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Earlier this year, a Reuters investigative reporting team led by Brian Grow documented alleged conflict of interest at Chesapeake Energy, the country’s second-largest natural gas company. Today, Grow and his team wrap up their Chesapeake coverage in a report with new details, including: Chesapeake can be stingy when paying vendors.
As low natural gas prices ate into the company’s cash flow, they write, it appears the company began delaying payments to vendors.
Joseph Allman, JPMorgan’s oil and gas analyst, said that’s pretty unusual:
The impression you get is that Chesapeake slow-walks payments to its vendors. I cover 37 exploration and production companies. I never hear a complaint about other companies slow-walking payments.”
Grow and his team found one vendor who has vowed never to do business with the Oklahoma City-based company again.
In fall of 2011, Otis Eastern, a New York-based contractor that laid pipeline for Chesapeake, said Chesapeake had fallen behind on about $15 million in past bills.
From there, the company sued, accusing Chesapeake of engaging in a “slow payment” strategy “to conserve cash and try to force contractors to settle for less than they’re owed,” according to Reuters.
Chesapeake denied the allegation and said Otis had submitted duplicate bills. Otis eventually received a check for $7.9 million from a former unit of Chesapeake’s oil and gas infrastructure operation, the wire says.