Total investigating Chesapeake

Just heard from a friend who is a landman and he stated that his company was selected by Total to review leases that Chesapeake took in Ohio after the JV with Total and were back dated.  So far they have discovered many leases dated Oct. 31, 2011 but were notarized in late November and December.  According to him the per acre prices would be much lower for Total with the back dated leases then the price with them would be.

The funny thing about this is that he used to be a landman for Chesapeake working in Ohio until they laid him off.  He said he is well aware of this practice by Chesapeake.

Anyone else heard this?

Jim

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Permalink Reply by pat on May 10, 2015 at 2:05am

 Jim at the recorders office it reads that Total has mortgage the the property. But we own it free and clear.  Any idea what they did. We signed with Chesapeake and a year later Total acquired the lease.Everything that i have heard about Total is good.Any input?

Permalink Reply by Joseph-Ohio on May 10, 2015 at 2:09am
Can't know for sure but thinking the 'mortgage' might be on the leasehold ?
Permalink Reply by Jim Lawrence on May 10, 2015 at 7:19am

Total mortgaged the potential of the lease to raise capital is what I believe.  They do not own anything so it is a loan against future income raised by the potential of the lease.

Permalink Reply by Joseph-Ohio on May 10, 2015 at 7:48am
Not being a new age financial whiz / expert; applying the word 'mortgage' to their arrangement strikes me as a strange / unusual application of the word.

I would have used the words 'collateral loan' myself but it's still lacking; as the 'collateral' is really 'future collateral'.

Oh well, I just better come up to speed / get on the bus.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on May 13, 2015 at 2:16pm

Joeseph,

      Last year a law was passed in Ohio that made a lease with an O&G company a Real Estate Transaction. Someone entered the new law as a discussion item. The law talked about recording the leases in the County Courthouses, and other important Real Estate functions. Needless to say I got a little nervous knowing the CHK had already made a deal with the Deutch Bank for a loan using our leases as collateral.

I have a feeling we haven't heard the end of these leases being used for collateral on loans from Deutchland and France (Total). 

I'll be sending some info to Total E&P USA tomorrow, that spreadsheet Chesapeake sent to me, so Total E&P can take a look at what CHK is up to. I suspect they are screwing Total E&P by some means. You know CHK, the'll short change landowners or partners. It's all good.

  

Permalink Reply by Joseph-Ohio on May 13, 2015 at 3:30pm
Thanks Ron.
Permalink Reply by Joseph-Ohio on May 13, 2015 at 4:14pm
So, when one E & P 'acquires' (buys) another the seller would have to pay off any such 'mortgage' obligation from the proceeds.

That leads me to believe that if the big G & O Companies are borrowing against future production they would only do so expecting to make enough to pay their obligation plus turn a profit (as that's the nature of any business). Also I'll hazard a guess that they would want to turn around / recover their investment and profit as quickly as they could.

Well then I say Giddy Up G & O - Giddy Up.
Permalink Reply by Joseph-Ohio on May 14, 2015 at 11:46am
Wondering what Deutschland Bank would do in the event of a default on the 'mortgages' (by the borrower) ?

Sell the leaseholds to the world's highest bidder ?

I wonder who that would be ?

Maybe AEP / Aubrey ?

Hopefully not SA or China or Russia.

The words 'bailout' and 'too big to fail' come to mind.

Nasty stuff to ponder.
Permalink Reply by Joseph-Ohio on May 14, 2015 at 11:53pm
To try and keep my head screwed on as straight as possible; I guess I need to ask plainly who / what entity 'collateralized' / 'mortgaged' the leaseholds / future production ?

Was it only 1) Total (France), 2) only CHK or 3) both Total and CHK jointly ?

Anybody know ?
Permalink Reply by Alan Bowers on May 18, 2015 at 1:52pm

Ron,

For details on the contract between Chesapeake (NYSE: CHK) and Total E&P (parent company Total SA, NYSE: TOT) you should search the SEC filings for CHK.  Find the filing relating to CHK Utica LLC.  You can locate the information via the internet on the SEC web site.

TOT purchased preferred shares of CHK Utica LLC. The SEC filing will detail what CHK is required to give back in return and the penalties for failing to meet the requirements.  It should be noted CHK has failed to meet some of those terms and some of the penalties were kicked in.

Joseph-Ohio,

PDF files containing portions of the CHK Utica LLC mortgage with Deutsche Bank have been posted on the Go Marcellus web site.  See the thread originally posted 2013-09-12, Deutsche Bank National Trust Co Americas, for some of the information.

The mortgage allows Deutsche Bank to start selling assets used as collateral WITHOUT going to court and start the foreclosure process.

The Trumbull County Ohio Recorders web site offers web access to a copy of the filing of the mortgage for all to be read.  To get a more complete picture of the transaction you also need to locate and download the additional documents referenced in the Mortgage and read the SEC filing by CHK that references the CHK Utica LLC mortgage.

Permalink Reply by Joseph-Ohio on May 18, 2015 at 2:14pm
Thanks for your reply Alan.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on May 19, 2015 at 1:26pm

Thanks Alan.

I know Total owns 25% of Buck Well.

I sent an email to Total and they gave me the mailing address for Total E&P and suggested I send the Chesapeake Spreadsheet to them.

If anyone wants to write a complaint to Total E&P about YOU KNOW WHO, here is the address:

Total E&P

Total Plaza, 1201 Louisiana Street

Suite 1800

Houston Texas 77001

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