When Chesapeake Energy
One seemingly small step was the addition of Lou Simpson to Chesapeake's board of directors. Simpson is the fellow who, until his retirement last year, managed the portfolio at Berkshire Hathaway's
This board appointment was followed by Chesapeake's latest joint venture, this time in the Niobrara with China's CNOOC
Perhaps the most notable step forward in Chesapeake's financial overhaul is today's announced plan to seek buyers for some $5 billion worth of assets. This includes the company's Fayetteville shale position, which is currently a joint venture with BP
BP would be the most likely buyer of the Fayetteville properties, as consolidating these sorts of operations under one roof makes a good amount of sense from a cost and efficiency standpoint. As for Frac Tech, the company has filed for an IPO, so that should make for an easy exit on Chesapeake's part.
Chaparral, Oklahoma's third-largest oil producer, almost came public through a special-purpose acquisition company merger in late 2009, but shareholders rejected the deal. I'm thinking the company would receive a warm welcome in the current ebullient environment for oil-weighted producers like Concho Resources
In short, none of these transactions looks tough to pull off, especially in the current market climate. Chesapeake should be able to shave several billion dollars off its debt load with the after-tax proceeds. That should be great for both its credit rating and its standing with equity investors afraid of Chesapeake's overly leveraged balance sheet.
All signs point to progress being made at improving both the perception and the reality of Chesapeake's financial strength. I'm fully expecting further gains for shareholders from here.
Berkshire Hathaway and Chesapeake Energy are Motley Fool Inside Value choices. Berkshire Hathaway is a Motley Fool Stock Advisor pick. CNOOC is a Motley Fool Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days.
Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profileor follow his articles using Twitter or RSS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool owns shares of Berkshire Hathaway and Denbury Resources. Motley Fool Alpha owns shares of Chesapeake Energy. The Motley Fool has a disclosure policy.