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Wednesday, May 16, 2012

Chesapeake Staying in the News, For Better or For Worse

First, from the Canton Repository:
Standard & Poor’s lowered Chesapeake Energy’s credit rating Tuesday, questioning how quickly the company could remedy its financial woes.
Chesapeake shares dropped more than 6 percent to the lowest level since March 2009.
The credit ratings agency believes that Chesapeake will struggle to generate enough cash to pay off its debts as natural gas prices plunge. Standard & Poor’s also noted that the “mounting turmoil” from CEO Aubrey McClendon’s personal financial dealings could make it tougher for the company to raise money in the future.
S&P pushed Chesapeake further into junk investment territory by dropping it a notch to “BB-,” saying the company “faces major ongoing uncertainties to adverse business, financial and economic conditions.”
Chesapeake, like other petroleum companies, saw revenues sink this year as natural gas prices tumbled to a 10-year low. It’s working to produce more profitable crude oil and liquid hydrocarbons, but the shift is costly and risky for a company with high debt.
Not good news.  Read the rest of the article here.

But then, from Bloomberg comes a report of a potential buyer of Chesapeake assets which may help with the company's cash flow issues:
Anadarko Petroleum Corp. (APC) will look at Chesapeake Energy Corp. (CHK)’s assets in the Permian Basin and elsewhere.
Anadarko may be interested in acquiring assets where it already has wells and stakes, Chief Executive Officer Al Walker told reporters after the company’s annual meeting today in The Woodlands, Texas. Anadarko is a partner with Chesapeake in some Permian operations now, he said.
The roller coaster ride continues for Chesapeake and their investors.

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