Editor’s Note: Related Tickers: Chesapeake Energy Corporation (NYSE:CHK), SandRidge Energy Inc. (NYSE:SD)
United States: When A Redemption Period Is Not Really A “Redemption” Period: A Red Flag Courtesy Of Chesapeake Energy (Mondaq News Alerts)
In May 2013, the Southern District of New York decided Chesapeake Energy Corporation (NYSE:CHK) v. Bank of New York Mellon Trust Co., N.A.1 The decision, which found that an early redemption period in an indenture referred to the deadline to give notice and not the deadline to actually redeem the bonds, is notable because it raises possible red flags about the industry-standard language used for many trust indenture bond redemption clauses. Chesapeake Energy Corp. (“Chesapeake”) decided to redeem notes earlier than their stated maturity date. Chesapeake Energy Corporation (NYSE:CHK) sent notice of its plan to the trustee, The Bank of New York Mellon Trust Company, N.A. (“BNY Mellon”), on the last day that their indenture provided for an Early Redemption Period, which allowed for early redemption of the bonds.
Investors in Chesapeake Energy Corporation (NYSE:CHK) saw new options become available today, for the September 21st expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 89 days until expiration the newly available contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. The put contract at the $19.00 strike price has a current bid of $1.34. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $19.00, but will also collect the premium, putting the cost basis of the shares at $17.66 (before broker commissions).
It’s a big fracking world out there, and people are getting angry (Globe and Mail)
Carrollton, a village of 3,000 in the Appalachian hills of eastern Ohio, has become a battleground in an energy revolution that has global consequences. Chesapeake Energy Corporation (NYSE:CHK) is drilling a nearby exploration well more than 1,800 metres deep into the Utica shale formation in search of commercial quantities of natural gas. In scenes similar to ones played out over recent years in neighbouring Pennsylvania and New York, local residents and statewide activists in Ohio are raising alarms about the invasion of oil companies eager to drill through bedrock and use hydraulic fracturing – fracking – to test the newest prospects in the shale-gas boom that has dramatically transformed North America’s energy picture.
A New Era Dawns for SandRidge Energy (DailyFinance)
It’s been bad year to be a highly paid CEO of an underperforming energy company. This past January we found out that Chesapeake Energy Corporation (NYSE:CHK) co-founder Aubrey McClendon was “retiring” after philosophical differences with his board. Now, SandRidge Energy Inc. (NYSE:SD) CEO Tom Ward, also a co-founder of Chesapeake Energy, is being sent packing. Unfortunately, for Ward, there won’t be any cake served at a retirement party, for he’s being let go effective immediately. It could have been worse: The company, which had hired an independent investigation firm to look into allegations of improper related-party transactions, determined that Ward’s actions didn’t merit him being terminated with cause. Despite that finding, this isn’t the most graceful exit for the company’s founder.
