYSE:CHK), EnCana (NYSE:ECA) and Devon (NYSE:DVN) Up on Higher Demand from Warm Weather
Chesapeake Energy (NYSE:CHK), EnCana Corp. (NYSE:ECA) and Devon Energy Corp. (NYSE:DVN), along with Anadarko Petroleum Corp. (NYSE:APC) and Halliburton (NYSE:HAL), on news of the warmer summer increased demand for natural gas for the generation of electricity.
Most of the companies with exposure to the commodity are up today, but there is downward pressure coming as the supply continues to grow in spite of the demand.
The increase in share price of the companies today are based on past demand, and not on future prospects.
For example, for the week ending August 20, stockpiles of natural gas in the lower 48 states increased by 40 billion cubic feet.
There also continues to be ample supply as storage levels are 6.2 percent above their five-year average, even with the recent strong demand. And the natural gas inventories have risen over the Tcf level for only the second time in 2010.
A number of companies with significant exposure to natural gas understand the threats, even in a high-demand period of time, as the huge amount of resource and increasing number of companies entering into the field ensure downward pressure on natural gas prices for some time to come.
Some have been diversifying into oil to help them maintain revenue and earnings growth.
Most of the companies with exposure to the commodity are up today, but there is downward pressure coming as the supply continues to grow in spite of the demand.
The increase in share price of the companies today are based on past demand, and not on future prospects.
For example, for the week ending August 20, stockpiles of natural gas in the lower 48 states increased by 40 billion cubic feet.
There also continues to be ample supply as storage levels are 6.2 percent above their five-year average, even with the recent strong demand. And the natural gas inventories have risen over the Tcf level for only the second time in 2010.
A number of companies with significant exposure to natural gas understand the threats, even in a high-demand period of time, as the huge amount of resource and increasing number of companies entering into the field ensure downward pressure on natural gas prices for some time to come.
Some have been diversifying into oil to help them maintain revenue and earnings growth.
Wednesday, August 4, 2010
Chesapeake (NYSE:CHK) Level for Second-quarter Earnings, Revenue Up
Chesapeake Energy Corp. (NYSE:CHK) earnings were almost the same as last quarter, even though revenue in the quarter jumped 20 percent.
Earnings for the quarter came in at $235 million, or 37 cents a share, slightly down from the $237 million, or 39 cents a share last year in the same quarter.
Revenue on the other hand rose to $2.01 billion, increasing by 20 percent from $1.67 billion last year.
After excluding one-time items, the company generated profits of 75 cents a share, up from the 69 cents a share analysts had estimated.
The company was punished from a $214 million loss from it hedging strategy in gas, oil and interest rates. Redeemed debt with a charge of $42 million was the other major factor.
In the end, this is about the abundance of natural gas, which it'll take Chesapeake some time to decrease its exposure to.
At this time it accounts for the majority of production of Chesapeake, with oil and natural gas liquids making up 10 percent of the overall production of the company. Chesapeake said they're going to continually work on increasing liquids going forward.
According to CEO Aubrey McClendon, Chesapeake will have liquid production coming in at about 25 percent of overall production, and 40 percent of revenue from production.
To limit the consequences of low natural gas prices, the company will also cut back on drilling of their natural gas wells until prices rebound to at least $6 per 1,000 cubic feet.
Earnings for the quarter came in at $235 million, or 37 cents a share, slightly down from the $237 million, or 39 cents a share last year in the same quarter.
Revenue on the other hand rose to $2.01 billion, increasing by 20 percent from $1.67 billion last year.
After excluding one-time items, the company generated profits of 75 cents a share, up from the 69 cents a share analysts had estimated.
The company was punished from a $214 million loss from it hedging strategy in gas, oil and interest rates. Redeemed debt with a charge of $42 million was the other major factor.
In the end, this is about the abundance of natural gas, which it'll take Chesapeake some time to decrease its exposure to.
At this time it accounts for the majority of production of Chesapeake, with oil and natural gas liquids making up 10 percent of the overall production of the company. Chesapeake said they're going to continually work on increasing liquids going forward.
According to CEO Aubrey McClendon, Chesapeake will have liquid production coming in at about 25 percent of overall production, and 40 percent of revenue from production.
To limit the consequences of low natural gas prices, the company will also cut back on drilling of their natural gas wells until prices rebound to at least $6 per 1,000 cubic feet.
Tuesday, August 3, 2010
Chesapeake Shifting $400 Million to Oil Exploration
The amount of natural gas in the United States has become so abundant it no longer makes sense for companies to continue to put more resources into it, and that has caused Chesapeake Energy Corp (NYSE:CHK) to transfer $400 million it had targeted natural gas exploration and production, to oil exploration.
Supply of natural gas has put a lot of downward pressure on natural gas prices at a time when oil prices are rising. Oil margins have a larger spread and oil is much more profitable than its counterpart at this time, and for the foreseeable future.
In a press release, Chesapeake said, "In recognition of the significant and persistent value gap that has developed between natural gas and oil prices, Chesapeake has accelerated its transition to a more liquids-rich asset base."
The full-year drilling budget for Chesapeake will remain level, with $4.5 billion to $4.6 billion set aside for that purpose.
Cheasapeake will release its earnings for the second quarter after the market closes today.
Supply of natural gas has put a lot of downward pressure on natural gas prices at a time when oil prices are rising. Oil margins have a larger spread and oil is much more profitable than its counterpart at this time, and for the foreseeable future.
In a press release, Chesapeake said, "In recognition of the significant and persistent value gap that has developed between natural gas and oil prices, Chesapeake has accelerated its transition to a more liquids-rich asset base."
The full-year drilling budget for Chesapeake will remain level, with $4.5 billion to $4.6 billion set aside for that purpose.
Cheasapeake will release its earnings for the second quarter after the market closes today.
Monday, June 21, 2010
Chesapeake Energy (NYSE:CHK) Sells $900 Million More in Preferred Stock
After selling $1.7 billion worth of preferred stock in May, Chesapeake Energy (NYSE:CHK) has offered another $900 million in preferred stock to more private investors.
The private investors interested in the onshore energy sources represented by Chesapeake, include four sovereign wealth funds: China Investment Corp., Abu Dhabi Investment Council, Korea Investment Corp. and Temasek Holdings, based in Singapore.
Also investing in the preferred shares were Li Ka Shing Foundation, a charitable foundation based in Hong Kong, private equity fund Hopu Investment Management Co., based in China, and Daiwa Securities of Japan.
Chesapeake focuses primarily on exploration and development of oil and natural gas onshore, and is among the leaders in extracting natural gas from shale.
The problem for natural gas is it's so abundant that the price will remain depressed for some time to come, the reason so many companies have been moving toward oil again, which is more profitable, even with the BP (NYSE:BP) disaster making some investors in offshore drilling nervous.
The private investors interested in the onshore energy sources represented by Chesapeake, include four sovereign wealth funds: China Investment Corp., Abu Dhabi Investment Council, Korea Investment Corp. and Temasek Holdings, based in Singapore.
Also investing in the preferred shares were Li Ka Shing Foundation, a charitable foundation based in Hong Kong, private equity fund Hopu Investment Management Co., based in China, and Daiwa Securities of Japan.
Chesapeake focuses primarily on exploration and development of oil and natural gas onshore, and is among the leaders in extracting natural gas from shale.
The problem for natural gas is it's so abundant that the price will remain depressed for some time to come, the reason so many companies have been moving toward oil again, which is more profitable, even with the BP (NYSE:BP) disaster making some investors in offshore drilling nervous.
Saturday, May 22, 2010
Chesapeake Energy (NYSE:CHK) Increases Debt to Retain Leases
Even though Chesapeake Energy (NYSE:CHK) CEO Aubrey McClendon has recently said the company wouldn't go into deeper debt to raise capital, they once again have changed their minds and reversed direction, as they've decided to issue $1.7 billion in preferred convertible shares to raise the money.
This pretty much deja vous for the company, as the almost exact reasoning behind this debt has been stated in the past, as the debt will be used to reduce debt. Sounds like the government in many ways.
One other way of raising capital is through the sale of some of its Marcellus Shale assets, which will evidently also be used to pay down debt to the tune of $3.5 billion.
What is left over is targeted for investing in more liquid gas and oil assets. As I said, deja vous.
The company has been brought to this place because of the increased supply of natural gas which is pushing prices down, as well as the large number of acquisitions which led to the debt in the first place.
If it didn't access capital, which the lower natural gas prices can't buy, they could lose their drilling leases, which would happen if they quit drilling.
Consequently, the company will have a dilution of their shares which will cause share price to fall.
This pretty much deja vous for the company, as the almost exact reasoning behind this debt has been stated in the past, as the debt will be used to reduce debt. Sounds like the government in many ways.
One other way of raising capital is through the sale of some of its Marcellus Shale assets, which will evidently also be used to pay down debt to the tune of $3.5 billion.
What is left over is targeted for investing in more liquid gas and oil assets. As I said, deja vous.
The company has been brought to this place because of the increased supply of natural gas which is pushing prices down, as well as the large number of acquisitions which led to the debt in the first place.
If it didn't access capital, which the lower natural gas prices can't buy, they could lose their drilling leases, which would happen if they quit drilling.
Consequently, the company will have a dilution of their shares which will cause share price to fall.
Wednesday, May 12, 2010
Chesapeake Energy (NYSE:CHK) Sells $600 Million in Convertible Preferred Stock
Chesapeake Energy (NYSE:CHK) announced today it has sold $600 million in convertible preferred stock to North America-based institutional investors.
With the goal of raising billions of dollars from investors, Chesapeakes next move should be to seek out Asian investors in Singapore and China, which the bulk of their strategy to raise money is focused.
The first part of the plan will take the money raised and pay down the debt of the company, said Chesapeake.
The dividend yield on the preferred bonds is 5.75 percnet with a liquidation preference of $1,000 a share.
With the goal of raising billions of dollars from investors, Chesapeakes next move should be to seek out Asian investors in Singapore and China, which the bulk of their strategy to raise money is focused.
The first part of the plan will take the money raised and pay down the debt of the company, said Chesapeake.
The dividend yield on the preferred bonds is 5.75 percnet with a liquidation preference of $1,000 a share.
Saturday, May 8, 2010
Chesapeake Energy (NYSE:CHK) Liquids Strategy
Most companies heavily weighted in natural gas, like Chesapeake Energy (NYSE:CHK), are using a strategy of developing a more balanced porfolio of assets in order to deal with the low price of natural gas, which probably won't rise in price much in the near term.
At this time Chesapeake has a ratio of about 90 percent natural gas to 10 percent liguids, and their goal is to bring it to 80 percent natural gas to 20 percent liquids.
Chesapeake said they'll be cutting their rig count to 105 rigs, or 12 percent as part of their strategy, while reducing it even more in 2011 by 17 percent as far as what they spend in the gas segment.
Ethane, butane, isobutane, propane and natural gasoline are natural gas liquids companies are gravitating towards.
At this time Chesapeake has a ratio of about 90 percent natural gas to 10 percent liguids, and their goal is to bring it to 80 percent natural gas to 20 percent liquids.
Chesapeake said they'll be cutting their rig count to 105 rigs, or 12 percent as part of their strategy, while reducing it even more in 2011 by 17 percent as far as what they spend in the gas segment.
Ethane, butane, isobutane, propane and natural gasoline are natural gas liquids companies are gravitating towards.
Wednesday, May 5, 2010
Chesapeake Energy (NYSE:CHK) Oil, Gas Liquid Shift
Chesapeake Energy (NYSE:CHK) beat analysts' expectations for the first quarter, with earnings reaching $590 million, or 92 cents a share. Last year in the same quarter lost $5.7 billion, or $9.63 a share.
Revenue for the quarter increased to $2.8 billion, up from $2 billion last year.
Going forward, Chesapeake said they're going to shift capital expenditures to natural gas liquids and oil, and a glut of natural gas on the market has driven prices down.
Analysts had been looking for 70 cents a share after excluding one-time items, while Chesapeake's adjusted profit far exceeded that, ending the quarter at 82 cents a share.
Revenue for the quarter increased to $2.8 billion, up from $2 billion last year.
Going forward, Chesapeake said they're going to shift capital expenditures to natural gas liquids and oil, and a glut of natural gas on the market has driven prices down.
Analysts had been looking for 70 cents a share after excluding one-time items, while Chesapeake's adjusted profit far exceeded that, ending the quarter at 82 cents a share.
Monday, April 5, 2010
Chesapeake Energy (NYSE:CHK) Targeting Oil
Chesapeake Energy
The abundance of natural gas which has resulted in natural gas prices plunging, has resulted in a number of natural gas companies like Chesapeake Energy (NYSE:CHK) to focus on other sources of revenue; and in the case of Chesapeake Energy that is oil.
Aubrey McClendon, Chairman and CEO of Chesapeake Energy has resisted making the move, but the refusal of natural gas prices to rise over time has forced her to reconsider, and now is changing her tune and is looking at oil as a way to diversify their assets.
McClendon recently stated the company feels they probably have enough gas to last them the rest of their lives. What she really means is the economics of natural gas is no longer as compelling as it has been, and they need to go beyond it for a more profitable future.
Chesapeake Energy
The abundance of natural gas which has resulted in natural gas prices plunging, has resulted in a number of natural gas companies like Chesapeake Energy (NYSE:CHK) to focus on other sources of revenue; and in the case of Chesapeake Energy that is oil.
Aubrey McClendon, Chairman and CEO of Chesapeake Energy has resisted making the move, but the refusal of natural gas prices to rise over time has forced her to reconsider, and now is changing her tune and is looking at oil as a way to diversify their assets.
McClendon recently stated the company feels they probably have enough gas to last them the rest of their lives. What she really means is the economics of natural gas is no longer as compelling as it has been, and they need to go beyond it for a more profitable future.
Chesapeake Energy
Wednesday, March 24, 2010
Exco Resources (NYSE:XCO) Marcellus Shale Joint Venture
Exco Resources Marcellus Shale
According to CEO Douglas Miller, within a couple of weeks Exco Resources Inc. (NYSE:XCO) could announce a joint venture in the Marcellus shale.
Increased drilling in the region by companies like Chesapeake Energy Corp. (NYSE:CHK), Encana Corp. (NYSE:ECA) and Petrohawk Energy Corp. (NYSE:HK) has raised costs, making it more profitable to attract a partner than bear the cost themselves.
Miller didn't release any potential partners in the Marcellus shale play, although he's looking at a number of options before making a final decision.
Exco Resources Marcellus Shale
According to CEO Douglas Miller, within a couple of weeks Exco Resources Inc. (NYSE:XCO) could announce a joint venture in the Marcellus shale.
Increased drilling in the region by companies like Chesapeake Energy Corp. (NYSE:CHK), Encana Corp. (NYSE:ECA) and Petrohawk Energy Corp. (NYSE:HK) has raised costs, making it more profitable to attract a partner than bear the cost themselves.
Miller didn't release any potential partners in the Marcellus shale play, although he's looking at a number of options before making a final decision.
Exco Resources Marcellus Shale
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