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Chesapeake Energy (CHK) - Update

CHK reached a high of $39 in September, dropped down to $27 in November, and is back up today at $33.72.  All this, of course, has generally followed the price of natural gas and crude oil futures.  In fact, natural gas yesterday soared to the highest price ever recorded on the New York Mercantile Exchange.

Industry consolidation is another reason for the stock’s recovery.  ConocoPhillips (COP) acquired Burlington Resources (BR) two days ago for $35 billion.  With a market capitalization of $11.6 billion, CHK is a potential target.  CHK itself has been issuing preferred stock, common stock, and debt to fund expansion.  Last month it acquired Columbia Natural Resources for $2.2 billion.

But the biggest news (for me at least) was posted on the SEC today.  Audrey McClendon, the Chairman and CEO, and Tom Ward, the President and COO, each purchased another $23.6 million of shares at an average price of $31.46.

By Theo at 2005-12-14 19:29 | Stocks | CHK | Theo's blog


Interpretation of Tom Ward's resignation?

What's your interpretation of Tom's departure?

By schin at Mon, 2006-02-13 09:46 | login or register to post comments

RE: Tom Ward

My first reaction was:  "This can't be good for business."  I do not like how sudden the departure was and that he resigned all roles, including director.  Of course my main concern is whether he sells his shares.  This is what they said:
"Chesapeake has been my passion for more than 20 years," said Mr. Ward. "The company has achieved great success and is now the second largest independent producer of U.S. natural gas. I am happy that our investors have shared in our accomplishments, and as a co-founder of the company, I am proud of my leadership role at Chesapeake and know that I am leaving the company in good hands and in a very favorable competitive position. I now look forward to devoting more time and energy to my other interests, including advocacy for neglected children, and various business ventures."

Aubrey K. McClendon, Chairman and Chief Executive Officer, commented, "Tom has been my good friend and partner for 23 years. Through the various ups and downs associated with starting from a $50,000 investment and building it into a $20 billion company, we grew up together and remained partners through thick and thin. Tom is an exceptionally talented entrepreneur and that has enabled him to build very talented exploration, development and operations teams at Chesapeake. He will continue to be a great friend and we will miss him. We wish him well in his future endeavors."

I'm not sure if I believe them.  Perhaps the two co-founders had a falling out?  Who knows.  Anyone else have an opinion?
By Theo at Mon, 2006-02-13 13:46 | login or register to post comments

CHK as an investment

It's hard to interpret PRs on a CEO leaving. The release is so scrubbed that you can't really tell the real story. But, the follow-up PR about CHK's hedging operations look good. They locked in most of their profits for 2006, so unless there is a hurricane or an explosion -- they should meet their earnings numbers. As such, they're also generating a lot of free cash flow with manageable debt. If it's accounting fraud, the show's over.. but, barring a facilities explosion or outright fraud.. I'm still holding on.. possibly buying more. My 2 cents.

By schin at Mon, 2006-02-13 23:23 | login or register to post comments

Nicely Said

Me I'm going to watch the CHK insider transactions like a hawk.  It's one thing for Tom Ward to say the company is in great shape, but if he starts liquidating his shares - some of which he acquired just two weeks ago - I will reconsider my position.
By Theo at Tue, 2006-02-14 22:22 | login or register to post comments

CHK

I was just looking through the SEC filings for CHK and noticed the CEO bought another $1 million.

As for Tom Ward, I believe he has to give up all his options and restricted stock, but I haven't seen any buying/selling in the open market from him lately.
By Theo at Sun, 2006-03-26 21:56 | login or register to post comments