Landowners are being foolish. They don't listen. They believe those in conservation are crackpots. Now they have land that is compromised and losing value without the wealth they were promised.
...CUSICK: That was the total for May. They didn't get a check at all in March. The check comes from Chesapeake Energy Corporation based in Oklahoma City. It is the number one drilling company in Pennsylvania and number two for the whole country.
GEIGER: And I made three phone calls to Oklahoma City before they finally told me: We never sent you a check last month. We hadn't sold the gas - we didn't have the money....
One has to ask how a company is going to 'handle' their investments and whether or not the management sees royalties as an expense they want to control. The landowners should have stipulated the removal of natural gas from their lands was a cash and carry enterprise. As soon as the gas was extracted it was paid for and the futures belonged to Chesapeake.
North Carolina and the rest of the nation needs to take notice about the fracking legislation the new Governor and legislature was in such a rush to pass. The Pennsylvania experience has been a nightmare on many fronts.
...The presentation repackaged (click here) a lot of what we already know about the company. Great assets, massive leverage and high sensitivity to natural gas prices. More than anything else, the company strove to get across the point that the value of its 6.2 million acres of oil and liquids-rich fields more than balances out its mounting liabilities, including $13.2 billion in debt. Of $7 billion in capital spending this year, 85% will be directed towards liquids-rich plays....
I have no doubt Chesapeake has the money to pay landowners for their natural gas, but, they won't if they don't have to because the longer that money sits in the Chesapeake treasury the more interest it accumulates.
Then again, with Chesapeake paying out all these 'up front' monies, the company might be pinched for LIQUIDITY.
The fracking companies are not interested in a quick turn around of that natural gas either.
...If McClendon really could sell all those assets at $50 billion, Chesapeake would be left with zero liabilities, $30 billion in cash and a collection of gas fields in the Marcellus, Haynesville, Barnett shales that might not be economic now, but would be a valuable option on future gas prices. In that scenario, the company’s current $10 billion equity market cap would have a lot of room to grow. McClendon could slay all his doubters, deleverage his balance sheet and crow about how he was right all along.
It’s this kind of best-case scenario analysis that keeps Chesapeake bulls going....
And what was that about a cleaner, cheaper form of energy? The cheaper sure as heck isn't the consumer.
...In today’s presentation Chesapeake figures that at $2 natural gas it would do full-year ebitda of $2.7 billion. At $3 gas it would make $3.25 billion, still less than it needs to stay within covenants. Gas today is $2.70 for the front end of the strip and $3.20 a year from now....
People have to remember, the petroleum industry seeks profits from oil. The best quality oil is significantly diminished. So, the industry is seeking junk oil and natural gas to fill it's profit margins. This industry is going to want to exceed the profits from the past decades, so the idea this is cheap energy is a hideous thought.
...As a gas trader told me the other day: “Chesapeake is in that horrible stage of corporate crisis where you have your choice of getting your face ripped off by one or more of (i) the asset sale market, (ii) the corporate M&A market, (iii) the debt market. It’s amazing to watch the market punish someone that they don’t like/trust.”...
For all those folks who sold their mineral rights to be the next millionaire, their heirs might see that money, if they haven't lost the farm by then for all the pollution and diminished farm production fracking causes. But, will they be the millionaires they expected to be in their lifetime? Probably not.
Before Americans trust others with their land, they need to understand why the government passed legislation to allow this in the first place. And companies are going to want to refill their political coffers before they pay royalties for Round 2, 3 and 4 as time goes on. So, why not sell off old assets before the obligations of the new ones are paid?
Concerned Residents Mic-Check Rigged Congressional Hearing on Fracking (click here)
STEUBENVILLE, OH - A dozen anti-fracking Ohio and Pennsylvania residents were escorted from today's congressional field hearing on natural gas after interrupting the proceedings and attempting to present members of the committee with a $3 million check representing the money spent by industry just on members of the hearing.
Held by the Congressional Subcommittee on Energy and Mineral Resources, today's event was the latest in a series of field hearings designed to promote hydraulic fracturing (a.k.a. "fracking") as a solution to the economic and energy crises.
Residents pointed out that Chairman Doug Lamborn (R-CO), Glenn Thompson (R-PA), and Bill Johnson (R-OH), have collectively received a total of at least $267,084 in campaign contributions from oil and gas corporations and therefore clearly have a conflict of interest that makes them unfit for reviewing the human health, environmental, and economic impacts of fracking.
Although not invited to testify, residents handed out pamphlets containing testimony regarding fracking's environmental devastation, as well as the Subcommittee's history of taking donations from the oil and gas industry, amounting to a sum of approximately $3 million split between 18 members of the Subcommittee. This is part of the $747 million spent by the industry for fracking as part of a 10-year lobbying campaign to persuade federal authorities to ignore the dangers of fracking as reported by Common Cause in their report "Deep Drilling, Deep Pockets."...
...CUSICK: That was the total for May. They didn't get a check at all in March. The check comes from Chesapeake Energy Corporation based in Oklahoma City. It is the number one drilling company in Pennsylvania and number two for the whole country.
GEIGER: And I made three phone calls to Oklahoma City before they finally told me: We never sent you a check last month. We hadn't sold the gas - we didn't have the money....
One has to ask how a company is going to 'handle' their investments and whether or not the management sees royalties as an expense they want to control. The landowners should have stipulated the removal of natural gas from their lands was a cash and carry enterprise. As soon as the gas was extracted it was paid for and the futures belonged to Chesapeake.
North Carolina and the rest of the nation needs to take notice about the fracking legislation the new Governor and legislature was in such a rush to pass. The Pennsylvania experience has been a nightmare on many fronts.
Christopher Helman, Forbes Staff
5/22/2012 @ 2:21PM...The presentation repackaged (click here) a lot of what we already know about the company. Great assets, massive leverage and high sensitivity to natural gas prices. More than anything else, the company strove to get across the point that the value of its 6.2 million acres of oil and liquids-rich fields more than balances out its mounting liabilities, including $13.2 billion in debt. Of $7 billion in capital spending this year, 85% will be directed towards liquids-rich plays....
I have no doubt Chesapeake has the money to pay landowners for their natural gas, but, they won't if they don't have to because the longer that money sits in the Chesapeake treasury the more interest it accumulates.
Then again, with Chesapeake paying out all these 'up front' monies, the company might be pinched for LIQUIDITY.
The fracking companies are not interested in a quick turn around of that natural gas either.
...If McClendon really could sell all those assets at $50 billion, Chesapeake would be left with zero liabilities, $30 billion in cash and a collection of gas fields in the Marcellus, Haynesville, Barnett shales that might not be economic now, but would be a valuable option on future gas prices. In that scenario, the company’s current $10 billion equity market cap would have a lot of room to grow. McClendon could slay all his doubters, deleverage his balance sheet and crow about how he was right all along.
It’s this kind of best-case scenario analysis that keeps Chesapeake bulls going....
And what was that about a cleaner, cheaper form of energy? The cheaper sure as heck isn't the consumer.
...In today’s presentation Chesapeake figures that at $2 natural gas it would do full-year ebitda of $2.7 billion. At $3 gas it would make $3.25 billion, still less than it needs to stay within covenants. Gas today is $2.70 for the front end of the strip and $3.20 a year from now....
People have to remember, the petroleum industry seeks profits from oil. The best quality oil is significantly diminished. So, the industry is seeking junk oil and natural gas to fill it's profit margins. This industry is going to want to exceed the profits from the past decades, so the idea this is cheap energy is a hideous thought.
...As a gas trader told me the other day: “Chesapeake is in that horrible stage of corporate crisis where you have your choice of getting your face ripped off by one or more of (i) the asset sale market, (ii) the corporate M&A market, (iii) the debt market. It’s amazing to watch the market punish someone that they don’t like/trust.”...
For all those folks who sold their mineral rights to be the next millionaire, their heirs might see that money, if they haven't lost the farm by then for all the pollution and diminished farm production fracking causes. But, will they be the millionaires they expected to be in their lifetime? Probably not.
Before Americans trust others with their land, they need to understand why the government passed legislation to allow this in the first place. And companies are going to want to refill their political coffers before they pay royalties for Round 2, 3 and 4 as time goes on. So, why not sell off old assets before the obligations of the new ones are paid?
STEUBENVILLE, OH - A dozen anti-fracking Ohio and Pennsylvania residents were escorted from today's congressional field hearing on natural gas after interrupting the proceedings and attempting to present members of the committee with a $3 million check representing the money spent by industry just on members of the hearing.
Held by the Congressional Subcommittee on Energy and Mineral Resources, today's event was the latest in a series of field hearings designed to promote hydraulic fracturing (a.k.a. "fracking") as a solution to the economic and energy crises.
Residents pointed out that Chairman Doug Lamborn (R-CO), Glenn Thompson (R-PA), and Bill Johnson (R-OH), have collectively received a total of at least $267,084 in campaign contributions from oil and gas corporations and therefore clearly have a conflict of interest that makes them unfit for reviewing the human health, environmental, and economic impacts of fracking.
Although not invited to testify, residents handed out pamphlets containing testimony regarding fracking's environmental devastation, as well as the Subcommittee's history of taking donations from the oil and gas industry, amounting to a sum of approximately $3 million split between 18 members of the Subcommittee. This is part of the $747 million spent by the industry for fracking as part of a 10-year lobbying campaign to persuade federal authorities to ignore the dangers of fracking as reported by Common Cause in their report "Deep Drilling, Deep Pockets."...
