CHK FAIL ON DIVIDEND / City should acquire Chesapeake pad sites 4 public safety’s sake

10/27/15 update: O&G Journal reports Chinese company 2 buy Permian basin assets


—– Forwarded Message —–

From: kim feil <>
To: Stuart Young <>
Sent: Friday, July 24, 2015 8:40 AM
Subject: Stuart what throughput pipeline production quantities are Arlington gas well operators obliged to?
—– Forwarded Message —–
From: kim feil <>
To: Roger Venables <>; Carolyn Mentesana <>
Cc: Sheri Capehart <>; Jimmy Bennett <>; Lana Wolff <>; Charlie Parker <>; Robert Shepard <>; Robert Rivera <>; Michael Glaspie <>; Kathryn Wilemon <>; Trey Yelverton <>; Don Crowson <>; Jim Parajon <>; Cindy Powell <>; Collin Gregory <>; “” <>; “” <>
Sent: Thursday, July 23, 2015 11:51 AM
Subject: Roger how to compare Arlington Chesapeake asset valuations with this 4Point Deal in OK?
I bet the TAD’s minerals valuation group could assist…
Feasibly…would the Tomorrow Funds be able to take out the risk of (foreign) second tier drillers materializing with a “Chesapeake’s pen swipe”? I firmly believe we should lead the way and have Arlington own and contract out/or expand GW Division to include specialized maintenance workers until production peters out. Then WE will be in control of preventing future Brownsfields sites. Our longterm goal would then be to “correctly” plug and abandon our urban wells and focus on redevelopment. I imagine with the GM expansion…that pad site has to go?

—– Forwarded Message —–
From: kim feil <>
To: Don Crowson <>; Charlie Parker <>; Lana Wolff <>; Robert Rivera <>; Robert Shepard <>; Jimmy Bennett <>; Michael Glaspie <>; Sheri Capehart <>; Kathryn Wilemon <>; Trey Yelverton <>; Jim Parajon <>; Cynthia Simmons <>; “” <>; Cindy Powell <>; Collin Gregory <>; “” <>; Tony Rutigliano <>; Roger Venables <>; Maria Carbajal <>
Cc: Brett Shipp <>
Sent: Tuesday, July 21, 2015 9:53 AM
Subject: Chesapeake Cuts Dividend/ ripe for take over
2nd tier driller here we come? China owned Arlington pad site(s) operator?
None of this sounds healthy to the neighborhoods when maintaining these sites become harder as they age. What to do about this?
1) challenge HB40 at Supreme Court
2) the city should buy out Chk’s Arlington sites and we maintain these for eventual shut in
—– Forwarded Message —–
From: Seeking Alpha <>
Sent: Tuesday, July 21, 2015 7:02 AM
Subject: CHK: Chesapeake Cuts Dividend, Confirms Details Of FourPoint Transaction
Chesapeake Cuts Dividend, Confirms Details Of FourPoint Transaction by Dallas Salazar
This article was published on Tue, Jul. 21, 8:00 AM ET

“Chesapeake Energy is finally out with an update on its recent transaction and on its dividend. Neither are good for investors new or investor old.
Chesapeake largely confirmed what my sources had put together in regards to the FourPoint Energy LLC transaction.
Moving to the marquee item of business, Chesapeake has announced that it will cut its common dividend.
Chesapeake Energy (NYSE:CHK) is finally out with an update on its recent transaction and on its dividend. Neither is good for new or old investors.

Chesapeake largely confirmed what my sources had put together in regards to the FourPoint Energy LLC transaction which we expressed to Seeking Alpha readers in an exclusive article. Chesapeake will, “eliminate approximately $75 million in annual preferred dividend payments, the 3.75% overriding royalty interest payments associated with the properties and all related future drilling and override conveyance commitments. Additionally, Chesapeake signed a definitive agreement to sell noncore adjacent properties centered in Roger Mills and Ellis counties in Oklahoma to FourPoint for approximately $90 million in cash”.

Again, this proves out our sources were dead on in their hearing of the deal and their piecing the details of the deal together. While I did confirm these with an IR rep at Chesapeake at the time of the deal being announced it is only today, weeks later, that Chesapeake has issued an official confirmation press release.

Moving to the marquee item of business, Chesapeake has announced that it will cut its common dividend.

Chesapeake has received board approval to cut the dividend with the cut being applicable to the third quarter 2015. Chesapeake CEO Doug Lawler noted, “The elimination of the common stock dividend will save approximately $240 million annually. This, along with the redemption of the preferred shares in our CHK Cleveland Tonkawa subsidiary, is part of a broader disciplined approach that began two years ago to decrease the company’s financial complexity and increase our liquidity”.

Now, while the $240 annual cost savings from the dividend cut along with the $75 million in annual preferred dividend payments and the 3.75% ORRI savings are meaningful this will absolutely crush Chesapeake common over the next few weeks. My guess is 10% today and 20% over the next few weeks in aggregate. Chesapeake has exampled that, rightly so for the company, it is willing to do anything and without warning.

Chesapeake’s FourPoint transaction netted it negligible total structural gain on a massive divestiture – exampling just how bad some of the ventures on the books really are. Chesapeake’s dividend cut will have a large part of the investor base selling off as its 3.41% yield (as of most recent close) was a primary reason to “wait for the turnaround” in energy pricing, a turnaround that looks more and more bleak by the day.

Chesapeake, even with its liquidity is now simply another commodity player that’s on the clock and begging for a commodity pricing recovery. Worse, at what could be an under $6 billion valuation in the next few weeks Chesapeake, I believe, is now an attractive target for a take-private transaction (if allowed) by foreign, state-owned entities or a massive PE that would be interested in cutting up the company and selling it off piece by piece. The premium paid would not be substantial in my opinion as Chesapeake should now be a victim of valuation “decay” – meaning the market understands the lower commodities go or the longer the commodity pricing environment goes without substantial uptick the worse off Chesapeake will be.

I tried to reach out to Chesapeake IR in an effort to get anything of commentary, even a “no comment”, in regards to the dividend a few days ago believing that a dividend cut was imminent and anything but an outright denial would essentially be an admission. Chesapeake obviously did not respond and now it’s clear why.

Good luck everybody.

FEIL post on Facebook 7/24/15….

I THINK I see Arlington Chesapeake (dry gas) gaswell padsites will continue to be taking a breather from finishing the fracking build out here because of this statement by CEO Lawler who commented on dividend scrap: “The company paid out 35-cents on an annualized basis, or approximately $240 million, funds that now can be plowed into revenue producing oilfields”….he also hints at other announcements forthcoming (selling off more assets probably) “We continue to move forward with multiple opportunities that will strengthen our cash flow generation capabilities, and I look forward to future announcements regarding the ways we are creating additional value in the months ahead,” Lawler added. BUT ON THE OTHER HAND….they may be forced to stimulate production at petering out Arlington gas wells or add new wells to existing Arlington sites because of transport contract commitments (to pipeline companies).……”As per a Forbes article on July 21, 2015, by Antoine Gara, expensive oil and gas transport contracts weigh down on Chesapeake’s finances. These contracts cannot be tweaked to be in line with falling production volumes. Thus, the firm is forced to maintain its output even in times of weaknesses in commodity prices.”

So even if pie in the sky happens that Arlington moves to own the operator status of these drill sites, that someone has to be accountable to the pipeline companies production quotas…..oh what a tangled web we’ve weaved….solar and wind exists to never deceive…ya’ll.

About Kim Triolo Feil

Since TX Statute 253.005 forbids drilling in heavily settled municipalities, I unsuccessfully ran for City Council Seat to try to enforce this. Since Urban Drilling, our drinking water has almost tripled for TTHM's. Before moving to Arlington in 1990, I lived in Norco’s “cancer alley”, a refinery town. It was only after Urban Drilling in Arlington did I start having health effects. After our drill site was established closest to my home, the chronic nosebleeds started. I know there are more canaries here in Arlington having reactions to our industrialized airshed (we have 55-60 padsites of gas wells). Come forward and report to me those having health issues especially if you live to the north/northwest of a drill site so I can map your health effects on this blog. My youtube account is KimFeilGood. FAIR USE NOTICE: THIS SITE MAY CONTAIN COPYRIGHTED MATERIAL THE USE OF WHICH HAS NOT ALWAYS BEEN SPECIFICALLY AUTHORIZED BY THE COPYRIGHT OWNER. MATERIAL FROM DIVERSE AND SOMETIMES TEMPORARY SOURCES IS BEING MADE AVAILABLE IN A PERMANENT UNIFIED MANNER, AS PART OF AN EFFORT TO ADVANCE UNDERSTANDING OF THE SOCIAL JUSTICE ISSUES ASSOCIATED WITH EMINENT DOMAIN AND THE PRIVATIZATION OF PUBLIC INFRASTRUCTURE (AMONG OTHER THINGS). IT IS BELIEVED THAT THIS IS A 'FAIR USE' OF THE INFORMATION AS ALLOWED UNDER SECTION 107 OF THE US COPYRIGHT LAW. IN ACCORDANCE WITH TITLE 17 USC SECTION 107, THE SITE IS MAINTAINED WITHOUT PROFIT FOR THOSE WHO ACCESS IT FOR RESEARCH AND EDUCATIONAL PURPOSES. FOR MORE INFORMATION, SEE: HTTP://WWW.LAW.CORNELL.EDU/ TO USE MATERIAL REPRODUCED ON THIS SITE FOR PURPOSES THAT GO BEYOND 'FAIR USE', PERMISSION IS REQUIRED FROM THE COPYRIGHT OWNER INDICATED WITH A NAME AND INTERNET LINK AT THE END OF EACH ITEM. (NOTE: THE TEXT OF THIS NOTICE WAS ALSO LIFTED FROM CORRIDORNEWS.BLOGSPOT.COM)
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