Chesapeake Energy (NYSE:CHK) to Sell Pipelines to GIP for $4.08 Billion

Atlanta, GA 6/8/12 (StreetBeat) – Chesapeake Energy Corp. (NYSE:CHK), the U.S. energy explorer facing a $22 billion cash shortfall because of falling natural-gas prices, agreed to sell its pipeline interests to Global Infrastructure Partners for $4.08 billion.

The transaction will allow Chesapeake to cut its previously-budgeted capital expenditure plan by about $3 billion, the company said in a statement today.

The divestitures include Chesapeake's interest in Chesapeake Midstream Partners LP. (NYSE:CHKM)

Buying Chesapeake's pipeline partnership assets and other pipelines will add to Global Infrastructure's more than $10 billion of investments in pipelines, power generation, ports and airports. Chesapeake Energy Chief Executive Officer Aubrey McClendon is seeking buyers for assets from Appalachia to the Rocky Mountains to plug a cash-flow shortfall that James Sullivan, an analyst with Alembic Global Advisors, has estimated may exceed $22 billion by the end of next year.

Chesapeake Midstream operates pipeline networks in Texas, Louisiana, Pennsylvania and other gas-producing states, and had 3,953 miles (6,360 kilometers) of pipelines 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 (FP) and Norwegian oil company Statoil ASA. (STL) Chesapeake Energy also owned 1,950 miles of pipelines separate from the Midstream partnership as of Dec. 31.

Chesapeake Midstream will be a "cash machine" for Global Infrastructure because it's structured to pay an increasing dividend as profits increase, David Askew, an analyst at RBC Capital Markets Corp. in Austin, Texas said before the announcement.

The acquisition follows Global Infrastructure's purchase of Edinburgh Airport for 807.2 million pounds ($1.25 billion) in April. Global Infrastructure's investments in pipelines, water, waste and transport have annual revenue of more than $4 billion and employ 12,000 people, according to its website.

Hedging Contracts

McClendon exited gas hedging contracts held by Chesapeake Energy in late 2011, leaving the company exposed when milder- than-normal weather across the northern U.S. slashed demand for the furnace fuel and prices plunged. Alembic Global said in a May 17 note that the company may be forced to curtail spending on drilling if McClendon fails to sell enough assets.

Selling pipelines was one of the measures that billionaire investor Carl Icahn said he would push for, along with other asset sales and reduced capital spending, in a June 4 filing with the Securities & Exchange Commission. Icahn's (Nasdaq:IEP) 7.6 percent stake won him the right to appoint one of four new directors who will replace almost half the board by June 22 under an overhaul announced earlier this week.

Chesapeake Midstream slipped 0.8 percent to $25.07 in New York on June 7, taking its decline for the year to 14 percent. Chesapeake Energy lost 2 percent yesterday, for a 20 percent slide this year.

Chesapeake held a 45.2 percent limited partner interest in the midstream partnership as of Dec. 31, according to a regulatory filing. It also jointly owns Chesapeake Midstream's general partner with Global Infrastructure.

More Efficient

McClendon, who sits on the boards of both the Midstream pipeline company and its controlling partner, has been under a cloud since a series of media reports in March and April about personal loans he obtained using minority stakes in company- owned wells that he'd been allowed to gather for his private portfolio.

Chesapeake Energy announced May 1 that he will step down as chairman of the parent company when a replacement is chosen.

Shedding the pipelines is a retreat from McClendon's vision of so-called vertical integration, which involves owning oil and gas fields as well as ancillary assets such as gas-processing plants, drilling rigs and hydraulic-fracturing equipment.

Chesapeake Energy said in its most recent annual report that owning pipelines makes the company more efficient at managing costs involved with gathering and processing gas.

Chesapeake Energy started a pipeline venture with Global Infrastructure in 2009 when the infrastructure investment fund, led by Adebayo Ogunlesi, bought a stake in some Chesapeake pipelines. They took Chesapeake Midstream public the following year.

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Monday’s top gaining and declining stocks

Orlando, FL 5/14/12 (StreetBeat) -- The following stocks were on the move in the U.S. premarket:

Gainers

Avon Products Inc. (NYSE: AVP +5.10%) shares rose 6% on Monday. The company said its board will consider Coty Inc.’s revised acquisition bid. The board, working in conjunction with management and financial and legal advisers, expects to render a decision “within a week,” Avon said Sunday.

Chesapeake Energy Corp. (NYSE: CHK +5.67%) shares rallied more than 9% as the most actively traded stock ahead of Wall Street’s opening bell. The Wall Street Journal reported that activist investor Carl Icahn is looking to buy a significant stake in the embattled company, citing people familiar with the matter.

Ventrus Biosciences Inc. (Nasdaq: VTUS +18.98%) shares jumped nearly 10%. The company said Phase III trials of its Diltiazem drug showed significant improvements over placebos.

Decliners

Shares of Simon Property Group Inc. (NYSE: SPG -0.46%) fell 6%.

InterOil Corp. shares (NYSE: IOC -17.74%) fell 5% in preopen trading. Dow Jones Newswires reported on Monday that a Papua New Guinea joint venture it is heading will be cancelled by the government after delays and design changes.

Baytex Energy Corp. (NYSE: BTE -3.46%) shares fell 6.3%. The pullback came in the wake of a company announcement that Tony Marino was leaving as chief executive. Analysts at TD Bank said the news came as a surprise and was unexpected.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

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Chesapeake (NYSE: CHK) CEO took out $1.1 billion in unreported loans

Northern, WI 4/18/12 (StreetBeat) -- Aubrey McClendon, the CEO of Chesapeake Energy Corp (NYSE: CHK), has borrowed as much as $1.1 billion over the last three years against his stake in thousands of company wells - a move that analysts, academics and attorneys who reviewed loan documents say raises the potential for conflicts of interest.

The loans, which haven't been previously detailed to shareholders, are used to fund McClendon's operating costs for an unusual corporate perk that offers him a chance to invest in a 2.5 percent interest in every well the company drills. McClendon in turn is using the 2.5 percent stakes as collateral on those same loans, documents filed in five states show.

The size and nature of the loans raise questions about whether McClendon's personal financial deals could compromise his fiduciary duty to Chesapeake investors, experts who reviewed the documents told Reuters.

Both McClendon and Chesapeake said the loans don't pose any conflict of interest. And they are private transactions that the company has no responsibility to disclose or to vet, Chesapeake said. "There are no covenants or obligations in my loan documents or mortgages that bind Chesapeake in any way," McClendon wrote in an email to Reuters.

The revelation comes as McClendon is scrambling to help Chesapeake weather a multi-billion-dollar cash shortfall amid a plunge in natural gas prices.

McClendon's biggest personal lender, EIG Global Energy Partners, has also been a big financier for Chesapeake. EIG and other investors have helped Chesapeake raise more than $2 billion through the sale of preferred shares that provide very favorable terms to the buyers.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

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BioLargo (OTCBB: BLGO) Offers a Solution to Water Pollution in Oil and Gas Industry

Orlando, FL 4/17/12 (StreetBeat) -- Contaminated water is a growing concern across North America, especially as related to the oil and gas industry. A December 2011 article posted by staff at the Natural Resources Defense Council highlighted more than 30 reported incidents across 13 U.S. states of drinking water contamination with hydraulic fracturing as the suspected cause. The author emphasized that those listed were only a sampling of reported cases “where a homeowner had enough detailed knowledge to know that a nearby well was recently fractured and specifically included that information in reports.” Cases were reported at wells owned by large publicly-traded companies such as Southwestern Energy Corp. (NYSE: SWN), Ballard Petroleum (now Encana Corporation (NYSE: ECA)), Chesapeake Energy Corp (NYSE: CHK), Devon Energy Corp. (NYSE: DVN) and Range Resources Corp. (NYSE: RRC).

Movie goers that have seen “A Civil Action,” starring John Travolta and Julia Roberts, can imagine that type of lawsuits that are ongoing in those communities claiming damages because hydraulic fracturing has polluted their water. Albeit that movie was about dumping toxic waste, it has a similar undertone as big business is disputing the claims of the residents. Concerned investors and citizens are encouraged to perform their due diligence on pollution and water contamination from hydraulic fracturing and other common practices in the oil and gas industry to better understand the magnitude of the problem.

There is a company that is establishing a growing presence with its ability to offer a solution to the malevolent hydraulic fracturing business. BioLargo, Inc. (OTCBB: BLGO), a creator of patented iodine technologies, has developed CupriDyne™-SAP, a proprietary technology uniquely suited to detoxify water in a variety of applications, including the oil and gas industry. Using Iodine in a stable molecular form, CupriDyne™-SAP is able to eradicate bacteria and sop-up heavy metals and radioactive elements. Iodine, one of nature’s most powerful cleaners, is simply combined with the somewhat ineffective filtration processes that are presently used. The reaction products are harvested; leaving clean water as the end product and eliminating the threats that watersheds, wells and groundwater in the area currently face.

The possibilities for the BioLargo technology are tremendous in the energy sector. Enormous amounts of water are used and/or generated (saline water is extracted from the ground with the oil and gas) every day in collecting oil and gas reserves. The ratio of produced water to oil is roughly 10 barrels of produced water per 1 barrel of oil. According to the American Petroleum Institute, more than 18 billion barrels of waste fluids from oil and gas production are generated annually in the United States. That’s more than two million barrels of tainted water every hour…and that’s just in the U.S.

Energy is an integral part of the Canadian economy. In 2009, the $80.2 billion energy sector represented 6.7% of Canada’s gross domestic product. Canada’s oil sands industry has been put under a microscope in recent years because of its contaminative nature. The oil sands of Northern Alberta are the second largest oil deposits in the world, behind only Saudi Arabia. Because of the way that the oil is trapped in the sands, it takes special processes – and plenty of water – to extract the oil and make it fluid enough to travel through pipelines. In general, three to four barrels of water are used/contaminated for each barrel of oil produced from tar sands.

In June of 2011, the Canadian Association of Petroleum Producers said, “Oil sands growth and new production from existing conventional oil reserves will drive Canadian crude oil production to about 4.7 million barrels per day by 2025.” That means that billions of barrels of polluted water will be generated in the process each year as well.

So what happens with the contaminated water? Theoretically, it is should be processed to ensure that it is non-toxic. According to the U.S. EPA, “Produced waters contain levels of radium and its decay products that are concentrated, but the concentrations vary from site to site. In general, produced waters are re-injected into deep wells or are discharged into non-potable coastal waters.”

Water contamination in the oil and gas industry is a growing concern. As such, people, companies and countries are starting to hone-in on what BioLargo has to offer. That’s why investors should be taking note of its corporate happenings. The company has been appointed as a founding member of a Canada’s Natural Sciences and Engineering Research Council (NSERC) “Industrial Research Chair in Oil Sands Tailings Water Treatment” formed to solve the contaminated water and tailing ponds problems associated with the oil sands industry, leaving the company in a prime position for growth.

“The core technology is well established and with the addition of our world-class team members over the past year, it is now a great time for BioLargo to refine, focus and execute to help solve serious problems that face industry and our world,” said Dennis Calvert, President and CEO of BioLargo in a recent company statement.

The bottom line is that green energy initiatives (i.e. solar, wind) are fantastic in theory and gaining momentum in frequency of use, but still nascent in energy’s big picture. Oil and gas are still going to be the primary sources of energy for the foreseeable future. There are plenty of reserves in North America to accommodate less reliance on foreign oil, but the industry has to transition its processes into having less of an impact on the environment and population. BioLargo holds a key to that evolution.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

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