Sinopec to buy stake in Chesapeake assets for $1.02 billion

OKLAHOMA CITY, Okla., Mon Feb 25, 2013 — China Petroleum & Chemical Corp. (Sinopec), Asia’s largest oil refiner, will buy half of Chesapeake Energy Corp.’s Mississippi Lime oil and gas properties for $1.02 billion, becoming the latest Chinese company to pick up shale assets in North America.

Chesapeake shares were up 2 percent at $20.90 in premarket trading on Monday. The stock has risen about 23 percent this year.

Output from shale fields in the United States and Canada has jumped over the last three years due to the advent of drilling methods such as hydraulic fracturing.

Companies in China, which has the largest shale reserves in the world, are keen to get the know-how of drilling in such unconventional fields.

China’s state-owned CNOOC Ltd. has struck a deal to buy Canadian oil and gas company Nexen Inc. for $15.1 billion, while U.S. company Pioneer Natural Resources Co. said last month it would sell a stake in its assets in the Wolfcamp shale field of Texas to Sinochem Group for $1.7 billion.

Sinopec will get 425,000 acres in northern Oklahoma through the deal, Sinopec and Chesapeake said in a statement.

The Mississippi Lime assets will be bought by Sinopec International.

Chesapeake fourth quarter profit tops Street, shares rise

OKLAHOMA CITY, Okla., Thu Feb 21, 2013 — Chesapeake Energy Corp. reported fourth-quarter profit that topped Wall Street estimates on Thursday, helped by lower-than-expected expenses and more profitable oil production.

Shares of Chesapeake rose nearly 2 percent to $20.60 before the start of regular trading.

The earnings report came a day after Chesapeake said an internal investigation of the financial dealings of its outgoing chief executive, Aubrey McClendon, found no “intentional” wrongdoing.

McClendon is stepping down in April following a tumultuous year during which the company faced a liquidity crunch and a governance crisis. Now Chesapeake’s board and big shareholders are working to rein in spending, pay down debt and increase production of more profitable oil.

McClendon, who founded the company in 1989, was not quoted in the earnings release as he typically is.

Phil Weiss, an analyst with Argus Research, said expenses in a number of areas came in below his projections while cash flow was higher than he anticipated.

As controversy swirls, Chesapeake Energy picks new lawyer, James Webb

OKLAHOMA CITY, Okla., Fri Sep 21, 2012 – Chesapeake Energy Corp. has hired James Webb as its new, full-time legal counsel as it tries to recover from damaging reports about controversial land deals in Michigan and personal loans taken out by its chief executive.

Webb, who has worked on a contract basis for the company for the past four months, will be Chesapeake’s legal and general counsel, the second-largest U.S. natural gas producer said in a statement Friday.

He replaces Henry Hood, who held the position from April 2006 through June 2012.

Hood will remain Chesapeake’s senior vice president, land and legal.

A Reuters report in June showed Chesapeake and Encana Corp. had colluded in 2010 to avoid bidding against each other in Michigan land deals.

That report triggered an investigation by the U.S. Department of Justice into possible criminal antitrust violations.

The company has also come under intense scrutiny after Reuters reported in April that Chesapeake CEO Aubrey McClendon had borrowed as much as $1.1 billion over the last three years by pledging his stake in the company’s oil and natural gas wells as collateral.

Hood had defended McClendon and Chesapeake after initial reports of the loan, saying there was no conflict of interest.

Webb has worked for 17 years at the Oklahoma law firm McAfee & Taft.

Chesapeake Energy to raise $6.9 billion from asset sales

OKLAHOMA CITY, Okla.,Wed Sep 12, 2012 – Chesapeake Energy Corp said it will sell most of its Permian Basin properties to Royal Dutch Shell Plc nd Chevron Corp. and a majority of its pipeline assets to raise about $6.9 billion in cash.

The company, which has been shedding assets to raise cash to meet an estimated $10 billion funding gap, said it would use the proceeds to repay $4 billion of term loans in the fourth quarter.

Chesapeake has been working to sell the Permian Basin assets since February. The company holds 1.5 million acres in the basin, spread across the western part of Texas and the southeastern part of New Mexico.

Chesapeake said on Wednesday it would sell its assets in the southern Delaware Basin portion of the Permian Basin to a unit of Shell. Its assets in the northern Delaware Basin portion would be sold to Chevron. The company said it would raise about $3.3 billion from sale of the Permian Basin assets.

Chesapeake said it would raise $3 billion from selling substantially its entire pipeline and related assets. This comes after the company said in June it would sell its pipeline assets to Global Infrastructure Partners for more than $4 billion.

Chesapeake asset deals going as planned: CEO

OKLAHOMA CITY, Okla., Thu Sep 6, 2012 – Chesapeake Energy Corp. will sell up to $14 billion in assets by the end of the year as planned, with proceeds targeted to debt reduction, the company’s chief executive said on Thursday.

The Oklahoma City company also needs to sell some of its oil and gas interests to fill a funding gap that Barclays analysts estimate at $4 billion in 2013.

“About $13 to $14 billion in sales remains our goal for the year,” Chesapeake CEO Aubrey McClendon told investors at the Barclays energy conference in New York. “We should be a cash generator this year as a result of our asset sales.”

By the end of the third quarter, Chesapeake will have announced nearly $12 billion in assets so far this year. That figure includes the sale of most of the company’s 1.5 million acres in the Permian Basin and its midstream business, McClendon said.

But the Permian deals might not close in the third quarter as previously planned.

“There will probably be some spillover in the fourth quarter,” the executive said.

McClendon declined to provide more detailed status updates on its planned deals.

Shares of Chesapeake rose to $19.65 in premarket trading, up from Wednesday’s New York Stock Exchange close of $19.54.

Chesapeake swears off big spending, shares jump

OKLAHOMA CITY, Okla., Tue Aug 7, 2012 – Chesapeake Energy Corp said on Tuesday it plans to stop spending heavily on oil and gas properties next year in a strategic shift from land acquisition to resource development, helping to boost the U.S. company’s shares by over 10 percent.

Chief Executive Aubrey McClendon has spent heavily to amass more than 15 million acres (6 million hectares) in oil and gas basins around the United States, leaving the company awash in debt and unable to fund its operations without bringing in deep-pocketed partners or selling properties.

Big investors including Carl Icahn and Southeastern Asset Management’s Mason Hawkins have pressured McClendon to reduce spending and sell assets to bridge an estimated $10 billion funding gap for this year.

Chesapeake is pledging to lower spending and focus on producing higher-priced oil and natural gas liquids from basins it considers key, while it sheds up to $14 billion in assets this year and up to $5 billion in 2013.

In addition, the company will cut its capital budget by $6 billion next year, McClendon said. Its 2012 capex is estimated at $13 billion.

Encana tipped off Chesapeake to land plans in Michigan, e-mails show

OKLAHOMA CITY, Okla., Wed Jul 11, 2012 – As Chesapeake Energy Corp and Encana Corp. face antitrust investigations, emails reviewed by Reuters indicate that top executives of the two rivals shared sensitive information that gave Chesapeake the upper hand in deals with Michigan land owners.
The emails show the competitors traded information about whether Encana was halting new land leasing in Michigan in 2010, and the information prompted Chesapeake to dramatically change its leasing strategy in subsequent weeks and helped send Michigan land prices tumbling from record highs.
In the days after learning that Encana was paring back, Chesapeake CEO Aubrey McClendon ordered Chesapeake to renegotiate or delay closing on at least 10 deals that his company was negotiating with major land lease holders in Michigan, documents reviewed by Reuters show.
Antitrust experts said such discussions could add fodder to probes by the Justice Department and Michigan authorities, who are exploring whether the two companies violated state or federal laws by discussing how to suppress land prices in the state.
They said the emails raise collusion concerns, given that two direct competitors appear to have exchanged critical data. “Information exchange” is not explicitly illegal under U.S. antitrust law, unlike bid-rigging and price-fixing. But it has been found by courts to be anti-competitive when the sharing is done privately, doesn’t promote efficiency and involves information of value to customers – in this case, Michigan land owners.
“It’s highly suspect,” said Maurice Stucke, a former antitrust attorney with the Department of Justice. Said Harry First, another former Justice Department antitrust attorney: “Asking your competitor whether they are going to stop leasing in, or exit, the Michigan market is an offer to collude.”

Chesapeake to sell pipeline assets for more than $4 billion

OKLAHOMA CITY, Okla., Fri Jun 8, 2012 – Chesapeake Energy Corp. will sell its pipeline and related assets to Global Infrastructure Partners in three separate transactions worth more than $4 billion, as the company scrambles to plug an expected $9 billion to $10 billion funding shortfall.

Chesapeake, the second-largest U.S. natural gas producer, is under pressure to sell assets and cut spending to reduce debt after tumbling natural gas prices have pinched profits. The company, which is holding its annual meeting later on Friday, has also come under intense scrutiny for corporate governance issues.

Chesapeake said it will sell its limited partner units and general partner interests in Chesapeake Midstream Partners LP to infrastructure fund GIP for $2 billion.

The company also entered into an agreement with Chesapeake Midstream Partners for potential sale of certain Mid-Continent gathering and processing assets.

It also has a agreement with Global Infrastructure Partners for the sale its interests in wholly owned subsidiary Chesapeake Midstream Development LP.

Chesapeake expects to raise more than $2 billion from the latter two transactions.

Chesapeake Midstream Partners has more than 3,700 miles of natural gas gathering pipelines, according to the company’s website. Chesapeake also held about 1,950 miles of pipelines in the Chesapeake Midstream Development unit as of the end of last year, according to regulatory filings.

Chesapeake has said it will sell as much as $11.5 billion in assets this year in order to reduce its funding gap. Last month, the company arranged for a pricey $4 billion loan from its investment bankers to tide it over.

Chesapeake shareholders to replace four directors

OKLAHOMA CITY, Okla., Mon Jun 4, 2012 – Chesapeake Energy Corp. agreed to replace four of its current board members with new directors chosen by two of its largest shareholders, as the company has come under intense pressure to improve its corporate governance.

Chesapeake said on Monday that its largest shareholder, Southeastern Asset Management, will nominate three of the new directors, while billionaire investor Carl Icahn and his affiliates will pick the fourth. It said four of its current directors will resign upon appointment of the new directors.

NY pension fund urges no vote on Chesapeake directors

NEW YORK, Tue May 29, 2012 – The head of New York’s state pension fund urged shareholders of Chesapeake Energy Corp. to withhold votes to re-elect two members of the natural gas producer’s board of directors.

In a letter issued on Tuesday, New York State Comptroller Thomas DiNapoli said withholding votes from board members V. Burns Hargis and Richard K. Davidson was a “necessary first step toward reconstituting a board that is currently entrenched and unaccountable to shareholders.”

On Friday, activist investor Carl Icahn revealed he had taken a 7.6 percent stake in Chesapeake and called on the company to replace at least four directors.

Icahn asked the company for two board seats for his own representatives and two for another large shareholder such as Chesapeake’s largest, Southeastern Asset Management.

DiNapoli said Hargis, who has been on the board since 2008, and Davidson, who has been on it since 2006, both serve on the audit committee, which has failed to monitor Chief Executive Aubrey McClendon’s mortgages on his stakes in company wells.

“In my view, there needs to be an evaluation of the entire board’s competence and performance, including an assessment of whether the current directors have the necessary skills and attributes to continue to oversee the company,” DiNapoli said in the letter.

Shares in Chesapeake were up 2.7 percent in premarket trading to $16.24.