Special Report: Chesapeake and rival plotted to suppress land prices

Comments (16)
Renox wrote:

How do you take out a personal loan for $1.3billion? Does that count as petty cash?

Jun 25, 2012 9:43am EDT  --  Report as abuse
Obsilutely wrote:

I can’t say I’m surprised. Although it seems as if someone is trying to get rid of McClendon. It is a shame that the society we live in offers no incentive to follow the rules or do the right thing. Those who are honest are the ones who suffer the most. Those who are dishonest are the most successful. Great report, I hope it has a similar effect to the report covering the loans and unprecedented participation program.

Jun 25, 2012 9:52am EDT  --  Report as abuse
Factsplz wrote:

If landowners were getting offers of $3,000 per acre from companies other than CHK and ECA, why did they not take those offers?

If at a later auction NO OTHER oil company bid against CHK or ECA, why did the others NOT bid?

If leases were bought for $46 why didn’t XOM or any other company bid $47?

If CHK did not $46 then there would have been no bids.

This is another “news” story to crush CHK with no common sense or proper view of facts. Why are companies who bid in May, but not in October, not under review? Nobody is REQUIRED to bid because Reuters says they should.

How about a real story on the GREAT things CHK has done to make America energy independent?

Jun 25, 2012 10:05am EDT  --  Report as abuse
sjtom wrote:

Oil companies lied and cheated? Who’d a thunk it?

Jun 25, 2012 10:39am EDT  --  Report as abuse
libertadormg wrote:

This is a red letter day for all the oil and gas operator’s in the shale basins. Collusion to keep land prices low in leasing shale land seems to be a widespread practice among oil and gas companies. Bidding got out of hand in 2007 in the Haynesville and Barnett with lease bonuses of $30,000 per acre and 27 1/2% royalty for dry gas and after that happened the oil companies apparently vowed never to let that happen again.

Jun 25, 2012 10:51am EDT  --  Report as abuse
Harry079 wrote:

“Some landowners were being offered more than $3,000 per acre in June 2010, documents reviewed by Reuters show.”

A friend of mine has 80 acres that borders the State Forest west of Black Lake in Grant Township. For a period of time in 2010 the was a flurry of activity and offers from Oil & Gas companies. When local landowners started banding together with legal council many offers were either reduced or withdrawn completely.

My friend had offers from both the American & Canadian companies along with offers to join other property owners to negotiate as a group through legal council.

As of today we haven’t seen or heard of any activity in the area with oil or gas exploration, drilling or fracking.

Jun 25, 2012 11:28am EDT  --  Report as abuse
Factsplz wrote:

First, to Renox – McClendon did NOT borrow from CHK – he borrowed privately under a program approved by shareholders in 1993, again in 2005, and had 3 pages of disclousures in the annual Proxy sent to all shareholders — which specifically allowed borrowing.

Re: CHK & ECA – If landowners were getting offers of $3,000 from other oil companies why did they not take the money? Why did they take just $1,413 from CHK and not take all those other wonderful “guaranteed” offers?

If there were no other bids, from ANY oil company, why is it wrong that CHK got some for $46?

So why isn’t NorthStar king-of-the-hill and own all the oil rights if it is such a strong bidder? Or was it just trying to scalp on CHK’s geological work?

With the market changed dramatically from May to October, what happened to leasing throughout the nation? What happened to gas/oil prices? Why did ALL oil companies stop bidding?

If CHK and ECA decided not to bid against each other, and NO other bidders surfaced, why MUST these two be forced to bid to be the only two participants on property that nobody else wants?

This is clearly another case of creating “news” by implying that CHK had to continue to bid against itself when only 10% of the leases had bids from ANY other oil company.

Jun 25, 2012 11:31am EDT  --  Report as abuse
suswa wrote:

@libertadormg and @Harry079: There is a distinction between mineral leasing and land buying. Just to be clear, the lease bonuses you are describing have to do with mineral leasing. Maybe you are describing this to show “why” Chesapeake and Encana were negotiating these land deals? Not sure.

Jun 25, 2012 12:48pm EDT  --  Report as abuse
BuckeyeNick wrote:

Like many good conseratives, I sometimes have to defend capitalism and the profit motive on a very basic level. I point out to liberals and young people that the big profits reported by corporations go to individual investors, mutual funds and pension funds. Then somebody like McClendon comes along and it becomes impossible to deal with the unbridled greed pointed at all of us in private business. This SOB will eventually end up in jail, but not fast enough. People like him are just plain bad for America.

Jun 25, 2012 3:39pm EDT  --  Report as abuse
BuckeyeNick wrote:

Like many good conseratives, I sometimes have to defend capitalism and the profit motive on a very basic level. I point out to liberals and young people that the big profits reported by corporations go to individual investors, mutual funds and pension funds. Then somebody like McClendon comes along and it becomes impossible to deal with the unbridled greed pointed at all of us in private business. This SOB will eventually end up in jail, but not fast enough. People like him are just plain bad for America.

Jun 25, 2012 3:39pm EDT  --  Report as abuse
kbkoonce wrote:

Bleed out, McClendon!

Jun 25, 2012 4:49pm EDT  --  Report as abuse
Daleville wrote:

Factsplz:

Do you work for Chesapeake or just own a lot of their stock?

I can see no other reason for your comments blaming Reuters for Chesapeake’s potentially criminal conduct.

Jun 25, 2012 6:08pm EDT  --  Report as abuse
Harry079 wrote:

“Maybe you are describing this to show “why” Chesapeake and Encana were negotiating these land deals”

I’m pretty darn sure that here in Michigan neither company was buying any land but there sure was a frenzy for about a year on mineral rights leasing.

The Headline falsely implies surppessing propety values and I already knew the difference.

Jun 25, 2012 6:09pm EDT  --  Report as abuse
Skellygirl wrote:

Like really Aubrey, Mr. “Nice Guy”. You did a lot for OKC and probably other communities nationally. But now you have affected the livlihood of thousands and thousands of now unemployed landmen (your original profession). Shame on you, shame on your greed. I hope you realize what you have done to the economy, how many families you have affected, the negative impact you have on the industry, etc. How does it feel to sit in those high-dollar Thunder NBA seats, while thousands are losing their homes, cars, etc. Most can’t even collect unemployment because they are contract personnel.

Jun 26, 2012 10:51am EDT  --  Report as abuse
eclements wrote:

While on one level the reading of these e-mails paints a picture of collusion driving down prices, there are many other factors which ultimately contributed to the final winning bids. In short, lease bonuses are worth whatever someone is willing to pay for them. In turn, that amount is based on projections for gas prices and anticipated drilling results.

Earlier this year there was a fair amount of publicity about Chesapeake pulling back from some areas in Michigan they had leased. The implication was that drilling results in those areas had been less spectacular than anticipated. When combined with the slump in gas prices, those are two very compelling reasons for leases to draw lower bids than anticipated. Bubbles do burst – even the kind filled with Natural Gas.

As there are theoretically numerous potential bidders for these acres, actions by two of them – by themselves – wouldn’t be enough to dampen bids. As noted earlier, any other oil or gas exploration company could have stepped in and bid a higher amount. One would presume that their economic analysis of the prospects didn’t justify higher bids.

Oil and Gas Exploration is a typically a boom / bust enterprise. Yesterday’s results will not be today’s – or tomorrow’s results. So to simply say “last time we sold x acres and netted $y”, this time “we sold more and got less” – by itself – doesn’t prove that these companies’ actions – alone – caused that reduction in lease values. That said, it was a foolish topic to engage in via e-mail as it simply creates another area in which to pursue litigation.

Jun 26, 2012 12:05pm EDT  --  Report as abuse
lawbider wrote:

Thats similiar to what single family homeowners have been going through the last 4 years!

Jun 26, 2012 6:34pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.