Chesapeake Energy

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Feds Clear Chesapeake & Encana in Collusion Case, Michigan Next?
May 2, 2014May 2, 2014

An update on the Chesapeake/Encana “collusion” story in Michigan. Two years ago Reuters accused Chessy and Encana of colluding to keep prices low for Michigan state oil and gas leases coming up for auction (see Did Reuters Break the Law with Latest Chesapeake Story?). Either a low-life snitch gave Reuters private emails from the companies or Reuters engaged in breaking and entering, a la Watergate style, to get access to those emails. Either way, the emails didn’t really show anything damning. However, both the feds and the state of Michigan launched years-long, anal exam-type investigations. In March of this year the Michigan Attorney General decided to press charges (see Reuters Smiles: MI Criminal Court to Charge Chesapeake & Encana).

However, the feds have just sent a letter to Chessy and Encana exonerating them from any wrongdoing. Since “more often than not” the feds and the state attorneys reach the same conclusion, it’s quite possible that Michigan will drop its criminal case as early as next week…
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Access Midstream Partners | Chesapeake Energy | Energy Companies | Energy Services | Industrywide Issues | Pipelines

Access Midstream 1Q14: Throughput Up in Marcellus/Utica
May 2, 2014May 2, 2014

Access Midstream, formerly known as Chesapeake Midstream, released their first quarter 2014 update earlier this week. Access has operations around the country, not just the northeast. However, both the Marcellus and Utica Shale is an important part of the Access picture. Among the interesting things in this update: Throughput (the amount of gas flowing through Access pipelines) was up for both the Marcellus and Utica in 1Q14; and, Chesapeake, via their subsidiary Midcon Compression, sold 103 compressor stations to Access located along gathering systems in the Marcellus and Utica region for $160 million (see Chesapeake Fire Sale Continues: Marcellus/Utica Compressor Plants).

Below is an extract from the Access Midstream update–the part most relevant for the Marcellus and Utica:
Read More “Access Midstream 1Q14: Throughput Up in Marcellus/Utica”
American Energy Partners | Chesapeake Energy | Energy Companies | Ohio | Statewide OH | Utica Shale

Aubrey McClendon Leases Rigs from Chesapeake to Drill in the Utica
April 21, 2014April 21, 2014

Aubrey McClendon, the former CEO of Chesapeake Energy (before corporate raider Carl Icahn tossed him from the company he founded) is back in business with Chesapeake. Sort of. McClendon’s new company, American Energy Partners, which is set to go great guns in the Ohio Utica Shale, is leasing drilling rigs from Chesapeake for $26,000 per day–six of them (with a seventh at $23,500 per day). Makes for strange bedfellows, no? But hey, a rig’s a rig’s a rig. Doesn’t matter who owns it. What matters is to get drilling now, before the competition. And Aubrey is all over it.

However, Aubrey is being mum on the arrangement. Here’s the little that is know, picked up from Chesapeake’s financial filings with the SEC…
Read More “Aubrey McClendon Leases Rigs from Chesapeake to Drill in the Utica”
Bradford County | Chesapeake Energy | Crime | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Statewide PA

PA AG Kathleen “Anti-Driller” Kane Probes Chessy Royalty Issue
April 17, 2014April 17, 2014

Pennsylvania Attorney General Kathleen Kane’s office is interviewing people on the Chesapeake Energy royalties screwing scandal, reportedly. We have mixed emotions about it. Yes, the state needs to investigate and see if there has been malfeasance. However, we question whether an avowedly anti-drilling AG has the moral or ethical ability to do so honestly. Yes, we ARE questioning her fitness for the office. Problem is, Gov. Tom Corbett and other PA Republicans like State Sen. Gene Yaw asked her to investigate–so it’s on their heads if she turns into the proverbial bull in a china closet and takes the opportunity to try and destroy the drilling industry as part of her “investigation.”

Here’s the latest from the rumor mill on Kane’s so-called royalty investigation…
Read More “PA AG Kathleen “Anti-Driller” Kane Probes Chessy Royalty Issue”
Chesapeake Energy | Energy Companies

The Skeletons Knocking Around in Chesapeake Energy’s Closet
April 10, 2014April 10, 2014

An article on The Motley Fool investors website takes a look at Chesapeake Energy and the potential skeletons that may be hiding in their closet. The purpose of the article is to make the point that potential suitors who may want to buy Chessy may want to reconsider that concept because of Chessy’s skeletons–much to dismay of corporate raider Carl Icahn who has invested a lot of his own money on the gamble that he can hack off entire pieces of Chessy and make it an attractive buy-out option, boosting his own fortune even more (Tolkien’s Smaug sitting atop mountains of ill-gotten gold comes to mind).

So which skeletons do we already know about in Chessy’s closet, and which ones don’t we know about (yet)?…
Read More “The Skeletons Knocking Around in Chesapeake Energy’s Closet”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Bad to Worse: PA Royalty Owner Asks Court for Chessy Class Action
April 9, 2014April 9, 2014

Chesapeake Energy continues to find itself under the metaphorical gun with respect to royalty payments in Pennsylvania. The PA legislature is considering a bill (HB 1684) that would plug a legal loophole and require Chesapeake and other drillers to pay landowners a 12.5% minimum royalty regardless of post-production costs (see PA NARO Alert: Tell Your State Rep to Vote YES on HB 1684). Landowners in Bradford County sued Chessy held an anti-Chesapeake rally to further express their extreme displeasure (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans). Gov. Corbett asked PA’s anti-drilling Attorney General, Kathleen Kane, to investigate (showing how bad it’s gotten–to stoop to asking her to get involved).

And now from bad to worse: a company that owns royalty rights in PA, Scout Petroleum, claims they’ve been screwed out of royalties by Chesapeake and has asked a judge for a full refund and to force Chesapeake into arbitration and grant class-action status to the whole, festering mess…
Read More “Bad to Worse: PA Royalty Owner Asks Court for Chessy Class Action”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

Rare Schism Between Landowners & Drillers over PA Royalty Law
April 8, 2014April 7, 2014

Several weeks ago MDN told you that the Pennsylvania chapter of the National Association of Royalty Owners had sent out a flash email to encourage support of House Bill (HB) 1684, the Guaranteed Minimum Royalty Act. The bill would clear up shady dealings from Chesapeake Energy (and perhaps others) in deducting certain expenses leaving some landowners with checks for royalties way under the 12.5% guaranteed minimum (see PA NARO Alert: Tell Your State Rep to Vote YES on HB 1684). Not long after NARO sounded the rallying cry, the Pennsylvania Farm Bureau joined NARO in supporting HB 1684 (see PA Farm Bureau Joins Chorus Against Chessy on Royalty Issue).

However, this is one issue on which landowners, who are strongly pro-drilling, and the drilling industry itself, part ways. The Marcellus Shale Coalition, through its new grassroots organization called Shale Advocates, is asking shale supporters to oppose HB 1684. According to the Shale Advocates website, they want their supporters to “Take a few moments to contact your representative and let them know you oppose HB1684 and any effort by the Commonwealth to intervene in private contracts. Here’s your opportunity to be heard. Your voice will make a difference.” After HB 1684 has been larded up with amendments, NARO met to consider whether or not they would still support it and in the end, they see more to like than no like about the bill–so they issued the following press release last week to reaffirm their strong support:
Read More “Rare Schism Between Landowners & Drillers over PA Royalty Law”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA Farm Bureau Joins Chorus Against Chessy on Royalty Issue
April 3, 2014April 3, 2014

The Pennsylvania Farm Bureau is adding its considerable weight behind the effort to pass new legislation that will guarantee landowners in the state don’t get shafted by companies like Chesapeake Energy when it comes to royalty payments. As MDN has previously reported, the royalty situation in PA has turned messy with claims that Chesapeake Energy has engaged in an elaborate scheme to pass post-production costs on to landowners–costs they technically don’t have a right to deduct (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). What it means is that some landowners are getting peanuts–far below the state mandated 12.5% minimum royalty.

The Farm Bureau is up in arms because its members are up in arms–and so the organization is pushing for new legislation to plug the loophole that Chesapeake (and maybe others) are apparently exploiting…
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Air Quality | Chesapeake Energy | Energy Companies | Exxon Mobil | Industrywide Issues | Regulation | Ultra Petroleum

Rogue Obama EPA Goes on Methane Witch Hunt
April 2, 2014April 2, 2014

The recent Climate Action Plan to cut methane emissions emitted by the White House last week contains this ominous bullet point: “EPA will assess several potentially significant sources of methane and other emissions from the oil and gas sector. EPA will solicit input from independent experts through a series of technical white papers, and in the fall of 2014, EPA will determine how best to pursue further methane reductions from these sources.”(1) The good news is that the overbearing, out-of-control actions by the Obama EPA will only apply to drilling on federal lands. The bad news is that they will try to bully individual states to adopt the same new onerous regulations, thereby making federal regulations de facto in many locations.

Will the EPA methane witch hunt affect the Marcellus and Utica region? Too early to tell whether PA, OH and WV will cave to Obama EPA pressure. Here’s an analysis of how onerous new regulations may affect several drillers with major operations in the Marcellus…
Read More “Rogue Obama EPA Goes on Methane Witch Hunt”
Chesapeake Energy | Energy Companies

Chesapeake’s 2014 Laser Focus: Liquids and Continued Fire Sales
March 25, 2014March 25, 2014

Chesapeake Energy is presenting at the 42nd Annual Howard Weil Energy Conference this week in New Orleans. As part of their presentation they released a new PowerPoint slide deck (copy embedded below). What does it show? Liquids liquids liquids. Chesapeake has its sights set on producing more liquids as it’s ticket to financial health. The presentation also reveals they will continue to shed “noncore assets and noncore affiliates.” That is, “Watch out below–more ballast coming over the side!” as Chessy will continue to dump divisions and subsidiaries in an effort to prop up the stock price and make bossman corporate raider Carl Icahn happy.

The slide deck is quite revealing and loaded with good information. We learn, for example, that Chessy is spending less than half in capital expenditures on drilling this year than they did just two years ago. First we’ll give you some of our insights and point out our favorite slides and what they reveal, then we’ll share SNL Financial’s take on the presentation. Finally, we’ve embedded the presentation itself so you can peruse it for yourself. The flavor and tone of the presentation is that Chessy is (now) fiscally disciplined and on track to turn the company around and make it profitable. Not mentioned anywhere in the presentation is the 800-pound gorilla: the lawsuits filed and investigations launched into Chesapeake’s alleged screwing of landowners out of royalty payments, which (if found true) will quickly derail all of their best-laid plans to make Icahn even more rich…
Read More “Chesapeake’s 2014 Laser Focus: Liquids and Continued Fire Sales”
Chesapeake Energy | Energy Companies | Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

OH Landowners Question Chesapeake’s Royalty Calculations
March 18, 2014March 18, 2014

The bad news for Chesapeake just keeps rolling in. Not only are landowners in Pennsylvania up in arms over minuscule royalty checks (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans), so too are Ohio landowners now questioning whether or not they’re getting the shaft from Chessy.

As we mentioned last week, the anti-drilling site ProPublica published an “investigative” article trying to lay the blame for Chesapeake’s current bad behavior on the previous CEO (and founder) Aubrey McClendon (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). In Ohio Chessy shows a big, fat zero in the column for post-production expenses deducted from the royalty payment. Some say that’s a lie…
Read More “OH Landowners Question Chesapeake’s Royalty Calculations”
Chesapeake Energy | Energy Companies

Chesapeake Rushes to Spin Off Oilfield Services into New Company
March 18, 2014March 18, 2014

Three weeks ago MDN brought you the news that Doug “the ax” Lawler, nominal CEO of Chesapeake Energy (his boss corporate raider Carl Icahn really runs the show) had decided to either spin off or sell Chessy’s oilfield services division (see Chesapeake Energy Looks to Dump Oilfield Services Division). Doug and Carl are impatient men–they’re on a mission to fatten Carl’s bank account. Since there were no immediate takers for this latest fire sale item, Doug and Carl announced yesterday they’re spinning the oilfield services division out into it’s own company–a company that will be named Seventy Seven Energy Inc.

This action comes on the heals of selling off many (most? all?) of the remaining compressor plants owned by Chesapeake, including all 103 of the compressors they owned in the Marcellus (see Chesapeake Fire Sale Continues: Marcellus/Utica Compressor Plants). We have to ask–what is there left to sell at this point? Er, right–the company itself! However, no one will buy the company with the current cloud of accusations hanging over it that they’ve been cheating landowners out of royalties. Here’s the announcement that Chessy is saying sayonara to their oilfield services division…
Read More “Chesapeake Rushes to Spin Off Oilfield Services into New Company”
Chesapeake Energy | Energy Companies | Lease & Royalty Payments | Pennsylvania | Statewide PA

Chesapeake Shafting Landowners out of Royalties Mess Gets Messier
March 14, 2014February 19, 2015

Corporate raider Carl Icahn is likely developing a case of heartburn over his investment in Chesapeake Energy. He’s been responsible for cutting thousands of jobs and selling off billions in assets at Chesapeake, but there is a developing situation he can’t control that will definitely affect his pocketbook. Pennsylvania’s landowners are up in arms over what they perceive to be theft of their royalty payments by Chesapeake Energy. We told you about the recent rally in Bradford County, and about Gov. Corbett and others who invited PA’s anti-drilling Attorney General, Kathleen Kane, to get involved (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans). It’s now a royal mess and likely to get messier as time goes on.

The sorta short version of the story is this: A few years ago Chesapeake was hammered by bad press (because the media hates Aubrey McClendon, then CEO). Chessy’s stock tanked and with lots of debt, McClendon couldn’t find any more money to borrow at a reasonable rate. So McClendon invented a clever scheme to re-interpret leases that would allow Chessy to deduct certain pipeline fees from landowner royalties. The expenses would be paid to Access Midstream (spun off from Chesapeake) in return for Access giving Chessy a big, fat pile of cash/investment. The inflated pipeline fees paid to Access–now deducted from royalty checks–would generate enough revenue for Access to recoup their investment in Chessy. It was a clever way of extracting money from landowners by doing it through the intermediary of a pipeline company. At least that’s the theory spun by the anti-drilling ProPublica/Daily Beast. Is it true?…
Read More “Chesapeake Shafting Landowners out of Royalties Mess Gets Messier”
American Energy Partners | Chesapeake Energy | Energy Companies | Ohio | Statewide OH | Utica Shale

Aubrey McClendon: Utica Shale ‘Man in Motion’
March 11, 2014March 11, 2014

If you (foolishly) believed the stories about Aubrey McClendon and his oversight of the company he co-founded, Chesapeake Energy, you would believe that after he was bounced out of the company no one would ever again give him a dime. Under McClendon, supposedly Chessy spiraled out of control with debt and mismanagement. McClendon was cast as a maverick–a wildcatter who threw money around on $300 champagne lunches and managed to grow the company beyond his ability to run it. The problem with that view is the truth of what’s happened to Chesapeake since McClendon’s departure. Corporate raider Carl Icahn is the one controlling Chessy these days–for his own personal benefit. Icahn and his lieutenant CEO Doug Lawler have sold off key assets right and left and fired thousands–actions that don’t have squat to do with improving the financial health of the company. It only improves Icahn’s per share value.

McClendon, less than a year from being unceremoniously dumped by Icahn, has a new company with $3 billion of OPM (other people’s money) in his hip pocket to spend on drilling “at least” 1,600 Utica Shale wells in Ohio. McClendon’s new venture, called American Energy Partners, has already amassed 260,000 acres of leases in less than a year, on which to drill those 1,600+ Utica wells. McClendon right now has drilling rigs on the job in Ohio. The man does not let any grass grow under his feet (or on his drill pads). Here’s an update on Aubrey McClendon, a Utica Shale man in motion…
Read More “Aubrey McClendon: Utica Shale ‘Man in Motion’”
Chesapeake Energy | Encana Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Michigan | Statewide MI

Reuters Smiles: MI Criminal Court to Charge Chesapeake & Encana
March 6, 2014March 6, 2014

In June 2012 MDN brought you the story that of possible collusion between Chesapeake Energy and Encana over lease offers in the state of Michigan. At the time we pointed out that the Reuters news service had “obtained” confidential emails that supposedly show such collusion, and we asked the question, how did Reuters come by those emails (see Did Reuters Break the Law with Latest Chesapeake Story?). It was obvious Retuers was trying to take down Aubrey McClendon and by extension Chesapeake Energy. Aubrey is now gone from Chesapeake and Reuters’ favorite corporate raider, Carl Icahn, now pulls the strings of the new CEO, Doug Lawler.

Not long after the whole story burst onto the scene, Encana did their own internal investigation and cleared themselves (see Encana Says Investigation Shows No Collusion with Chesapeake). That was Sept. 2012. Reuters is now back and announcing that the attorney general in Michigan will now file, two years later, criminal charges against both Chesapeake and Encana on March 19 in Michigan state court. We’re sure Reuters is smiling…
Read More “Reuters Smiles: MI Criminal Court to Charge Chesapeake & Encana”
Access Midstream Partners | Chesapeake Energy | Energy Companies | Energy Services | Industrywide Issues | Ohio | Pennsylvania | Pipelines | Statewide OH | Statewide PA | Statewide WV | West Virginia

Chesapeake Fire Sale Continues: Marcellus/Utica Compressor Plants
March 5, 2014March 5, 2014

Chesapeake Energy continues to sell off bits and pieces of the company, making corporate raider (and the company’s second largest investor) Carl Icahn happy. The latest ballast to go over the side are 103 “compression units” in the Marcellus/Utica region, purchased by Access Midstream (which used to be Chesapeake Midstream before it was tossed over the side too), and 334 “compression units” scattered throughout the south, southwest and west, sold to Exterran Partners. Total proceeds for Carl Icahn, er Chesapeake? $520 million.

Here’s the announcement from Chesapeake, followed by the announcement from Access Midstream about their “bolt-on” acquisition…
Read More “Chesapeake Fire Sale Continues: Marcellus/Utica Compressor Plants”