Current Weather
The Spy FM

Why Chevron Might Want to Buy Chesapeake Energy

Filed by KOSU News in State Impact.
August 30, 2012

Justin Sullivan / Getty Images

California energy giant Chevron is sitting atop a $21 billion cash pile, and as The Wall Street Journal reports, investors are wondering what’s behind the hoarding.

It could be one of two things, Daniel Gilbert writes. Perhaps Chevron is “bracing for a spike in costs,” but maybe they’ll use the savings to snatch up a smaller rival — like Oklahoma City’s Chesapeake Energy.

Cash-strapped Chesapeake Energy Corp., the nation’s second-largest gas producer after Exxon, has been discussed as an acquisition target since its largest shareholders—who now effectively control the board—urged its management in May to consider a sale at a rich enough premium.

And Chesapeake is, well, cheap. And many say the Oklahoma City company’s $12.7 billion market-value is a steal considering its extensive oil and natural gas land holdings.

But some experts say its complicated web of financings—and the discount on its stock price, which could hinder agreement on a deal value—make an acquisition less likely, the WSJ reports.

Other analysts say Chevron is more likely to spend less to acquire a much smaller gas company, “similar to its $3.2 billion purchase of Atlas Energy in 2010.”

Deutsche Bank recently noted that Hess Corp., HES –0.40% with a market capitalization of $17 billion, could be an attractive target for Chevron because of its operations in areas like North Dakota’s Bakken fields.

Neither Chesapeake nor Hess would comment, the WSJ reports.

Powered by WPeMatico

Leave a Reply

9PM to 10PM The Spy

The Spy

An eclectic mix of the Spy's library of more than 10,000 songs curated by Ferris O'Brien.

Listen Live Now!

10PM to 11PM The Blank Generation

The Blank Generation

Our punk show, The Blank Generation, is hosted by Katie Jones and Chad Hunnicutt. Katie has been attending punks shows for more than half her life. Chad is a member of local band, The Muck Savages.

View the program guide!

11PM to 5AM The Spy

The Spy

An eclectic mix of the Spy's library of more than 10,000 songs curated by Ferris O'Brien.

View the program guide!

Upcoming Events in your area (Submit your event today!)

Streaming audio and podcasts

Stream KOSU on your smartphone

Phone Streaming

SmartPhone listening options on this page are intended for many iPhones, Blackberries, etc. with low-cost software applications available to listen to our full-time web streams, both News on KOSU-1 and Classical on KOSU-2.

Learn more about our complete range of streaming services

We're perfecting the patient experience - Stillwater Medical Center