Photo: The Lost Ogle
Chesapeake CEO Aubrey McClendon says the company’s newly announced $3 billion unsecured loan from Goldman Sachs and Jefferies was proof of the company’s market strength. In a conference call this morning to discuss the loan, McClendon said Friday’s sell-off in the wake of company’s 10-Q filing was “so overwrought” that the company decided to expedite disclosing the loan.
The sole hiccup in the firm’s growth plans, he said, has been the delay of a term sale of its Eagle Ford Shale play near San Antonio as a result of falling oil prices.
The Goldman/Jefferies loan is essentially a substitution for that transaction, CFO Dom Dell’Osso said. Chesapeake had access to secured lending but opted for an unsecured loan for greater flexibility, he said.
“We will we have enough financial firepower to complete” asset monetizations to generate cash, McClendon said.
However, BofA/Merrill Lynch analyst Doug Leggate has suggested the Eagle Ford postponement is also the result of the increase in credit defaults on Chesapeake’s bonds that have widened “partly on the back of recent press scrutiny over the CEO.”
And when asked if the company was in danger of reaching credit limits in the financial covenants of its corporate lending revolvler, as was indicated in the 10-Q, Dell’Osso said it was “not clear.”
Shares were up as much as 6.5 per cent this morning to $15.78, though have since pulled back.
Regarding speculation this morning that corporate raider Carl Icahn would jump back into the fray, McClendon said he “wouldn’t be surprised” if he did, but did not confirm any moves.
According to the Twitter feed of Oklahoma’s largest newspaper, at the very beginning of this morning’s call, a voice — though unclear from whom — said, “This is like a funeral.”
A little early audio … “This is like a funeral,” unknown voice says on @Chesapeake call.
— Jay F. Marks (@OKenergybeat) May 14, 2012