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warrenbuffet1930 32 posts  |  Last Activity: Dec 13, 2012 3:24 AM Member since: Mar 15, 2012
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  • Read the Barron's article that is posted 12-12-12, under Headlines on the CHK summary page on Yahoo.

    It looks like there were offers as high as $37 and $37.50 on the table before Sullivan and Hochhauser got greedy and sold us out on the cheap in order to keep their equity stakes in the company?

    If they thought that the company wasn't going to be so profitable going forward, why did they sell for less money per share in order to keep their equity stakes in the company?

    It looks like Sullivan and Hochhauser might be in big trouble, as they should be!

    Maybe "Mr. Know It All" - sole63tread - will go to see them on visitation days if they serve any time at one of the Club Feds?

    LOL! .... {:-D

  • warrenbuffet1930 warrenbuffet1930 Jul 24, 2012 5:12 PM Flag

    It looks like Chesapeake can meet its debt obligations easily with the sale of some of their Permian Basin properties.

    Since they have yet to do so, perhaps they don't want to let those properties go?

  • Reply to

    Aubrey McClendon And The Sex Metaphor

    by warrenbuffet1930 Jun 3, 2012 9:43 PM
    warrenbuffet1930 warrenbuffet1930 Jun 3, 2012 9:50 PM Flag

    < bump >

  • warrenbuffet1930 warrenbuffet1930 Jun 3, 2012 9:49 PM Flag

    < bumpn >

  • Finally, let’s gaze upon the most insidious fact of all. Since the beginning of 2011 Aubrey has earned $108 million from proceeds of well sales for his 2.5% stake due to FWPP. Even more repulsive, end of 2011 SEC filings report the value of Aubrey’s FWPP interests based on PV9 is $852 million. PV9 is an oil valuation metric which takes the estimated future net oil and gas revenues and then takes the present value discounted at 9% of all the proved oil and gas reserves. By my arithmetic, from January 1, 2011 to close on Friday June 3, 2012 CHK was down 41.23%. From its past 52 week high CHK has fallen a precipitous 56.4%. Shareholders don’t despair. It’s all about Aubrey. He’s getting his nine parts. From the rare maps, to the fine wines, houses, and jets all’s well in Aubrey land. Even his basketball team (Aubrey owns 20%) the Thunder is fighting for a spot in the NBA finals.

    So here is why everybody should care about the CHK fiasco. Simply put, it undermines the integrity of our capitalist system in general and our financial markets in particular. A system founded on transparency has turned opaque. No longer can investors be certain that a company balance sheet is not riddled with off balance sheet liabilities. Rightly there is loss of confidence and anger by the investing public. That some people are esurient is the natural order of things. That some CEO’s (I have Aubrey in mind) stack their board with cronies to enrich themselves at the expense of shareholders is not how our markets were intended to work. My negative bias toward government regulation has been stated previously. Yet something must put a stop to allow this CEO to collect hundreds of millions while shareholders lose billions. That disconnect cannot continue indefinitely. It’s the stuff of which revolutions are made.

    Meanwhile, Aubrey still enjoys his wine collection. I confess my own weakness for a fine left bank Bordeaux. It is appearing less and less likely my dinner invite is in the mail. I will update after the June 7 annual meeting. My fingers are crossed for Mr. Icahn.

  • In one small positive step, a scant three days after my first article the board of directors announced the FWPP would not be renewed past its end date of December 31, 2015. The sun had barely set one more time when this was amended that the FWPP would be terminated 18 months earlier than the above expiration date. Great, the board threw the shareholders, rather the owners, a bone, a rather small one. FWPP should be canceled immediately and recent $1billion financing transactions and the 2.5% well working interests they represent should be “clawed” back, that is returned to company owners. I almost forgot. Aubrey was without ceremony stripped of his chairmanship and the board is searching for an outside “independent” chairman. It is difficult (actually impossible for me) to envision this cabal of Aubrey cronies after going through the elaborate search charade nominating anything other than just another pliable rubber stamp stooge……except for one unforeseen glitch. Activist investor Carl Icahn on May 25 announced through the required 13D filing his acquisition of 50 million CHK shares representing a 7.56% company stake. Accompanying the 13D filing was a letter containing some very sobering news for the CHK board to chew on. In it, Mr. Icahn makes clear his intention to break up the CHK board. He sharply rebukes the board for allowing the CHK funding gap reach an astronomical $16 billion. With regard to picking a new chairman Icahn minces no words: “Having the current board select a new chairman without shareholder approval………is akin to asking the fox who has plundered the hen house, to choose another fox to assist it in standing guard over the remaining hens.” Not much ambiguity in that statement. The CHK annual meeting is coming up on June 7 so perhaps Icahn can be the desperately needed agent of change.

    In the first two weeks of May cash strapped CHK in “a borrow from Peter to pay Paul” transaction got a $4 billion unsecured loan from a Jefferies & Co. and Goldman Sachs consortium. It was expensive money with an 8.5% coupon and puts even more pressure for immediate asset sales for what Fitch Ratings Service estimates to be a $10 billion 2012 funding shortfall. If the loan isn’t repaid in a year the rate jumps to 11%. No urgency there. S & P, always the lagging indicator, got wind of the deal and downgraded CHK shares to a “junk” status BB-.

    In other news the lackey CHK board had their compensation reduced by 20%. This was a great hardship for them to endure. 2011 average remuneration for the eight non-executive directors was $533,163. To put this absurdity in proper perspective Exxon-Mobil (XOM) directors, a company with a market capitalization 35 times as large as CHK, have average pay a little over half that amount. It also turns out from 2004 to 2008 Aubrey had been secretly running a natural gas hedge fund called Heritage Management Company LLC. If there was no conflict as claimed, then why not make full disclosure back in 2004. Like so much else at CHK there is a foul odor associated with it. Also, with all the wonderful hype Aubrey’s been getting, the IRS announced they better take a closer look at tax ramifications by conducting an audit of FWPP.

    [See Part 3]

  • warrenbuffet1930 by warrenbuffet1930 Jun 3, 2012 9:43 PM Flag

    Perhaps the most celebrated diviner in the annals of mythology was the blind prophet Tiresias of Thebes. His blindness was no accident of birth as will be clarified shortly. Anyway, legend has that Mr. Tiresias was strolling through the forest on Mt. Cithaeron minding his own business when he came upon two snakes coupling. When he struck the female with his staff she was so infuriated she turned him into a woman. Fast forward some years and again Tiresias gazed upon snakes in their mating. On this occasion his staff made contact with the male and with that he regained his manly attributes. More time passes and the venue shifts high atop Mt. Olympus where Zeus and cantankerous wife Hera engage in dissension as to who enjoys the pleasures of lovemaking more, man or woman. Hera insists it is man while Zeus casts his lot with females. Since Tiresias had expertise as member of both sexes, he was summoned as final arbiter. (Take note here.) Tiresias responds “if the number ten represented the total for these pleasures, woman enjoys nine parts, man but one.” Hera became so incensed that she blinded Tiresias. Taking pity on the young man Zeus made recompense by bestowing upon him the power of prophecy and long life which was to last seven ordinary lives.

    By my calculations Chesapeake Energy CEO Aubrey McClendon is getting nine parts and he’s trying to get part ten and leave shareholders with nothing. Much has transpired over the past fortnight or two since my first Aubrey diatribe. Now from a few thousand feet above it is time to collate and assimilate. Firstly, the SEC, astute birddogs that they are, have launched “informal” (does that mean casual dress?) investigations into Aubrey’s “Founders Well Participation Program”. It’s hard to expect much from this august agency, probably just the usual phlegmatic dillydallying. Gosh, it only took a few million words of press coverage to rouse them from stupor. And were they not the recipients for ten years of repeated warnings on the Madoff scandal? Ostensibly one focus is on the propriety on Aubrey’s “free ride” on well soft costs. Before a drilling campaign is undertaken leases are acquired, 3-D seismic is procured and analyzed which yield to a more intelligent assessment of the reserve potential. Add legal, organizational costs, rent and it can be many millions. Of course of all the hundreds of thousands of acres only the choice most favorable are drilled. But millions are spent acquiring and analyzing the discarded or undrilled acreage. That is the “free ride” Aubrey piggybacks on. (It is more detailed in my previous article.) Is it legal? Time will advise but as I say sometimes, there is no justice there is only the law and these days the law is a malleable concept. At a minimum in my opinion it is wrong and immoral and fraught with conflicts (see other article).

    [See Part 2]

  • It's pitchfork time for Chesapeake Energy Corp.

    The beleaguered oil and natural-gas producer will hold its annual shareholders meeting Friday in Oklahoma City. Flamboyant Chief Executive Aubrey McClendon, along with Chesapeake board members, better be ready to dodge some rotten tomatoes.

    The gathering comes amid one of the rockiest period in company history. Its shares are down more than 30% since April, when it came to light that Mr. McClendon took billions in personal loans from financial institutions involved in transactions with the company. Mr. McClendon's loans were intended to fund the drilling costs of the small stake he owns in every Chesapeake well. The loans caused an uproar, brought the company to regulators' attention and highlighted long running concerns that the board was not active enough.

    The transactions also threw a spotlight on the company's ability to fund its ambitious drilling program, at a time when natural-gas prices are hovering near decade-low levels. Chesapeake, the second-largest U.S. natural gas producer, needs to spend big to become more of an oil producer, with oil drilling being more profitable in the current market environment. But to make the switch, the energy company has engaged in some complex financial transactions that befuddled investors.

    After the uproar, Chesapeake's board quickly moved to end Mr. McClendon's part-ownership of the wells, and said it was separating the CEO and chairman-of-the-board role, stripping Mr. McClendon of significant power. The board also has cut its lofty pay, which last year averaged more than $400,000 in cash and stock, by 20%.

    But that hasn't pacified restive shareholders, some of which have sued to postpone the meeting until more information surfaces about Mr. McClendon's loans. A federal judge will hear their case Tuesday. Others are calling for an outright overhaul of the company's leadership.

    New York State Comptroller Thomas DiNapoli, sole trustee of the N.Y. State Common Retirement Fund, which owns Chesapeake shares, urged fellow shareholders in late May to withhold their vote on the two board members up for re-election, to signal their displeasure with the board. Proxy advisory firms such as ISS and Glass, Lewis have recommended the same tough approach. "I am pained to watch our investment free-fall as shares plummet to lows not seen even during the recent financial crisis," Mr. DiNapoli wrote.

    Chesapeake has stressed that both retired Union Pacific Corp. CEO Richard Davidson and Oklahoma State University president V. Burns Hargis are "strong, highly qualified independent directors and warrant shareholder support" in their re-election bid.

    Activist investor Carl Icahn, who last month became one of the company's largest shareholders, is on a quest for direct shareholder representation on the board—by having two members designated by Mr. Icahn himself and two by another large shareholder. Chesapeake's board said it would only consider the proposal.

    "To engender any meaningful credibility among shareholders, corporate governance reforms cannot, in our view, be led by directors whose irresponsible actions have brought this company to the edge of the proverbial cliff," Mr. Icahn wrote in a letter to the board.

    —Ángel Gonzalez

  • warrenbuffet1930 by warrenbuffet1930 May 18, 2012 4:04 PM Flag

    An obvious short seller of CHK, in panic due to the rise in the SP today.

    Best to place him on ignore.

  • warrenbuffet1930 warrenbuffet1930 May 18, 2012 4:00 PM Flag

    the obvious answer is yes!

  • warrenbuffet1930 warrenbuffet1930 May 17, 2012 7:25 PM Flag

    I'm not sure that I like being refered to as a whale.

    Most people refer to me as The Oracle.

  • warrenbuffet1930 warrenbuffet1930 May 17, 2012 6:24 PM Flag

    Sage advice.

  • Reply to

    The Icahn Bounce.

    by iamnathan May 13, 2012 10:06 PM
    warrenbuffet1930 warrenbuffet1930 May 13, 2012 10:19 PM Flag

    You know, I'm a very good influence on the shares of a company too.

    I'm not abrasive like Icahn is, either.

    The shares in Chesapeake will no doubt pop tomorrow.

    Profits are good, but I'm a long term holder.

  • Reply to

    "COME MONDAY"...u la la

    by h5n1eric May 11, 2012 8:41 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 9:11 PM Flag

    I didn't know that you were buying.

    Let's wait through next week to make sure that we have reason to celebrate.

    I don't spend profits before I have actually secured them, and you shouldn't either.

    We'll talk leter next week.

  • Reply to

    Take over certain

    by bucks0501 May 11, 2012 9:04 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 9:06 PM Flag

    You are another Oracle in training!

  • Reply to

    This could not have worked out better

    by marketmaker91 May 11, 2012 8:42 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 8:59 PM Flag

    Would you be interested in a job as an analyst and investor?

  • Reply to

    "COME MONDAY"...u la la

    by h5n1eric May 11, 2012 8:41 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 8:57 PM Flag

    I'm not sure about buying Chesapeake or visiting in San Diego, but buying a substantial position on CHK shares is a good move!

    I have no doubt that a major oil and gas company will make its move on Chesapeake, and most shareholders will be happy again.

    Thank you for the invitation.

  • Reply to

    Take my word -company is valueless

    by flickenstein May 11, 2012 8:48 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 8:53 PM Flag

    Your word is valueless.

    I'll stake my faith on the key statistics and the book value.

    They have merit, while you have none.

  • Reply to

    8.5% loan interest! they are desperate!!!

    by dutchref May 11, 2012 8:49 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 8:51 PM Flag

    It's an unsecured bridge loan.

    Your statement is ignorant.

  • Reply to

    "COME MONDAY"...u la la

    by h5n1eric May 11, 2012 8:41 PM
    warrenbuffet1930 warrenbuffet1930 May 11, 2012 8:49 PM Flag

    Thank you for the recognition.

    Good luck next week!

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