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4-Traders Homepage  >  Equities  >  Nyse  >  Chesapeake Energy Corporation    CHK

CHESAPEAKE ENERGY CORPORATION (CHK)
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Chesapeake Energy's Investors, Analyst Call For Change

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04/20/2012 | 07:17pm CEST

--Natural-gas company faces call for ouster of CEO

--Chesapeake has lost $800 million in market value since Tuesday's close

--Investor lawsuit filed against company

 
   By Ben Lefebvre 
   Of  
 

Investors and at least one market analyst are putting pressure on Chesapeake Energy Corp. (>> Chesapeake Energy Corporation) to rein in--and, in at least one case, replace--its chief executive in the wake of revelations detailing $1.1 billion in personal loans he took using his stakes in the company's wells as collateral.

The loan revelations, disclosed Wednesday, gave further ammunition to investors critical of Chesapeake Energy CEO and co-founder Aubrey McClendon, who over 12 years has built the company into the second-largest natural-gas producer after Exxon Mobil Corp. (XOM). In October 2008, McClendon drove down the price of the company's shares by selling $569 million of his own stock in the company to pay back margin calls from his stock brokers.

For the past three years, McClendon took out loans against 2.5% stakes in Chesapeake wells that the company allowed him to buy under its Founders Well Participation Program. McClendon used those holdings to secure $500 million in loans from private-equity firm EIG Global Energy Partners, which was also in financial dealings with Chesapeake. The loans were first revealed by Reuters on Wednesday.

On Thursday, the Deborah G Mallow IRA SEP Investment Plan filed a lawsuit against McClendon and Chesapeake Energy's board of directors. The suit, filed in the U.S. District Court, seeks that the company disclose all information relating to the McClendon loans, establish independent oversight of the loans and abolish the company program that allowed McClendon to buy personal stakes in the company's wells.

"Such huge loans raise serious conflicts of interest; they can easily cloud the CEO's judgment on key issues," the plaintiff's complaint stated. Attempts to reach the plaintiff were unsuccessful. A Chesapeake spokesman wasn't immediately available to comment on the lawsuit.

An analyst also called for McClendon's, or the board's, ouster.

Given the "questionable nature" of McClendon's actions, the board's approval of the program and the company's high debt level, "the best thing for investors would be to replace the board and/or the CEO," Argus energy analyst Phil Weiss wrote in an analyst note issued Friday. Weiss has a "sell" rating on Chesapeake shares.

"Now that this comes out, it makes my concern greater that there are other things going on that we can't see," Weiss said in an interview. "My level of concern about some sort of impropriety has grown; my concern about cooking the books has grown."

In an interview with Dow Jones last Wednesday, McClendon refused to discuss the loans, calling them a personal matter unrelated to Chesapeake. Chesapeake legal counsel Henry Hood has said McClendon's loans hadn't put the company's finances at risk.

Chesapeake stock was trading at $17.82 mid-morning Friday, down 6.5% since Tuesday's close. The company has lost about $800 million in market value since details of McClendon's loans appeared Wednesday.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; [email protected]

Stocks mentioned in the article : Chesapeake Energy Corporation
Stocks mentioned in the article
ChangeLast1st jan.
CHESAPEAKE ENERGY CORPORATION 1.36% 2.98 Delayed Quote.-25.76%
EXXON MOBIL CORPORATION 1.47% 79.5 Delayed Quote.-4.87%
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Financials ($)
Sales 2018 9 403 M
EBIT 2018 1 298 M
Net income 2018 679 M
Debt 2018 10 225 M
Yield 2018 -
P/E ratio 2018 4,32
P/E ratio 2019 4,46
EV / Sales 2018 1,38x
EV / Sales 2019 1,40x
Capitalization 2 710 M
Chart CHESAPEAKE ENERGY CORPORAT
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Chesapeake Energy Corporat Technical Analysis Chart | CHK | US1651671075 | 4-Traders
Technical analysis trends CHESAPEAKE ENERGY CORPORAT
Short TermMid-TermLong Term
TrendsNeutralBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 28
Average target price 3,76 $
Spread / Average Target 28%
EPS Revisions
Managers
NameTitle
Robert Douglas Lawler President, Chief Executive Officer & Director
R. Brad Martin Non-Executive Chairman
Jason M. Pigott Executive VP-Operations & Technical Services
Domenic J. Dell’Osso Chief Financial Officer & Executive Vice President
Cathy L. Tompkins CTO & Senior Vice President-Information Technology
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