From Seeking Alpha
According to
a recent report by
Reuters, the second biggest natural gas producer in the United States, Chesapeake
Energy (CHK),
has started cutting down the royalty payment it makes to the land owners on the
back of depressed natural gas prices. The energy giant is now transferring a
greater share of its marketing costs to Pennsylvania's landowners. The current
move is in line with the company's broader cost cutting efforts. Talisman
Energy (TLM)
is also mulling royalty deductions while Royal Dutch Shell (RDS.A) (RDS.B) has been
reducing the royalty payments to most of its Pennsylvania wells for quite some
time.
Chesapeake
has been eyeing a turnaround under the leadership of its new CEO
Doug Lawler through a management overhaul, asset sale, debt reduction and cost
cutting measures.
Management
Changes
The new chief
has fired at least four high profile employees, including
Steven Dixon (the same Steven Dixon who was on the search committee which got
Doug Lawler), and has brought in Anadarko Petroleum's (APC) Chris Doyle and
Jason Pigott. Lawler is himself a 25-year Anadarko veteran.
More Oil
Chesapeake posted better
than expected results in its previous quarter in which its adjusted EBITDA
increased by 77% from last year to $1.42 billion on the back of a 7% increase
in production. The natural gas giant was able to top the Street's estimates due
to a 44% year-over-year increase in oil production to 116,000 barrels per day.
Nearly all of this increase (93.4% to be precise) was due to … Read More
