I just heard from a Chesapeake employee that they are laying off 300. They are also offering surpervisors early retirement pacakges.

Apparently, it will mostly affect the employees that work with the SE OK asset that they recently sold off.

that sucks but its not surprising the way financial things are going right now

Wow. Bummer.

It doesn't surprise me considering all of the hedging, wall street games they like to play. It was only a matter of time before it caught up to them.

I feel sorry for all the people who got caught up in this mess.

Bailout shmaleout.

Rescue Shmescue........

If you follow the way CHK chooses to do business, you'll find that probably a lot of it has to do with their own decisions and not the overall market (although oil and gas prices droipping so much lately hurts quite a bit).

Be worried when Devon starts laying off people. They play the game a bit more conservatively.

Devon is still heavily recruiting.

We checked into this. Chesapeake says three, not 300 people, were let go.

LOL

I guess we can all calm down now.

Layoffs are sometimes a smoke and mirrors game. When I worked in HR we eliminated 150 position one time. The investors loved it but really we just closed 150 open position.

I was just passing along information that was given to me. I suppose it could just be a rumor at Chesapeake, but I was even given the reasons why they were doing it.

I guess time will tell.

BFizzy, I'm not doubting you. I took you seriously enough that we checked into it as soon as I saw your posting.
-Steve

My friend that works at Chesapeake said they are letting contract employees go. That is temporary and part time people. She said that it was more like 200 people.

Layoffs are sometimes a smoke and mirrors game. When I worked in HR we eliminated 150 position one time. The investors loved it but really we just closed 150 open position.

Both numbers (3 and 300) are probably close to accurate. They may have only fired three "employees," but 300 people are brushing up their resumes.

I just started as a Contractor. They are still hiring.

If you follow the way CHK chooses to do business, you'll find that probably a lot of it has to do with their own decisions and not the overall market (although oil and gas prices droipping so much lately hurts quite a bit).

Be worried when Devon starts laying off people. They play the game a bit more conservatively.

Amen

A temporary co-worker of mine was just hired on at CHK, starting next week.

For what its worth, my friend who is an accountant there told me they are cuting back on new wells, curbing new hires, selling off some small assets, etc.

I don't think they're in trouble, CHK is VERY leveraged and I imagined they are being hurt more by this current credit crunch and leveling off of gas prices more than other oil and gas companies, who are probably sitting on a wad of cash thanks to this summer's run up in prices.

I would be concerned that if this credit crisis lasts a long time (i.e. this time next year) and CHK has trouble paying their bills, they could become a takeover target.

Couple things guys, I work in the industry have for a few years...chesapeake is highly leveraged but still profitable even at 7 dollar gas. I talked with a friend of mine who has been with CHK for three years now. They are not at least at this point doing any layoffs. They let a few people go in several areas when they sold some properties. He didn't know how many but appearantly there was a rumor going around that they were going to lay people off which was rebutted from within the company.

As has already been said, if Devon starts laying people off there's a big problem. CHK will start long before Devon....IF things were to get nasty.

For what its worth, my friend who is an accountant there told me they are cuting back on new wells, curbing new hires, selling off some small assets, etc.

I don't think they're in trouble, CHK is VERY leveraged and I imagined they are being hurt more by this current credit crunch and leveling off of gas prices more than other oil and gas companies, who are probably sitting on a wad of cash thanks to this summer's run up in prices.

I would be concerned that if this credit crisis lasts a long time (i.e. this time next year) and CHK has trouble paying their bills, they could become a takeover target.

THat pretty much mirrors what I've seen and heard from my friends down there :)

I don't see them becoming a takeover target...far FAR too much debt.

Apparently they laid off around 3,000 independent-contractor landmen in the Barnett Shale area.

That's the rumor I heard.

From El' Wall Street . . . . .

Credit Crunch and Sinking Prices Threaten Chesapeake Energy's Growth
By BEN CASSELMAN

Chesapeake Energy Corp. is scrambling to sell assets and cut costs as falling energy prices and tightening credit threaten to derail the company's dramatic growth.

The Oklahoma City company has spent aggressively and borrowed heavily to fuel its climb this year to become the largest U.S. natural-gas producer. Its efforts were supported by natural-gas prices that leaped to a high of $13.577 per million British thermal units in July before fears of a supply glut sent prices plunging. Natural gas settled at $6.825 Thursday on the New York Mercantile Exchange.

Now Chesapeake is dramatically cutting back the costly land-leasing program that defined the company's rocketing growth.

It also faces the difficulty of trying to sell some of its gas-producing properties in South Texas in what has become a buyers' market. The sale is on top of other asset sales and spending cuts Chesapeake announced in September.

Charles Maxwell, an energy analyst who sits on Chesapeake's board, said the company suffered from "an excess of enthusiasm" when prices were rising earlier this year.

"I didn't think it would come to this," Mr. Maxwell said, adding that he believes the company's long-term prospects are solid.

Chesapeake co-founder and chief executive Aubrey McClendon said his company expects to end the year with $5 billion to $6 billion in cash -- enough to keep growing without tapping the capital markets.

The company had no cash at the end of the second quarter.

"We can continue to be the number one driller in America, the number one leaser in America ... because we're a big company, we generate a lot of cash," Mr. McClendon said.

He added that the company has insulated itself from falling natural gas prices with a hedging program that has effectively locked in an average price of $9.25 per million BTUs for 75% of its expected 2009 and 2010 production.

Nonetheless, Chesapeake's dilemma drives home how the credit crisis is threatening the business model of many independent oil and gas producers in the U.S. -- a model Mr. McClendon helped create. As gas prices rose and new technology unlocked vast new reserves of oil and gas, companies leased millions of acres of land, often at sky-high prices, and counted on being able to borrow money and sell shares to get the money to drill it.

Chesapeake was especially aggressive, at one point planning to spend $18 billion in 2008, more than three times its operating cash flow. Last spring, the company raised more than $3 billion in debt and equity despite promising the previous fall not to tap the capital markets "for the foreseeable future."

Chesapeake's shares hit a high of $69.40 on July 2, up 77% from the start of the year. Its shares closed at $17.97 Thursday on the New York Stock Exchange.

The extensive drilling by Chesapeake and its peers led to fears in recent months of an oversupply of natural gas, sending prices tumbling.

Mr. McClendon said the company will spend less in the future, but only because it's already got most of the land it needs.

But that land is only valuable if companies have the money to drill it -- and a growing number of analysts are skeptical that Chesapeake and some of its peers will be able to find enough money to drill all the land before the leases expire.

In recent weeks, a series of companies have announced billions of dollars worth of cuts to their capital budgets. Chesapeake itself led the way, announcing Sept. 22 that it would cut its capital budget by $3.2 billion, or 17%, through 2010. The company also said it planned to sell $1.75 billion worth of assets on top of the nearly $7 billion of assets the company has already sold this year.

Mr. McClendon said the company is slowing its acquisition of new land and plans to cut about a quarter of its 4,000 land men, private contractors hired to lease land on behalf of the company.

In Louisiana, where Chesapeake helped create a leasing frenzy earlier this year, the company's leasing has all but stopped, according to attorneys representing landowners there. The company has scaled back even further in Pennsylvania, where Tom Murphy with the Penn State Cooperative Extension says Chesapeake has canceled some leases before they have been finalized. Mr. McClendon said Chesapeake has delayed lease agreements, but denies canceling any signed deals.

"There are a lot of disgruntled individuals who thought they had a deal on the table and didn't realize the company had an out," Mr. Murphy said.

pls delete post-duplicate

however, saw channel 5 posted up doing a report about how they were laying off from a unit they sold. Something to do with a shale reserve in Appalachia.

that's all i gots.

I heard Chesapeake is laying off landmen, but it sounds like they'd hired way more than is practical anyway. I also heard that somebody local bought up a bunch of the Chesapeake stock Aubrey was forced to sell.

I have nothing against Aubrey, but from I read in the WSJ - he's broke, he had to sale a billion dollars worth of stock for $32 million -OUCH! I would be pissing my pants if I had only hundreds of millions instead of billions.

I'm usually not much of an article copy-n-paster but felt this might warrant it as this company's health greatly affects our economy.



Chesapeake CEO Sells Holdings
By BEN CASSELMAN

As natural-gas giant Chesapeake Energy Corp. revealed more financial problems Friday, the company disclosed that its co-founder and chief executive, Aubrey McClendon, had been forced to sell substantially all his shares to meet margin calls.

Mr. McClendon had been a major holder in his company, owning about 33.5 million shares as of Sept. 30, a stake of more than 5%. Between Wednesday and Friday, he sold 31.5 million of those shares -- 94% of his holdings -- for $569 million, according to regulatory filings. Those shares would have been worth nearly $2.2 billion at their July peak.

Mr. McClendon said in a prepared statement Friday that he had "frequently" purchased shares of stock using margin loans from brokerages, purchases he said showed his "complete confidence" in the company. But shares of Chesapeake have collapsed this year. Shares closed Friday at $16.52 on the New York Stock Exchange, down 43% for the week and well off their 52-week high of $69.40, reached in July.

"These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the world-wide financial crisis," Mr. McClendon said in the statement.

Reached by email, Mr. McClendon declined to elaborate. He co-founded the Oklahoma City-based Chesapeake, the largest producer of natural gas in the country, in 1989.

Mr. McClendon's sales came as the company was already reeling from the one-two punch of the credit crunch and falling natural-gas prices. Last month, the company announced plans to reduce its spending and sell assets to conserve cash.

On Friday, Chesapeake said it plans to sell $2.5 billion to $3 billion worth of assets in the fourth quarter and is cutting spending beyond its September announcement. It has also drawn down its entire revolving line of credit.

Chesapeake said it would slash another $1.5 billion from its 2009 and 2010 capital budget and was also making additional cuts to its 2008 spending. The move came less than three weeks after announcing it would cut $3.2 billion from its capital budget over the same time and a day after Mr. McClendon said in an interview that the company had no plans to further reduce capital spending.

As of Sept. 30, the company had $1.5 billion in cash and said it expects to end the year with $2.5 billion to $3 billion -- less than the $5 billion to $6 billion Mr. McClendon predicted in an interview Thursday.

Aubrey K. McClendon liked to boast that he hadn't sold a single share of Chesapeake Energy Corp. in years. As the company's founder and chief executive, he was a frequent buyer, borrowing against his holdings to accumulate more as the natural-gas company boomed. The value of his stake soared above $2 billion.

Then came the stock market meltdown and, last week, the calls on those loans. After a series of rapid-fire sales, Mr. McClendon now owns less than $32 million in Chesapeake shares. And investors are hoping the company, the nation's largest and most aggressive producer of natural gas, doesn't suffer a similar comedown.

"I got caught up in a wildfire that was bigger than I was," Mr. McClendon said Saturday. He declined to discuss his personal finances in detail, but said his personal situation was stable. "I'm fortunate that I have other resources and I'll be fine ," he said.

Across the country, a number of executives and other insiders, including Viacom Inc.'s Sumner Redstone and a director of Coca-Cola Enterprises Inc., are facing cash demands from their stockbrokers and banks, demands that are requiring them to sell shares to repay borrowings.

No one so far has flamed out quite as spectacularly as the 49-year-old Mr. McClendon, whose company is based in Oklahoma City.

On Friday, Chesapeake disclosed that Mr. McClendon, who is also chairman, had been forced to sell 31.5 million shares -- or 94% of his 5.8% stake -- to meet a margin call. Those shares, worth $2.2 billion when Chesapeake's stock hit $69.40 on July 2, were sold over three days last week for just $569 million. The stock closed at $16.52 Friday, down 76% from the July peak close.

Chesapeake relies heavily on debt to finance its operations but Mr. McClendon said his company won't get caught in the same inferno he did.

None of the company's debt comes due before 2012, he said, adding that the company expects to end the year with at least $2.5 billion in cash. And it plans to increase its gas production by 16% next year without borrowing or selling shares.

"I was very careful to make sure that I had the company protected against a 100-year flood," he said. "I had a completely different risk profile than the company did."

Experts said it was hard to separate the company's prospects from those of its chief executive and largest individual shareholder. "He's lost his luster, no question," said Dan McSpirit, an analyst with BMO Capital Markets in Denver.

Mr. McClendon has deep roots in the oil and gas industry. His middle name, Kerr, is one of the most famous in the Oklahoma oil patch -- but he and a partner built Chesapeake from scratch. They founded it in 1989, took it public in 1993, and nearly drove it into the ground in 1999 after betting heavily on a Louisiana gas formation that didn't work out.

He made big changes after that debacle, but his basic strategy of borrowing to buy lots of drilling acreage, often at high prices, has never varied.

Charles Maxwell, an energy analyst who has been on Chesapeake's board since 2002, said he and other directors sometimes see their role as keeping Mr. McClendon's enthusiasm in check. So when Mr. McClendon earlier this year asked to increase spending by nearly $1 billion to pursue a new opportunity in Louisiana, Mr. Maxwell was skeptical.

But Mr. McClendon convinced him that someone would spend the money and lease the land. Mr. Maxwell became a believer, saying "We just decided it would be us."

Mr. McClendon has become not just the face of his company, but also of the entire U.S. natural-gas industry. Handsome and charismatic, with unruly blond hair and an informal manner, he has appeared before Congress promoting natural gas and starred in television ads endorsing T. Boone Pickens' plan for natural-gas-powered cars.

He also has a record of stirring up controversy, sometimes far from the energy industry. He has been a major contributor to conservative causes, including Swift Boat Veterans for Truth, which ran ads attacking Democratic presidential nominee John Kerry in 2004.

And he is part of the ownership group that infuriated sports fans in Seattle by buying the Supersonics basketball team in 2006 and moving it to Oklahoma City.

His company shares Mr. McClendon's penchant for publicity. Chesapeake has sponsored ads attacking coal-fired power plants as "filthy," hired actor Tommy Lee Jones to promote its drilling efforts in Fort Worth, Texas, and announced plans to launch a daily online news program about natural-gas production that a spokeswoman once called "Aubrey's personal idea."

Mr. McClendon said he and Chesapeake had good reason to make their case vocally. "We've got more skin in the game than anybody else," he said. "I personally have more skin in the game than anybody else."

MODS, anyway we can change the title of this thread? I don't think it's appropriate to start flaunting bad news that isn't even true at this time. We don't need to be spreading around rumors of layoffs at one of our biggest and best employers in this city, when there hasn't been any press stating layoffs are coming.

I don't think this board wields THAT much power.

Guys, you'd be surprised at who is reading this board. And that brings me to ask you - the "new media" - what responsibility, if any, is there for a board like this to ensure the information is correct?
Yes, I'm firing up the flame-thrower, just a tidbit. I will be the first to admit I keep a close eye on this site and others as part of my daily newsgathering. But Metro's comment is an intriguing turn, one I've not seen to date, and I've been wondering at what point, if ever, this sort of discussion might start up.
To be clear, I'm making no accusations, I'm not trying to insult anyone on this board. I'm simply asking - with the rising importance of sites like this, is there a responsibility to guard against bad rumors and muckraking?

Can't we just post a correction notice in some unrelated thread - kind of like the New York Times does.

I suppose I should have titled it "Chesapeake Layoffs Rumor".

No, I take that back because it's not a rumor. Steve confirmed that they laid off at least 3 and probably will lay off more in the near future.

I would say 3 contract employees being laid off isn't exactly newsworthy for a Major Fortune 500 company, now 300 or 3000 layoffs would be. Steve, I agree with you, hence my original post above. I think the site should take some credibility being "new media."

Yeah I think mods should be responsible to change thread titles that are misleading or untrue. Just helps our credibility.

Maybe newspapers and "new media" should have a section called "Things we got wrong in the last 7 days" That way the correction stays out there longer than the error did and people can go to the same spot everyday to see what needed correcting.

Regarding personnel cuts:

"Mr. McClendon said the company is slowing its acquisition of new land and plans to cut about a quarter of its 4,000 land men, private contractors hired to lease land on behalf of the company." (Wall St. Journal 10-10-08)


Regarding future hedged production:

"Chesapeake also has so-called knockout swap contracts on more than one-third of its 2009 production, and those deals don't obligate the buyers to take gas when prices drop to $6.28 per thousand cubic feet of the heating and power-plant fuel, according to analyst Joseph Allman of JPMorgan Chase & Co. in New York. U.S. gas futures dropped to $6.65 today and have plunged 50 percent since the end of June.

`With natural gas close to $6.60, we think the concern about Chesapeake's knockout swaps is legitimate,' Allman said in a note to clients." (Bloomberg 10-10-08)

I honestly don't think there can be any form of responsibility, other than our own personal responsibility to present whatever information we might have as honestly as possible.

Most of us on this board have no professional connection to the media, and log in to this site only because we are interested in the goings on in our city. We can't be expected to hold to the same standards as a professional (i.e., unbiased objective reporting, extensive fact verification). We can only be held to the basic standards we expect of all people (honesty, no intention to purposefully mislead or do harm).

There may be some fallout from people posting sensitive or potentially damaging information, but as long as the intent isn't to damage, I don't see a problem with it. Part of the benefit of "new media" is that we get a clearer view of what is actually taking place. I think this site loses a lot of its value if it becomes a simple press release for the OKC Chamber of Commerce, or Chesapeake, etc. This site offers a bit of a glimpse of "the inside scoop", unfiltered, for better or worse. I think people who read this site understand that.

I would say 3 contract employees being laid off isn't exactly newsworthy for a Major Fortune 500 company, now 300 or 3000 layoffs would be. Steve, I agree with you, hence my original post above. I think the site should take some credibility being "new media."

Apparently, the Wall Street Journal thought it was newsworthy.

Well said, hoya. I agree with all of the above.

I think the site should take some credibility being "new media."

this is my favorite part, pretty funny

good call Metro

Steve, I agree with you, hence my original post above. I think the site should take some credibility being "new media."

It's an open discussion forum. Call it whatever you want, but readers should be smart enough to do their own due dilligence. You can quickly imagine how this would become a slippery slope for the mods - I say leave it wide open.

Of course there will always be exceptions that are just way over the line.

I did change the thread title to "Rumors about Chesapeake Layoffs" rather than "Chesapeake Layoffs", which is a bit misleading.

As for the role of this site and the moderators that oversee it, there are obviously lots of gray areas.

One of the great ways this site serves the community is to get information out there that might not come from conventional channels. Just on the Chesapeake subject alone, I've posted a proposed master plan of their campus (emailed to me anonymously) and portions of an email sent by McClendon to CHK employees. Neither has appeared anywhere else and add greatly to the topics at hand.

Also, this site is very much about opinion. I think it's important to provide a place where those concerned about the community can fully express themselves. It's a modern day town forum with the largest possible amount of participants and with the easy ability to add facts and get real answers to specific questions.

However, I also feel a responsibility to safeguard against unsubstantiated rumors stated as fact. There was recently something posted about a local financial institution (very negative statements about their financial position) that were completely false and misleading. After changing the thread title to more accurately reflect this, I decided just to delete the thread altogether. If someone had googled this particular company, this negative thread would be one of the first things to pop up, and that's clearly not right. And in fact, I was contacted personally by a representative from this business that raised his concerns in a very nice way.


We'll continue to do our best to balance between being an open forum and safeguarding against completely unfair and untrue rumor. But where unsure, I think it's always best to err on the side of letting information flow, at least until we're sure there are untruths that have the potential to harm.

I thought the purpose of this site was to post rumors, so that we can learn about possible OKC happenings before they are officially confirmed. That is the only reason I come to this site.

If Chesapeake lays off more people, will you change the name of the thread back? Nevermind... I don't really care about the name of the thread. It's just that there are many other threads on this board that started off as rumors and came to be true. The names of those threads were never changed.

As a discussion board, I consider all the comments here as valid (or as invalid) as anything I overhear at Starbucks or anywhere else conversation is had.

It's just a discussion board.

Apparently, the Wall Street Journal thought it was newsworthy.

Agreed, but still no EMPLOYEE layoffs. They mentioned about 1,000 layoffs for contract labor, but no EMPLOYEE layoffs, as in their HQ employees. That is when we should really get concerned. I think when the majority of the lay folk read this thread, they are thinking of the HQ here in OKC and not the thousands of contract workers and laborers all over the US. Still sucks about the reduction in contract labor, especially for their families. I hope they get back on their feet soon.

I thought the purpose of this site was to post rumors

Rumors are fine but when they are 1) disproven or 2) likely harmful with no real validation, then sometimes it's appropriate to either make that clear or remove them altogether.

I know my father works for a company that works with chesapeake and he is talking like he may be let go or, basically take a holiday for awhile. I know this is a rumors, but I have heard from a very reliable source, when she was working in the accounting dept at Chesapeake...well bascially things didnt add up... take it for whatever that meant, but she backed it up with statements like "bigger than Enron," dont know if she was just trying to scare the ppl in the room. What happens to the Thunder? lol

I heard a rumor about some very scary layoffs for CHK--as in up high. That's all I can say and it could easily be just a rumor.

Because the price of oil dropped like a stone during the last two weeks, ALL companies involved in exploration are letting contractors go. They are not actually "laying off" these people. They are simply terminating their contracts. These were never permanent employees and they always intended to release them as prospects wind down.

Someone said something about CHK releasing 3,000 landmen in Barnett Shale. I find this figure difficult to believe. This seems to be about 2,500 more than they ought to have in this play. I think that figure must be incorrect.

Speaking for the business in the Bakken in North Dakota: oil exploration companies are closing down prospects and releasing staff all over the west half of the state. The price of oil needs to rise above $90 a barrel for the exploration to resume full throttle here.

Because the price of oil dropped like a stone during the last two weeks, ALL companies involved in exploration are letting contractors go. They are not actually "laying off" these people. They are simply terminating their contracts. These were never permanent employees and they always intended to release them as prospects wind down.

Someone said something about CHK releasing 3,000 landmen in Barnett Shale. I find this figure difficult to believe. This seems to be about 2,500 more than they ought to have in this play. I think that figure must be incorrect.

Speaking for the business in the Bakken in North Dakota: oil exploration companies are closing down prospects and releasing staff all over the west half of the state. The price of oil needs to rise above $90 a barrel for the exploration to resume full throttle here.

Exactly! People keep getting contractors mixed up with actual corporate employees. Two totally different things. Sucks people are losing their jobs, but not exactly the same. Hopefully the markets will pick back up quickly.

Not trying to impugn the unimpeachably high standards of journalism at the Oklahoman, but where are they on this story? There's nothing today except a reference to yesterday's closing share price. This is the talk of the town -- and probably throughout the country -- and what is our paper doing? Are they waiting for the issuance of a company press release before they do any reporting?

Exactly! People keep getting contractors mixed up with actual corporate employees. Two totally different things. Sucks people are losing their jobs, but not exactly the same. Hopefully the markets will pick back up quickly.

I posted the 3,000 layoff rumor. I believe I specifically said "independent contractor" when I posted. Thanks :)

I think the "laid off" terminology was probably appropriate because CHK probably intends to rehire these folks when things turn for the better.

Not trying to impugn the unimpeachably high standards of journalism at the Oklahoman, but where are they on this story? There's nothing today except a reference to yesterday's closing share price. This is the talk of the town -- and probably throughout the country -- and what is our paper doing? Are they waiting for the issuance of a company press release before they do any reporting?

They've covered it pretty extensively. What's NEW today?

They've covered it pretty extensively. What's NEW today?

His critique is that the Oklahoman isn't out there finding facts to tell a story and that they're relying 100% on press releases from CHK.

CHK is known for bullying around reports and Wall Street analysts for reporting the facts. I have heard of them threatening a few analysts for giving them bad financial reviews and reporting CHK as a SELL SELL SELL! So, don't be surprised that nobody is doing anything until they release the press release. The reporters probably don't want to be harrassed by CHK.

A bit of a sidenote...its funny to see people griping about the Oklahoman...I agree its a pretty crappy paper, but its better than the Tulsa World that I have to live with :(


I'm just glad I subscribre to the WSJ.

His critique is that the Oklahoman isn't out there finding facts to tell a story and that they're relying 100% on press releases from CHK.

Or maybe they are and there's nothing new to report.