Wednesday, June 6, 2012

As Chesapeake Contemplates Dumping Pipeline for $4 Billion, McClendon Lawyers Up With ex-SEC Hard Guy (CHK; CHKM)

 CHK is trading up 3.83% at $17.65 while Chesapeake Midstream, up 2.2% yesterday it tacking on another 5.38% in early pre-market action.
First up, Bloomberg via the San Francisco Chronicle:
Chesapeake Said in Talks to Sell Pipelines in $4 Billion Deal
Chesapeake Energy Corp. is in advanced talks to sell pipelines to Global Infrastructure Partners for more than $4 billion, said two people with knowledge of the matter.
The Oklahoma-City based energy explorer, facing a $22 billion cash-flow shortfall after natural-gas prices touched a decade low is discussing selling its entire stake in Chesapeake Midstream Partners LP and other pipeline assets, said the people, who spoke on condition of anonymity because the talks are private. The negotiations may lead to a deal within days and could also fall apart, the people said.

Chesapeake Midstream operates pipeline networks in Texas, Louisiana, Pennsylvania and other gas-producing states, and had 3,953 miles (6,360 kilometers) of pipe as of March 31. The partnership gets about 75 percent of its revenue from Chesapeake Energy, with the remainder from energy producers such as France's Total SA and Norwegian oil company Statoil ASA. Chesapeake Energy also owned 1,950 miles of pipelines separate from the Midstream partnership as of Dec. 31....MORE
And from Reuters:
Exclusive: Chesapeake CEO McClendon hires ex-SEC lawyer
The embattled chief executive of Chesapeake Energy Corp. has hired a top defense lawyer to represent him in a securities regulatory inquiry into $1.3 billion in personal loans, three people familiar with the situation said.
CEO Aubrey McClendon has retained Marvin Pickholz, a partner with Duane Morris and a former assistant director of enforcement with the U.S. Securities and Exchange Commission. He is counseling McClendon in connection with the SEC inquiry into loans he obtained from an investment firm doing business with the natural gas company.

The SEC is looking into whether the loans posed a conflict of interest or should have been disclosed to shareholders.

The loans from investment funds managed by EIG Global Energy Partners enabled McClendon to participate in a special perk which awarded him as much as a 2.5 percent interest in every well drilled by Oklahoma City-based Chesapeake each year.
McClendon used the well stakes as collateral for the loans.

The SEC launched its inquiry soon after April 18, when Reuters reported on the loans to McClendon, who co-founded Chesapeake more than two decades ago.

Pickholz, an aggressive and tough-talking attorney, represented a key prosecution witness in the trial of homemaking doyenne Martha Stewart on obstruction of justice charges stemming from an insider trading investigation. He is also a frequent legal commentator on television news programs....MORE