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Chesapeake Sells Utica Leases in Columbiana County, OH to Hilcorp

investigationA great piece of investigative journalism from the Youngstown Business Journal has found that Chesapeake Energy, the largest leaseholder in the Utica Shale, transferred nearly 1,100 leases (representing tens of thousands of acres) in Columbiana County, OH to Hilcorp earlier this year. No announcements of any kind from either Chesapeake or Hilcorp about the deal. Which is interesting, because not long after the deal was signed, sealed and delivered, Chesapeake on an earnings call singled out Columbiana as one of two Utica counties that they are committed to (see Chesapeake Earnings Call Highlights Utica Results in 2 OH Counties).
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Utica Shale Potpourri: Gulfport, Chesapeake, Antero & More…

The Akron Beacon Journal‘s Bob Downing does a great job, as usual, of jamming a lot of useful facts and figures into a single article. He posted a story on Monday that we would call “Utica Shale potpourri”…a round-up of interesting tidbits from the world of Utica Shale drilling from recent analyst and investor phone calls.

Here’s Bob’s latest information feast!…
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3 Important Questions Asked/Answered about Utica Shale Potential

Investors website The Motley Fool does a good job of asking, and answering, three important questions about the Utica Shale play, especially in light of the recent 2012 production report issued by the Ohio Dept. of Natural Resources.

The Fool article takes a look at: (1) Which other play(s) is the Utica like? (2) Were the 2012 numbers really a disappointment? And, (3) Why are producers holding back production?…
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Gulfport Does Best Job of Locating Utica Shale’s Oil Window

The old real estate bromide “location, location, location” is never more relevant than in the oil patch. An article on The Motley Fool website makes the following observation about the prospects for oil production in the Ohio Utica Shale for Devon Energy, Chesapeake Energy and Gulfport Energy:
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Chesapeake Energy Appoints Anadarko Engineer as New CEO

Robert "Doug" LawlerLess than two months ago corporate raider Carl Icahn and other mercenary “stockholders” of Chesapeake Energy (with the help of complicit reporters at Bloomberg and Reuters) unceremoniously dumped Aubrey McClendon, founder of Chesapeake, as CEO (see McClendon Exits Chesapeake, Well-Bonused “Friends” Replace Him). Yesterday, Chesapeake announced they’ve hired an executive from rival drilling company Anadarko Petroleum to lead them. Three of Aubrey’s closest “friends” that together were running the company via an “Office of the Chairman”–Archie Dunham, Steve Dixon and Dom Dell’Osso–will now go back to their regularly scheduled jobs (and piles of money). Et tu, Brute?

Robert Douglas (“Doug”) Lawler, 46, until this week, was senior vice president of international and deepwater operations at Anadarko. On June 17, he will join Chessy as CEO and a member of the Board of Directors. Doug is a petroleum engineer with an MBA. Our advice to Doug when he arrives at the corporate board room at Chessy: Watch your back when Carl Icahn is in the room. And you darned well better produce a dramatic turnaround on the balance sheet, quickly, or you too will be histoire.
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Chesapeake Donates $1M, Employees Help with OK Tornado Recovery

MDN is no fan of the new Chesapeake Energy under the tutelage of board member and corporate raider Carl Icahn–that you know from reading this site for any length of time. However, when a company like Chesapeake does something good and wholesome and just “right,” we don’t want to overlook that either. Yesterday, Moore, Oklahoma was hit by devastating tornadoes. There were a number of fatalities and a huge amount of property damage. Oklahoma native son company Chesapeake (headquartered in nearby Oklahoma City) announced they will donate $1 million cash to the American Red Cross to help with this tragedy. In addition, Chessy employees are volunteering their time to help in the recovery effort. It is noteworthy, and we applaud them.

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Zeits Says Chesapeake Marcellus Land Deals Not a Fire Sale

MDN recently highlighted two deals by Chesapeake to sell Marcellus Shale acreage at what we consider fire sale prices–in one case $574 per acre (see Southwestern Energy Buys 162K PA Marcellus Acres from Chesapeake), and in a second case $606 per acre (see Chesapeake Fire Sale Continues – EQT Picks up 99K Acres in SW PA).

However, Seeking Alpha blogger and energy analyst Richard Zeits–someone whose opinion we respect–has a different take. He says when you analyze the deals closely, they aren’t as irrational as they may appear, and these deals are far from a “fire sale”…
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Chesapeake Fire Sale Continues – EQT Picks up 99K Acres in SW PA

fire saleThe Chesapeake Energy fire sale of assets continues. On Friday, EQT Corp. announced they’re picking up 99,000 acres of leases and 10 horizontal wells in the Marcellus Shale from Chessy in southwestern PA for $113 million. Of that number, $60 million is the price for the acreage (and $53 million for the 10 operating wells). If you run the math, that’s $606 per acre ($60M/99K)–i.e. fire sale price.

Below is the EQT announcement (first), and analysis of the deal by Seeking Alpha blogger and energy analyst Richard Zeits (second):
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Oh Oh – Chesapeake Installs an Undertaker on the Board

Chesapeake Energy announced Friday they’ve shown board member Louis Simpson to the door. Simpson has been on the Chessy board since 2011 BCR (Before Corporate Raiders). He will be replaced by the CEO of the nation’s largest funeral home operator and provider of “death care products and services.” Talk about metaphors! We couldn’t have made this one up. Call in the undertaker…
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Chesapeake 1Q13: Marcellus Production Hits 2 Bcf/d, 14 Utica Rigs

Chesapeake Energy released their first quarter 2013 financial and operational update yesterday. The big news, for MDN readers, is that Chesapeake has now hit 2 billion cubic feet of production per day (Bcf/d) from their Marcellus Shale acreage. That’s a huge milestone. They also are still gung ho on the Utica Shale operating 14 drilling rigs in the Utica, and say they’re just waiting for infrastructure (pipelines and processing plants) to catch up and then production will take off for the Utica.

Revenue for the company is up by 35% to $1.1 billion in 1Q13, although what’s left over for common shareholders was a pitiful $15 million (2 cents per share). Still, the numbers overall are looking much better, and new Chesapeake CEO Steve Dixon says the company is on track to sell off another $4-$7 billion in assets this year in their attempt to reduce the high debt load.

Below are select portions of the Chesapeake 1Q13 update, with MDN comments sprinkled in to provide context…
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Chesapeake Sells Mississippi Lime Midstream Operation for $300M

Yesterday, SemGroup Corporation announced it had signed an agreement with Chesapeake Energy to purchase all of the assets of Mid-America Midstream Gas Services (a Chessy subsidiary), which owns gas gathering pipelines and processing plants in the Mississippi Lime play. SemGroup is paying Chessy $300 million in cash.

Technically it’s not a Marcellus/Utica deal, but MDN is covering this story because…
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More on Chesapeake’s Fire Sale of PA Acreage to Southwestern

A blogger on the Seeking Alpha website delivers a bit more information about the announcement earlier this week that Chesapeake is selling their leases for 163,000 acres in NE PA to Southwestern Energy for what MDN called the “fire sale” price of $574 per acre (see Southwestern Energy Buys 162K PA Marcellus Acres from Chesapeake).

According to Seeking Alpha, Chesapeake paid an average of $610 per acre to lease that acreage between 2006-2009, so they actually lost money on the deal…
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Southwestern Energy Buys 162K PA Marcellus Acres from Chesapeake

fire saleSouthwestern Energy announced yesterday that they’ve picked up 162,000 Marcellus Shale acres in northeastern Pennsylvania from Chesapeake Energy for $93 million. Along with the acreage comes 17 producing (1.2 net) wells with a (very small) 2 million cubic feet of net production per day. The Southwestern purchase nearly doubles the amount of their Marcellus Shale acreage.

The first interesting thing to MDN about the deal is that all of this new acreage–as well as all of Southwestern’s existing Marcellus acreage–is squarely in the “dry gas” area of NE PA. Obviously Southwestern, like Cabot Oil & Gas, believes there is money to be made in the dry gas window of the play. The second interesting thing is that Southwestern got the acreage at the fire sale price of $574 per acre…
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Chesapeake 2.0? Aubrey McClendon is Back – in the Energy Business

Aubrey McClendon It was pretty easy to predict (and MDN predicted it), that a very youthful Aubrey McClendon would not just sit on his hands and lick his wounds after being unceremoniously tossed aside by corporate raider Carl Icahn and other Chessy investors. MDN said this on April 1:

Why is it an error to show McClendon to the door even in light of his aggressive financial deals? You think McClendon will take his piles of money and sit on a Caribbean beach somewhere? In your dreams! He’ll be back, and he’ll start (or buy) another company that will directly compete with Chesapeake. You can bank on it. (McClendon Exits Chesapeake, Well-Bonused “Friends” Replace Him)

And what’s this? Just two weeks after exiting stage left, Aubrey has registered three new company names, set up an office, and hung out his shingle. Stetson hats off to the man:

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