Analysis: Legal woes may spoil Chesapeake’s Michigan sale by Anna Driver and Joshua Schneyer, August 10, 2012, Reuters
Chesapeake Energy’s (CHK.N) planned sale of its oil and gas properties in Michigan likely will bring in less cash for operations or even be stymied completely because of probes into how it got the properties in the first place, some analysts say. And any fines that might result from the investigations could conceivably wipe out Chesapeake’s investment in the state. … The company is racing to sell assets to fund its operations. … Now, liability risk — as well as potentially poor drilling results — may have slashed the value of the Michigan leases. Some analysts say the leases may be hard to sell at any price. … On July 25, Encana CEO Randy Eresman, addressing analyst questions about the company’s own probe into allegations of collusion with Chesapeake, said Encana would no longer include its Michigan assets in a major asset sale package. … Mike Breard, analyst at Hodges Capital Management in Dallas, believes that Chesapeake could easily sell its Michigan acreage but its price would likely be low. “I don’t think they’d get much for it,” Breard said. “There are a lot of properties on the market right now.”