Current Weather
The Spy FM

Chesapeake Energy CEO Aubrey McClendon’s ‘Big Bet’: A Cold Winter

Filed by KOSU News in State Impact.
November 20, 2012

Jeffk / Flickr

Devon Energy and Continental Resources will hedge oil and natural gas in 2013, but not Chesapeake Energy.

The Oklahoma City natural gas giant’s CEO Aubrey McClendon is going all-in on a bold weather wager, reports the Journal Record‘s Sarah Terry-Cobo:

He’s betting that a cold winter will drive up demand for the heating fuel, increasing the price from the decade lows it reached this year.

It’s a risky move, considering Chesapeake has billions in debt, Argus Research analyst Philip Weiss tells the paper.

Chesapeake is also hoping that a slowdown in drilling will reduce supply and raise prices, the Journal reports. During the company’s third-quarter conference call earlier this month, a Wells Fargo analyst asked executives why they weren’t planning at least some hedging to guard against volatile energy prices:

McClendon said their view of the market is driven by information that other people don’t have. Because Chesapeake knows it will cut production and influence the industry, supply will drop and prices will rise.

News of a colder winter is buoying natural gas producers, The Wall Street Journal reports. But analyst Weiss says other factors — increased supply from new pipelines going online and record-high storage — could lead to a surplus and smother prices.

But another analyst, Greg Womack, president of Womack Investment Advisers in Edmond, tells the paper that Chesapeake’s decision makes sense:

Because they are drilling for more oil and natural gas liquids, a higher-priced byproduct, the company is reducing its exposure to gas prices, he said.

Natural gas prices have bottomed out, which means most of the risk is gone, he said.

Powered by WPeMatico

One Response to “Chesapeake Energy CEO Aubrey McClendon’s ‘Big Bet’: A Cold Winter”

  1. ronwagn says:

    Heating as a percentage of natural gas use will be steadily declining. There are many growing uses for natural gas, and related liquids. Electrical generation is number one.

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, air conditioners, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It is used to make many products. It lowers CO2 emissions. Over 2,900 natural gas story links on my blog. An annotated bibliography of live links, updated daily. The big picture of natural gas.
    ronwagners rants . blogspot .com

Leave a Reply

10AM to 11PM On Point

On Point

On Point unites distinct and provocative voices with passionate discussion as it confronts the stories that are at the center of what is important in the world today. Leaving no perspective unchallenged, On Point digs past the surface and into the core of a subject, exposing each of its real world implications.

Listen Live Now!

11AM to 12PM The Story

The Story

The Story with Dick Gordon brings the news home through first-person accounts. The live weekday program is passionate, personal, immediate and relevant to listeners, focusing on the news where it changes our lives, causes us to stop and rethink, inspires us.

View the program guide!

12PM to 1PM Fresh Air

Fresh Air

This one-hour program features Terry Gross' in-depth interviews with prominent cultural and entertainment figures, as well as distinguished experts on current affairs and news.

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