Thursday, April 11, 2013

Chesapeake's Asset Sale: A Look Inside FTS International

The U.S natural gas giant Chesapeake Energy (CHK) has been offloading its assets to pump up its balance sheet. The company has been struggling due to the weak natural gas pricing environment, a mounting pile of debt -- which stood at $12 billion by the end of last year -- and some serious management problems, coming largely from the former CEO Aubrey McClendon. The business's current goals are to sell assets, cut spending, reduce debt and focus on increasing production of higher margin liquids. However, the WSJ has recently reported that Chesapeake has no plans to sell its much hyped $2 billion stake in FTS International due to a fall in its value, according to one estimate, to less than $1 billion.
McClendon took a brilliant decision to invest in FTS back in 2006 for just $100 million. The company now owns 30% of FTS. However, McClendon failed to cash in on his investment when it was worth significantly more. In late 2011 .... read more