Chesapeake Business Practices

[sooner88]

This isn't the thread for this, but does anyone know when the Christmas lights are supposed to come on? We drove by at sundown and they weren't on, but Whole Foods had theirs on...

The lights on Western aren't done by CHK anymore, but rather was organized by a group called Winter on Western. There was a lighting ceremony Friday evening in honor of Aubrey. They were having some issues with the generators Friday, so I imagine they should be back on soon.

[gopokes88]

"Industry observers are closely watching Callon Petroleum Co., SM Energy Co., Southwestern Energy Co. and Chesapeake Energy Corp. as possible takeover targets, given their overlapping acreage and need to scale up. "

https://www.bloomberg.com/news/artic...?sref=VEjJXJjm

[DowntownMan]

Chk being the one acquiring would only benefit OKC.
https://www.reuters.com/markets/deal...es-2023-10-17/

[chssooner]

I read that as CHK is wanting to acquire companies. Whether it be SW or some other company.

[Pete]

I read that as CHK is wanting to acquire companies. Whether it be SW or some other company.

They are still downsizing.

Down to 688 OKC employees and dropping.

They were once over 5,000.

[PhiAlpha]

They are still downsizing.

Down to 688 OKC employees and dropping.

They were once over 5,000.

Not sure if that’s commentary their ability/potential plans to make an acquisition or just commentary on the current state of the company locally but downsizing staff doesn’t necessarily indicate that they aren’t looking to acquire another company. CHK is in about as good of financial position as it’s been in since 2008 and are extremely bullish longterm on natural gas (especially in the NE and with good reason). Southwestern’s Appalachia and Haynesville assets seem to complement CHK’s pretty well. If it comes to pass, they would likely reclaim the title of largest gas producer in the US from EQT (at least in market cap, not sure of how much the three companies are producing right now). Hope it happens, would be a great deal for OKC, if anything in that it ensures CHK won’t be going anywhere for a while.

[Pete]

Not sure if that’s commentary their ability/potential plans to make an acquisition or just commentary on the current state of the company locally but downsizing staff doesn’t necessarily indicate that they aren’t looking to acquire another company. CHK is in about as good of financial position as it’s been in since 2008 and are extremely bullish longterm on natural gas (especially in the NE and with good reason). Southwestern’s Appalachia and Haynesville assets seem to complement CHK’s pretty well. If it comes to pass, they would likely reclaim the title of largest gas producer in the US from EQT (at least in market cap, not sure of how much the three companies are producing right now). Hope it happens, would be a great deal for OKC.

I know someone who works there and talked to him today; that employee total continues to go down month by month, year by year.

Two people from his department were fired today and they are expecting more later in the year. They have moved out of all the buildings east of Classen.

Not the actions of a company expecting growth.

[PhiAlpha]

I know someone who works there and talked to him today; that employee total continues to go down month by month, year by year.

Two people from his department were fired today and they are expecting more later in the year. They have moved out of all the buildings east of Classen.

Not the actions of a company expecting growth.

I know several people there in the land department. Though I haven’t asked them directly about SWN, they have been actively evaluating acquisition targets. All the news stories today didn’t appear for no reason.

They could just as easily be acquired but you don’t need to staff up to make an acquisition like that (just look at Devon who was also shrinking and laying people off then essentially acquired WPX). Most of the heavy M&A lifting is done by outside consultanting firms and contractors (I’ve been involved in a ton of these on the consultant side for tiny companies, headcount wise, buying out larger ones). If they’re planning to acquire SWN, which is a fairly good size company, they will have a bunch of overlapping employees that work the same assets as well as administrative employees that they would most likely absorb in that type of deal. Could very easily be reducing staff that they don’t need in their current state and assume that if a large scale acquisition like that goes through, they’ll have their pick of employees from the other company who, as a bonus, are familiar with that company’s history with its asset base. They also may have been letting any remaining personnel related to their Eagleford assets go since they finalized their exit from that play back in August after multiple sales this year.

This could easily go either way but given that they just banked $3.5 billion in cash from their Eagleford exit this year (which is about half the market cap of SWN), I wouldn’t be at all surprised to see them make a big splash. I guarantee any debt that remained after the bankruptcy in 2020/2021 was refinanced at near 0 interest rates so that debt is cheap and not really a liability anymore (ie they wouldn’t be in a huge hurry to pay it down with the asset sale proceeds). Their plan since last year has been to reduce their oil production in favor of more natural gas, so selling out of the Eagleford and purchasing a large complementary gas producer like SWN would fit that plan.

I’ll ask around my circles and see what I can find out.

[Pete]

I didn't mean to imply they aren't making money or doing well, just that they continue to shrink in terms of employees which is what really matters in terms of impact on OKC.

[PhiAlpha]

I didn't mean to imply they aren't making money or doing well, just that they continue to shrink in terms of employees which is what really matters in terms of impact on OKC.

Gotcha. Well SWN is a fairly large company (similar in size to Continental) and has around 1000 employees so hopefully that would result in at least a few hundred moving here from Houston if it comes to pass.

[PhiAlpha]

Latest on the SWN merger talks

https://www.bloomberg.com/news/artic...r-journal-says

[gopokes88]

Huge for CHK. King of gas once again. Would have the biggest market cap for a gas producer.

[gopokes88]

WSJ reporting deal should be done next week. https://www.wsj.com/business/energy-...d7372d?mod=mhp

[stlokc]

Will the combined headquarters be in OKC?

[Bowser214]

Yahoo Finance link not behind a pay wall.
https://finance.yahoo.com/news/south...t_AuSDPrfDilSR

[PhiAlpha]

Will the combined headquarters be in OKC?

Most likely yes.

[chssooner]

Most likely yes.

If so, it would be huge for OKC. Shows CHK is back, and hopefully that OKC companies are in purchase mode, not sell mode.

[progressiveboy]

It would be nice if OKC can land this merger and new jobs be added to the OKC HQ's. The only thing is the energy sector is/can be volatile and can change at the drop of the hat. That pesky boom and bust mentality. What if Chesapeake gets bought out in the future, and moves HQ to Houston? Right new, HQ for SWE are located in the Houston area which is really the true oil capital.

[April in the Plaza]

It would be nice if OKC can land this merger and new jobs be added to the OKC HQ's. The only thing is the energy sector is/can be volatile and can change at the drop of the hat. That pesky boom and bust mentality. What if Chesapeake gets bought out in the future, and moves HQ to Houston? Right new, HQ for SWE are located in the Houston area which is really the true oil capital.

They always could, but most of the peeps in Houston are focused on oil weighted prospects. Natural Gas is not exactly a sexy proposition at these pricing levels.

[citywokchinesefood]

They always could, but most of the peeps in Houston are focused on oil weighted prospects. Natural Gas is not exactly a sexy proposition at these pricing levels.

Russian production is eventually going to implode due to incompetence and lack of expertise. The United States has some of the lowest cost on production in the space currently. I think domestic players are going to be exporting record amounts in the near future. It takes a little bit of conflict in a couple places to drive things crazy and we can definitely feel some rumblings. It can be easy to be down on domestic energy production given current pricing levels, if you take a step back it feels a lot better when you consider the state of the rest of the world.

[PhiAlpha]

It would be nice if OKC can land this merger and new jobs be added to the OKC HQ's. The only thing is the energy sector is/can be volatile and can change at the drop of the hat. That pesky boom and bust mentality. What if Chesapeake gets bought out in the future, and moves HQ to Houston? Right new, HQ for SWE are located in the Houston area which is really the true oil capital.

What kind of losers mentality is this? Yes….in a city that needs all the good jobs it can get…Let’s be disappointed or concerned about the potential of gaining somewhere between 100-1,000 well paying jobs, or at the very least bolstering the jobs already here, because there’s a chance some of them may go away at some point. These companies are both running extremely lean at this point. CHK will need ant least some additional staff to absorb SWN’s assets whether that be from SWN or additional hires.

Also the only reason I didn’t unequivocally state that the HQ would be here is that none of the articles have even referenced it to this point but there is little to no reason to believe it will not be. This has been treated as a takeover in which CHK will be the surviving entity from everything I’ve seen/heard and they have a massive campus with ample office space here as opposed to one or two buildings in a mixed use development in Spring, TX.

[PhiAlpha]

Russian production is eventually going to implode due to incompetence and lack of expertise. The United States has some of the lowest cost on production in the space currently. I think domestic players are going to be exporting record amounts in the near future. It takes a little bit of conflict in a couple places to drive things crazy and we can definitely feel some rumblings. It can be easy to be down on domestic energy production given current pricing levels, if you take a step back it feels a lot better when you consider the state of the rest of the world.

One only needs to look to the massive effect that the Ukraine conflict had on oil and natural gas prices for the entirety of 2022 and nearly half of 2023. Starting in mid-2021 Market dynamics were pointing toward a price increase as a rebound from everything that happened during the pandemic and all it took was a conflcit between a major oil producer and another to blow prices through the roof. Between everything going on in Russia, Venezuela, Guyana, Iran, Israel, etc… it’s a powder keg.

[Will Dearborn]

Any geopolitical concerns are being offset by weak demand and rising OPEC (and non-OPEC somewhat) production... Saudi just cut their price to Asia to lowest it's been in 2.5 years.

[Rover]

One only needs to look to the massive effect that the Ukraine conflict had on oil and natural gas prices for the entirety of 2022 and nearly half of 2023. Starting in mid-2021 Market dynamics were pointing toward a price increase as a rebound from everything that happened during the pandemic and all it took was a conflcit between a major oil producer and another to blow prices through the roof. Between everything going on in Russia, Venezuela, Guyana, Iran, Israel, etc… it’s a powder keg.

And yet the Ukrainian war rages and gas is cheaper than a year ago. The market roils short term and adjusts long term.

[PhiAlpha]

And yet the Ukrainian war rages and gas is cheaper than a year ago. The market roils short term and adjusts long term.

Correct. Just saying that another large scale international incident can tip the scales causing a price shock that can last a year or longer and likely will if some of the brewing geopolitical issues I mentioned pop off in any significant way, just as the Ukrainian war/conflict did.