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This month the company put out this slick very expensive magazine touted as an investor's report. The cost of these things is out of sight so I take it as indication they are just not able to cut back on excess even in little things. I would have preferred to have these costs tacked onto checks. Figure royalty owners paid for the slick edition.
Still too risky for my money.... But good luck, Mr. Ichan!
The letter is excellent, timely, and necessary. Chesapeake's Board was hand-selected by the President of the company. This is business as usual for a small or even a mid-sized company. Typically, companies lose that friendly Board as it grows, borrows money or attracts investment from VCs, because the VCs won't put up with that stuff. I am not sure why that natural evolution didn't happen with CHK. Chesapeake has been wreckless in its growth strategy. I know it could not have grown the way it has without McClendon, but that assertion cuts both ways. I bought CHK stock 2 years ago - it is down more that 50%. I've chosen not to dump it at a huge loss, but I certainly am not going to double down either.
Good thinking on dumping. Too late now. Hope you don't end up with a lot of paper like I did with Braniff. Same thing ..the CEO kept the $$$ in his pocket and spent like it was his. I should have dumped it when he hired his girlfriend to "decorate" the planes and design the hostess outfits..
There was a blurb about him buying CHK on Fox this morning (Saturday).
If this had been done 4 weeks ago might have worked. I think it might be too late to turn the ship away from the waterfalls.
Hummm ... while I am fairly favorable to this development I do wish it were not necessary.
Aubrey is a wildcatter and they can be hard to control (or keep themselves under control) Ichan is a name I have heard of for years in the investment world. This may be a game changer in more ways that one. Consider that a New York born, Princeton Grad is taking over Chesapeake Energy. It looks like two wheeler-dealers have collided and the Yankee has won. Maybe it's a sign natural gas is growing up as an important investment.
In the past natural gas companies may have been too small and regional for the big investors to get excited about. However, CHK has gotten so big and important that it can attract a major investor like Ichan to "rescue" it. Ichan is a huge name in the investment world - he's sort of a "wildcatter" too. It's a shame that he and Aubrey could not work together.
Ichan may see a chance to get his name in the history book (and make a bundle with CHK's under-valued assets) He can make a lot of money - and be the hero on the white horse. That might be very good for the image of natural gas. We need some positive PR and sadly, Aubrey is causing people to be against natural gas because they are against HIM. He's a lightning rod for all things some people hate about natgas.
"We recently had dinner with Aubrey McClendon to suggest a manner by which that credibility gap might be filled. The company has publicly identified several actions including reduced spending and asset sales which will relieve some of the funding gap, yet the board still seems to miss the point. We believe that a management team and a business plan without strong oversight and accountability is doomed to fail. Accordingly, at that dinner we asked Aubrey to consider direct shareholder representation on the board. The next day we were informed that the board refused to even consider this request prior to the selection of a chairman of their choosing. We believe that this response was completely disingenuous and illogical. Why is appointing a new chairman, sometime out in the future, an excuse for putting off considering whether to have shareholders, the true owners of the company, have immediate representation on this very flawed board in this very fluid situation?"
Hopeful: My financial and general interests are far more aligned with NG as a commodity than in the small investment I have in CHK. Aubrey has done a great deal to thrust NG into the national conversation, and most of that is a good thing. After reading a good many of the recent articles about CHK's financing, I certainly would not characterize their assets as being "under-valued" although I would like to think that the stock is undervalued. A better characterization of CHK is that it is "over-leveraged." They are sitting on a vast portfolio of leases in the many shale areas of the US, and all of those leases are valuable. At least in Louisiana, CHK paid WAY TOO MUCH lease bonus for much of that. And I say that as a land/mineral owner who got a little of that. And all of those huge lease bonuses, we now find out, came from borrowed money. I'm starting to see what Aubrey has more in common with President Obama than I am comfortable with.
Amlost none of Aubrey's or CHK's problems would be in the news if NG prices had not dropped so sharply. But, of course, CHK is one of the reasons the price has dropped so much. That pesky law of "supply and demand" just won't go away.
I have almost nothing to like about Carl Ichan, or anything in common with him. But he does tend to hold corporate leadership's feet to the fire. Much needed by the Board of CHK, who has been a rubber stamp for far too long.
I love "wildcatters" and have known and worked for some. Not sure they make good CEO's of publicly traded companies.
You mean Aubrey was wrong when he said $30K an acre for a lease was chump change??
I completely agree that CHK would not be the news story it is if prices had not fallen so far. Of course, without Aubrey and CHK do you even have the whole Haynesville shale boom or the national focus on natural gas? Aubrey was vital for that. But, he makes a terrible poster boy for natural gas these days. They should never have let him do so many interviews. He has very loose lips.
You are right that few founders make good CEOs of traded companies. The corporate mindset is very different from a founders mindset. CHK has grown beyond Aubrey and his friends and their good old boy deals. Maybe that's a good thing for the industry over the long term.
HANG, there are many POV's when it comes to this stuff, and certainly your thinking is quite valid, being as a number of insiders in the O & G biz have voiced similar opinions about CHK and Aubrey's pop to the HA.
Nevertheless, I personally don't agree with that (or those) assessments, per se.
In other words, it seems to me that it really doesn't matter what entity was first to the Haynesville Shale formation, in that numerous mid-size operators and Seven Sisters now have the technology and expertise to bring in the super horizontal wells. CHK does not have a lock on such drilling, nor did it have before the HA cat was out of the bag, so to speak.
In other words, just like during the early Caddo oil boom -- the first-responders certainly did help prove the play, but the HA play would've eventually been proven anyway since the minerals are clearly in the ground and since numerous operators have a profitable way to extract them per a certain NG pricing level.
Ergo, the HA did not need Aubrey or CHK.
No, the reverse was true.
Aubrey needed the HA, per his reckless schemes and financial flips, in that it was a perfect/dovetail into his style of leveraging such in-the-ground asset grabs vis-a-vis his Enron-like derivative swaps [sic], and thus it allowed CHK to turn one dollar into twenty (to offer a bad derivative analogy).
In fact, Aubrey did quite a bit of damage to the HA, IMHO, since his unbridled complexities help drive NG options down into the basement.
And, y'know, this opinion comes from a landowner (me) -- who greatly benefited via reaping an unheard of high bonus-per-acre lease from one of Aubrey's competitors.
So, to take the easy road and characterize Aubrey as standing at the helm of the HA and somehow being responsible for what was already in the ground long before Mr. Oklahoma/trained landman had any inkling as to what was deep under the ARK-LA-TEX ground -- is a misnomer, if you ask me.
Yet, sure. Many might disagree with me, and that's their prerogative.
CHK thinks they can handle their own affairs.
Shareholders, go home and don't worry, you should keep your nose out of the Boards business, if the company tanks, oh well.....that's the risk you take when you invest.
Anyone have any idea when CHK stock will become a BUY in the markets. This co. is too big to fail. It will come back or be bought out by a bigger fish. I am thinking it will get below $10. Any ideas???????????