Apache donation to help Woodward get new tornado warning system
Houston-based Apache Corp. is donating $350,000 to the city of Woodward to pay for a new tornado warning system, the oil and natural gas company announced Monday.
Woodward was ravaged by a tornado on April 15 after a power outage knocked out most of its storm sirens. Six people died and more than 20 were injured.
Apache’s donation will allow the city to replace its tornado warning system with new equipment that will include battery backup and redundant controls. Installation is expected to begin this week.
Mayor Roscoe Hill praised Apache for its donation.
”Apache is a long-term corporate citizen ofWoodward. This very generous contribution demonstrates their profound commitment to our community. By dedicating funds to upgrade our early warning systems, Apache is saving lives, and we are extremely grateful.”
Apache executive Rob Johnston said Woodward is a hub for the company’s operations in western Oklahoma.
“Our hearts go out to the families who were impacted by this devastating event. This donation is one way for Apache to help the community rebuild, rebound and be prepared for future tornadoes.”
Analyst says Chesapeake directors and CEO should be replaced
Argus analyst Philip H. Weiss on Friday said Oklahoma City-based Chesapeake Energy Corp. should replace its directors and CEO Aubrey McClendon.
When we consider the full financial picture at Chesapeake, including its high debt levels (both on- and off-balance-sheet), its use of financial engineering, the relatively low quality of its financial data, the questionable nature of some of the CEO’s transactions with the company, and the apparent unwillingness of the board to put a stop to at least some of these practices, we believe the best thing for investors would be to replace the board and/or the CEO,” Weiss wrote in an analyst report released Friday.
Weiss lowered his rating on Chesapeake to “sell” from “hold.” He also suggested the company end its Founders Well Participation Program. Under the program, McClendon can personally participate in a 2.5 percent stake in every well Chesapeake drills. The program has been previously disclosed. This week’s controversy centered around up to $1.1 billion in previously undisclosed loans McClendon has received using the stake in the wells as collateral.
We have long noted our unfavorable view of (Chesapeake’s) Founders Well Participation Program…The company claims the program better aligns the interest of its CEO with shareholders. We strongly disagree. If this were truly the case, we think more companies would have similar programs.”
The report pointed out that Oklahoma City-based SandRidge Energy Inc. — whose CEO is Chesapeake co-founder Tom Ward — is the only company Argus is aware of that has had a similar program. SandRidge discontinued its plan two years after adopting it.
Chesapeake CEO loans could hurt the company’s bond ratings
The fallout surrounding Chesapeake Energy Corp. CEO Aubrey McClendon’s personal loans on company drilling projects could hurt Chesapeake”s bond rating, according to a report by Bloomberg on Friday.
McClendon in February said the company is on pace to becoming investment grade by the end of the year. But credit-default swaps on the bond market this week indicate that Chesapeake’s lenders have less confidence that the company will repay its debt. Chesapeake had $10.6 billion in long-term debt as of the end of 2011.
Marc Gross, a money manager at RS Investments in New York, said the news this week has “severely tainted the company.”
There is no chance of an IG (investment grade) rating” over the next three years, he said. Chesapeake is “more likely to get downgraded than upgraded.”
Shareholder lawsuit filed against McClendon, Chesapeake board of directors
UPDATE: A second lawsuit has also been filed. See a copy below.
Following revelations earlier this week of up to $1.1 billion in personal loans by Chesapeake Energy CEO Aubrey McClendon against his interests in company wells, a shareholder has filed a lawsuit in federal court in Oklahoma City.
The lawsuit accuses Chesapeake of not adequately disclosing the existence of the loans, which were taken against McClendon’s interests in a unique perk called the Founder Well Participation Program. The program allows McClendon to take a 2.5 percent stake in each well drilled by Chesapeake. He still has to pay upfront costs if he chooses to participate in the program.
Chesapeake has maintained the loans were McClendon’s personal business and the details of the Founder Well Participation Program have been public in the company’s proxy filings with the Securities and Exchange Commission.
When news of the loans came out Wednesday, at least five law firms across the country, including one headed by a former attorney general of Louisiana, announced their intention to pursue lawsuits against the company and board of directors.
Energy reporter Jay F. Marks has a web update on the lawsuit here.
Here’s a copy of the lawsuit:
Second lawsuit:
Owner of Wynnewood refinery submits to Icahn tender offer
The oil refinery in Wynnewood seems poised to change hands for the second time in a year.
Owner CVR Energy Inc. on Thursday announced it is signed a transaction agreement with activist investor Carl Icahn, who has offered to buy the majority of the Sugar Land, Texas-based company for $30 a share.
CVR Energy’s board had resisted Icahn’s takeover efforts but relented after shareholders recently indicated their willingness to accept Icahn’s tender offer.
The board is not recommending that shareholders accept Icahn’s price because it believes the company’s long-term value exceeds $30 a share, according to the company’s announcement.
“I am gratified that CVR’s board of directors has decided to let the owners of the company decide for themselves whether to accept our offer. I’ve believed all along that our offer is a “win-win” for shareholders and thank all shareholders, that have tendered, for their support,” said Icahn in a regulatory filing on Thursday, according to Forbes.
CVR Energy acquired the Wynnewood refinery last fall from Denver-based Gary-Williams Energy Corp.
Lawsuit forced EPA to issue fracking rules
Last week, President Barack Obama created a federal working group to coordinate efforts to regulate the oil and gas industry, including hydraulic fracturing.
Just a few days later, the U.S. Environmental Protection Agency released new rules to limit air pollution from fracking.
The agency said the move was forced by a court-ordered deadline.
Two environmental groups sued the EPA in 2009 for allegedly failing to review major source air toxics standards for the oil and natural gas industry.
A U.S. district judge in the District of Columbia issued a consent order in the case in February 2010, requiring the EPA to finalize new rules by April 17.
New pipeline route could lead to Keystone XL approval
The Omaha World-Herald's map of the new route for the proposed Keystone XL pipeline.
The much discussed Keystone XL pipeline could be moving closer to reality.
Developer TransCanada Inc. has submitted a new route through Nebraska for the 1,200-mile pipeline, which would carry crude oil through Oklahoma from Canada to refineries on the Gulf Coast.
President Barack Obama rejected TransCanada’s bid for a permit for the transcontinental pipeline in January after Republicans had set a deadline for the decision. The major stumbling block for the project at that time was its route through Nebraska’s fragile Sand Hills.
TransCanada subsequently announced plans to build the southern portion of the pipeline, from the oil storage hub at Cushing to the Gulf Coast, but industry officials have continued to urge the Obama administration to allow the full project to proceed.
Devon Energy Corp. CEO John Richels said Tuesday at the Oklahoma State University of Energy Conference that Obama should make the right decision on Keystone XL, rather than listening to his political advisers.
The new pipeline route seemingly puts the ball back in the president’s court.
Recap: The day’s Chesapeake Energy news
It was a wild ride for Chesapeake Energy Corp. shareholders today following a morning report by Reuters that delved into $1.1 billion in personal loans taken out by founder and CEO Aubrey McClendon against his interests in a founder well participation program.
After being down as much as 10 percent in morning trading, Chesapeake shares recovered in the afternoon to close at $18.06, still down more than 5 percent. Trading volume was extremely heavy, though, with more than 93 million shares changing hands. Chesapeake usually has average trading volume of 16 million shares. When the dust settled, investors shaved about $640 million off the value of Chesapeake shares.
By mid-afternoon, Chesapeake posted a full response on its website. Around the blogosphere, reaction also was swift:
Here’s just a sampling:
- Simon Lack, Seeking Alpha: Chesapeake’s CEO Once Again Shows Poor Judgment
- Davy Bui, Seeking Alpha: Investors Overreact to Chesapeake CEO loan scandal
- Francine McKenna, Forbes: Chesapeake Energy: CEO McClendon Serves Himself First
- Evan Niu, The Motley Fool: Why Chesapeake Energy Sank
- Heard on the Street, The Wall Street Journal: Chesapeake Fuels Reputation for Risk
- Jeff Macke, Yahoo! Breakout: Chesapeake Energy Plunges on CEO Debt
- Bezinga.com, MarketWatch: Chesapeake’s McClendon is Back Borrowing Money
Meanwhile, two other publicly traded Chesapeake entities also suffered on Wednesday. Subsidiary Chesapeake Midstream Partners was down 4.6 percent, closing at $27.96 a unit, while Chesapeake Granite Wash Trust dipped 5 percent to $23.71 a unit.
Chesapeake shares down after report on CEO loans
Shares of Chesapeake Energy Corp. fell this morning after Reuters published a special report documenting the loans taken out by founder and CEO Aubrey McClendon.
Shares were down almost 10 percent, to as low as $17.20 as of 10:30 a.m. That marked a 52-week low for the stock. At 51 million shares, trading volume was more than three times the average daily volume.
The Reuters story detailed $1.1 billion in personal loans taken out by McClendon against his stake in Chesapeake’s Founder Well Participation Program (Documented on Page 60 of last year’s proxy statement). The program allows McClendon to invest a small percentage in each well drilled by the company.
Rig worker snaps picture of Oklahoma tornado
No one ever said working on an oil rig wasn’t a potentially dangerous job, but a NOMAC Drilling crew encountered an unusual threat last week.
One of the workers on NOMAC 29 in Woods County snapped a scary looking picture of a nearby tornado.
The picture was posted Tuesday on Twitter by Michael Kehs, vice president of strategic affairs and public relations at NOMAC parent company Chesapeake Energy Corp.
Kehs justifiably used the hashtag “brave crew” on his Tweet.
UPDATE: A cell phone video shot by one of the NOMAC workers has been posted on YouTube.
