ADVFN - Advanced Financial Network.
HOME» NYSE » C » CHK Stock Price » CHK Stock News

Chesapeake Share News

 Chesapeake Energy Corp. Stock Price
CHK Stock Price
 Chesapeake Energy Corp. Stock Chart
CHK Stock Chart
 Chesapeake Energy Corp. Stock News
CHK Stock News
 Chesapeake Energy Corp. Company Information
CHK Company Information
 Chesapeake Energy Corp. Stock Trades
CHK Stock Trades

US Shale Gas Writedowns Turn Up Heat on BHP to Follow Suit

By Robb M. Stewart MELBOURNE--Energy heavyweights sharply writing down the value of U.S. shale gas assets is turning up the heat on BHP Billiton Ltd. (BHP) to follow suit, with expectations the company will take an impairment charge of at least US$3 billion in a move likely to ignite fresh scrutiny of chief executive Marius Kloppers's performance. BP PLC (BP), Encana Corp. (ECA) and BG Group PLC (BG.LN) have flagged combined writedowns totalling more than US$5 billion in recent days primarily because a supply glut of shale gas--trapped stores of methane in dense rock formations beneath the Earth's crust--has drive U.S. gas prices down to multi-year lows. BHP, which placed its biggest bet on U.S. unconventional fuels through its $12.1 billion acquisition of Petrohawk Energy Corp. last year, is due to release its earnings figures for the last financial year on Aug. 22. Any writedown of U.S. shale gas assets would come at a time when BHP is grappling with softer prices for other key commodities such as iron ore. Analysts at Deutsche Bank said they expect a writedown in the upcoming results of US$4 billion-US$5 billion after a recent tour of U.S. shale producers, but are confident BHP can hit production targets. Other analysts expect an impairment charge as high as US$7 billion, which would also cover the falling value of BHP's aluminum and nickel units. A writedown of such magnitude wouldn't affect cashflow or BHP's ability to pay dividends, but would further weigh on sentiment. Share prices of BHP and other big mining companies remain near three-year lows, and investor confidence is fragile while prices for iron ore, copper and other key commodities continue to weaken. "I'm conscious there is a lot of chatter" about Mr. Kloppers' performance, said Shaun Manuell, chief investment officer at Equity Trustees. "There isn't much a CEO can do, but where he can make an imprint is on mergers and acquisitions, and I don't think the track record there has been as bad as all that." BHP last year spent close to US$17 billion on shale assets at a time when the benchmark gas price was trading at $4-$5 a million British thermal units. That price fell below $2 earlier this year, although it has recovered to above $3.20 as power plants switched from coal to burn gas to generate electricity as homes and businesses increased air conditioning use. J. Michael Yeager, the head of BHP's petroleum division, in May said BHP would decide later in the year on whether gas prices would force a writedown. Conscious of the weaker outlook, he said the company was shifting its focus to producing liquids from shale deposits and would devote 85%-90% of spending to developing those areas. A spokeswoman for BHP declined to comment on the matter. BHP in February 2011 agreed to buy Chesapeake Energy Corp.'s Fayetteville shale assets and a pipeline system for US$4.75 billion, which gave it about 487,000 acres of gas properties in Arkansas. It followed up in July 2011 with the deal for Petrohawk, which gave it a further 1 million acres in Texas and Louisiana. Deutsche analysts Paul Young and Grant Spore said BHP picked up some of the best acreage in the liquids-rich Eagle Ford and Permian basins with the Petrohawk buy, where it has about 40 of its 45 rigs operating. They estimate the assets are now worth about US$20.3 billion, although a review of the carrying value under international accounting rules is likely to mean an impairment charge on the Petrohawk assets of up to US$1 billion and up to $4 billion on the gas-rich Fayetteville assets. That is similar to other calculations. Analysts at Citi have estimated a charge of US$3 billion to $5 billion, largely for the Fayetteville assets. BP said Tuesday it is taking an impairment charge of US$2.11 billion, primarily relating to its U.S. shale gas assets and the suspension of a separate project in Alaska. BG Group last week said it had booked a $1.3 billion impairment charge on its U.S. shale gas assets after lowering its forecast for Henry Hub benchmark gas prices to $4.25 from $5, while Canada's Encana said it had recorded a $1.7 billion charge against its earnings to reflect the fall in gas prices. John Robinson, chairman of Global Mining Investments Ltd., said the shale acquisitions last year have made Mr. Kloppers a target for investors upset with a poor share price performance in an industry facing pressure to lift shareholder returns with higher dividends. But he says resources companies need to make investments that look beyond near-term commodity prices, and the shale deals may well prove themselves in time. Simon Marais, managing director at Allan Gray, expects pressure on Mr. Kloppers to build as prices for the key metals and minerals it produces continue to weaken. "There is nothing he can do about this and replacing him will not make BHP earn more," Mr. Marais said. "If you want to blame him, you could criticize the U.S. shale gas acquisition. But even for that I do not see consensus that it was a dud deal." Write to Robb M. Stewart at robb.stewart@wsj.com Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Stock News for Chesapeake (CHK)
DateTimeHeadline
11/28/201413:24:56U.S. Stock Futures Pause; OPEC Decision Weighs on Energy Shares
11/25/201418:28:27Court Rules Against Chesapeake Energy Over 2013 Bond Redemption
11/25/201415:50:22Chesapeake Energy Bond Redemption Notice Faulty, Court Rules...
11/05/201409:45:59U.S. Hot Stocks: Hot Stocks to Watch
11/03/201415:14:08Southwestern Energy Shares Have 57% Upside -- Barron's
11/03/201412:08:50What Will Chesapeake Energy Do With All That Cash? -- Earnings...
09/18/201408:20:35Magnolia Shares Fall After Unveiling Cummings 2nd Half Well Output...
06/12/201416:43:41MARKET SNAPSHOT: U.S. Stocks Fall; S&P 500 Down For Third Day
06/12/201414:52:18MARKET SNAPSHOT: U.S. Stocks Fall; Dow In Triple-digit Decline
06/12/201410:29:47MARKET SNAPSHOT: U.S. Stocks Edge Lower; Energy Sector Rallies
06/11/201419:14:44Aubrey McClendon Launches His Post-Chesapeake Comeback
05/28/201420:22:36Oklahoma Governor Signs Bill Raising Energy-Output Tax
05/20/201422:02:19Companies Bet Exposing Hacks Will Help
05/12/201417:58:12Oil Man George Kaiser Proposes Increase in Oklahoma Oil-and-Gas...
05/07/201420:12:46SEC Ends Investigation of Chesapeake Energy Ex-CEO Aubrey McClendon...
05/07/201408:30:12Chesapeake Energy Profit Soars
05/07/201408:04:10Chesapeake Energy Profit Soars, Revenue Jumps 47%
03/05/201421:19:31Chesapeake, Encana Charged With Antitrust Violations -- Update
03/05/201419:10:11Chesapeake, Encana Charged With Antitrust Violations
02/28/201410:01:30Chesapeake Energy to Sell $520 Million in Assets to Exterran...

Chesapeake Energy and other New York Stock Exchange stock quotes are delayed by at least 20 minutes.
All other stock price data is delayed by at least 15 minutes unless otherwise stated.
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
Contact Us | Copyright 1999-2007 ADVFN PLC. | Privacy Policy | Investment Warning | Data accreditations | Investor Relations

ADVFNADVFN ItalyADVFN GermanyADVFN FranceADVFN BrazilADVFN JapanADVFN UKADVFN US noad