Chesapeake Energy being bought out?

There are rumors of BP making a bid on Chesapeake and a Louisiana News Station reported Exxon's buying out of Chk. Any thoughts?

BP jumps; traders cite talk of bid for Chesapeake
Reuters - 2 hours ago
LONDON, Jan 26 (Reuters) - Shares in British energy group BP (BP.L) rose more than 3 percent on Monday as traders cited market talk that the company was ...
BP moves higher on market talk of possible Chesapeake bid
guardian.co.uk, UK - 3 hours ago
A buoyant stock market tends to bring out the rumours, and this afternoon is no exception. BP is 17.5p higher at 505p after traders heard tell it might be ...
Options Update: Chesapeake Energy Calls Popular on BP Buyout ...
Schaeffers Research, OH - 25 minutes ago
by Joseph Hargett (jhargett@sir-inc.com) 1/26/2009 1:15 PM Speculation is swirling around Chesapeake Energy (CHK: sentiment, chart, options) and British oil ...

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Permalink Reply by Area Man on May 14, 2012 at 8:23am

I interpreted this more as a slap to the current board than any meaningful advice.

Really, CHK has far too much debt to be a takeover target in my opinion.  It would cost a heck of a lot of money, then you'd have a lot of acreage across the country needing development... far too much work than worth the price tag in the current gas price environment.

Permalink Reply by Jack Straw on May 14, 2012 at 8:43am

In addition to CHK's debt, CHK are involved in a myriad number of peculiar partnerships, VPP MLPs, Farm-outs, Farm-ins, sales of working interests, assignments of Over Riding Royalty Interests, they have Midstream MLPs, they have a drilling subsidiary, they are just about every Continental basin (good, bad or indifferent) .... they are an overly complicated mess.

CHK is an amazingly complex entity (perhaps singularly complex); the sum total of which would be extraordinarily difficult to evaluate and value.

As CHK need money to continue operations, they can (and likely will need to) sell off major discrete portions of the company - but, I would be surprised to see someone wish to purchase them (lock, stock and barrel). They are too much of a Gordian Knot for any but the most brave (foolish?) to contemplate purchase.

All IMHO,

                 JS

 

Permalink Reply by Chartist on May 14, 2012 at 12:07pm

They recently borrowed money for 5 years at 8.75% interest....that should tell you something right there; they have significant money problems....And their bonds are selling below par.....I think this is a sign that the NPV of their assets is less than their debt....I just don't see nat gas pricing to rise enough to bail out CHK.

1w1vl8clda7t4Permalink Reply by 1w1vl8clda7t4 on May 14, 2012 at 4:58pm
Natural gas prices don't have to rise to bail Chesapeake out...they just need to sell some assets and do more JV @ $15,000-$20,000 an acre on land they leased for $5,000 and under...some leases were signed for $10.00, not a bad day at the office. Chesapeake has turned land into a commodity...and the last time I checked they're not making anymore of It...and what happens when a highly sought after commodity is scarce...they name their price. Thats how this game is being played.
Jim ShoosPermalink Reply by Jim Shoos on May 15, 2012 at 3:43am

All you need to do is look at the CDS (Credit Default Swaps) on CHK to understand their predicament.  It costs $804,000/yr to insure $10Million in debt.  No go take a look at their entire debt and you figure out which way the smart money is leaning.   

The full extent of CHK's off balance sheet debt is not yet visible to the investing public, despite the series of recent revelations.  CHK owes a ton of money to all their working interest partners by virtue of their being overproduced in all their wells.  This doesn't even appear as a footnote on their SEC filings. 

Permalink Reply by Billy Park Whyde on May 15, 2012 at 5:21am
Shares in CHK jump on news Icahn getting involved, new loan
Shares in Chesapeake Energy Corp jumped on Monday on reports that billionaire investor Carl Icahn would take a stake in the company, as well as a late-Friday announcement that the firm had a new $3bn loan in place — easing concerns it might have to sell assets at fire-sale prices. Source Gas Business Briefing
Jim ShoosPermalink Reply by Jim Shoos on May 15, 2012 at 8:23am

Chesapeake Energy Corp( CHK :NYSE)

Real Time Stock Quote
|
Source: NASDAQ Real-Time Last Sale

http://www.cnbc.com/id/47433084

 14.6785 USD
Last Trade		  -0.8415 (-5.42%)
Change
 56,868,780
Volume		 3:21:31 PM EDT
Permalink Reply by Bluflame on May 15, 2012 at 8:44am

Jim,

  Maybe Carl Icahn is buying some of those 56+MM shares!

BluFlame

1w1vl8clda7t4Permalink Reply by 1w1vl8clda7t4 on May 15, 2012 at 8:48am
What's your point...Carl Icahn is in the game. Do you actually think Aubrey could pull the wool over his eyes. I don't think so...Icahn only invest in companies that he thinks are at bargain prices, will have a management position, and will have a control over future strategies. The financials clearly are not telling the whole story.
Permalink Reply by Bluflame on May 15, 2012 at 8:57am

BGJ,

   No real point, just my pitiful attempt at humor. Icahn is a tough, smart cookie, and no one is likely going to pull the wool over his eyes, not even the glib Mr. McClendon.

Bluflame

1w1vl8clda7t4Permalink Reply by 1w1vl8clda7t4 on May 15, 2012 at 9:04am
Bluflame, my comment was towards Jim Shoos prior 2 comments.
Jim ShoosPermalink Reply by Jim Shoos on May 15, 2012 at 9:10am

Woooo-hoooooo Carl Icahn... he lost millions on Motorola, lost his battle with Clorox, Lions Gate Entertainment, Forest Labs, Dynegy. 

He did OK when he was younger, but he is now in his 80's and his dementia leads him to do stupid things.

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