A Federal District Court Dismisses Chesapeake Stock Drop Suit
Nov 22 13
A federal district court dismissed a class action complaint alleging Chesapeake Energy acted imprudently by offering company stock to retirement plan participants. The U.S. District Court for the Western District of Oklahoma decided allegations from the plaintiffs had not been sufficiently proven. Fiduciaries for the Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan requested a motion to dismiss the suit, claiming the status of the company and the stock was never as dire as alleged and that the matter of prudency for investing in company stock is moot. The district court opined that the 10th U.S. Circuit Court of Appeals would adopt the Moench presumption of prudence in cases in which, under the terms of an Employee Retirement Income Security Act (ERISA) plan, the fiduciary is not absolutely required to invest in employer securities but is more than simply permitted to make
such investments, and would apply an abuse of discretion standard to review the fiduciary's decision to continue investing in employer securities. The court adds that the 10th Circuit Court would require the plaintiff to show that the ERISA fiduciary could not have reasonably believed that continued adherence to the plan's direction was in keeping with the
settlor's expectations of how a prudent trustee would operate in order to demonstrate an abuse of discretion. In its decision, the court reported, Having carefully reviewed the complaint, the court finds that although the plaintiffs have set forth numerous specific and detailed facts regarding certain aspects of Chesapeake's financial well-being, plaintiffs have not shown that they can plausibly overcome the presumption of prudence. The court cites the most damaging thing to the plaintiffs' case is that the price of Chesapeake stock
"during the class period always retained significant value. As such, the court finds it "implausible that a reasonable fiduciary would have considered himself bound to divest. The lawsuit alleges that the plan's fiduciaries failed to manage and administer the assets with the care, skill, prudence, and diligence of a prudent person; failed to disclose material information to the plan's participants; and engaged in activities inconsistent with, and detrimental to, the plan and its participants. Since April of 2012, Chesapeake has been the subject of a dozen lawsuits, alleging securities fraud, corporate waste and breach of fiduciary duties owed to shareholders.
Chesapeake Energy Corporation Announces Unaudited Consolidated Earnings and Production Results for the Third Quarter and Nine Months Ended September 30, 2013; Announces Impairment Charges for the Third Quarter of 2013; Provides Production and Capital Expenditure Guidance for the Fiscal 2013
Nov 6 13
Chesapeake Energy Corporation announced unaudited consolidated earnings results for the third quarter and nine months ended September 30, 2013. For the quarter, the company reported total revenues of $1,586 million compared to $1,437 million a year ago. Income from operations was $436 million compared to loss from operations of $3,194 million a year ago. Income before income taxes was $387 million compared to loss before income taxes of $3,231 million a year ago. Net income attributable to the company was $202 million compared to net loss attributable to the company $2,012 million a year ago. Net income available to the common stockholders was $156 million or $0.24 per diluted share compared to net loss available to the common stockholders of $2,055 million or $3.19 per diluted share a year ago. Cash provided by operating activities was $1,356 million against $949 million a year ago. Drilling and completion costs on proved and unproved were $1,303 million against $2,353 million a year ago. Acquisition of proved and unproved properties was $266 million against $936 million a year ago. Additions to other property and equipment were $133 million against $605 million a year ago. Adjusted net income available to common stockholders was $282 million compared to $35 million a year ago. Total adjusted net income was $328 million compared to $78 million a year ago. Adjusted earnings per share assuming dilution were $0.43 compared to $0.10 a year ago. EBITDA was $1,158 million compared to LBITDA $2,367 million a year ago. Adjusted EBITDA was $1,325 million compared to $1,024 million a year ago.
For the nine months, the company reported total revenues of $12,965 million compared to $8,778 million a year ago. Income from operations was $1,820 million compared to loss from operations of $2,450 million a year ago. Income before income taxes was $1,561 million compared to loss before income taxes of $1,537 million a year ago. Net income attributable to the company was $840 million compared to net loss attributable to the company of $1,069 million a year ago. Net income available to the common stockholders was $629 million or $0.96 per diluted share compared to net loss available to the common stockholders $1,197 million or $1.86 per diluted share a year ago. Cash provided by operating activities was $3,561 million compared to $1,978 million a year ago. Drilling and completion costs on proved and unproved properties were $4,435 million compared to $7,360 million a year ago. Acquisition of proved and unproved properties was $763 million compared to $2,594 million a year ago. Additions to other property and equipment were $639 million compared to $1,916 million a year ago. Adjusted net income available to common stockholders was $799 million compared to $132 million a year ago. Total adjusted net income was $941 million compared to $260 million a year ago. Adjusted earnings per share assuming dilution were $1.23 compared to $0.35 a year ago. EBITDA was $3,904 million compared to $615 million a year ago. Adjusted EBITDA was $3,883 million compared to $2,662 million a year ago.
For the quarter, the company reported natural gas equivalent production of 372 bcfe compared to 381 bcfe a year ago. Oil production was 11.0 mbbls compared to 9.0 mbbls a year ago. NGL production was 5.4 mbbls compared to 4.1 mbbls a year ago. Natural gas production was 273 bcf compared to 302 bcf a year ago.
For the nine months, the company reported natural gas equivalent production of 1,099.4 bcfe compared to 1,060.5 bcfe a year ago. Oil production was 30.9 mmbbls compared to 22.3 mmbbls a year ago. Natural gas production was 824.1 bcf compared to 848.6 bcf a year ago.
For the quarter, the company reported impairment of fixed assets and other of $85 million compared to $38 million for the same period a year ago.
The company is raising its 2013 oil production outlook increases by 2 million barrels to 40-42 million barrels, a 28-34% increase year over year. The full-year 2013 drilling, completion and leasehold capital expenditure outlook decreases by $300 million to $5.700 - $6.050 billion.
Fort Worth Sues Chesapeake over Royalties in Natural Gas Leases
Oct 22 13
The city of Fort Worth in Texas filed a lawsuit against Chesapeake Energy Corp. in the week of Oct. 14, claiming that the company violated lease agreements and shorted the city millions of dollars in royalties from natural gas leases The report said Fort Worth alleges that the company deducted production costs and used sham contracts with sister companies to keep a bigger portion of the money that was due to the city. The lawsuit also alleges the company of selling gas to its affiliate, Chesapeake Energy Marketing, and deducting related third-party costs from the transactions. The money lost is in the millions Chesapeake allegedly missed the royalty payments at the time when the company was a prominent part of Fort Worth.