NEW YORK — Shares of Chesapeake Energy Corp. fell about 2 percent early Friday after a published report said the company didn't tell investors about $1.4 billion in liabilities.
The Wall Street Journal reported that Chesapeake raised $6.4 billion since 2007 by signing oil and gas production deals with a number of banks. Those deals are essentially debts that Chesapeake must repay with oil and natural gas. The Journal said that Chesapeake didn't disclose to investors the full cost of meeting those obligations over the next 10 years.
Chesapeake spokesman Michael Kehs disagreed. He said the company included a portion of those liabilities in a May 1 regulatory filing as part of its operating costs for 2012. The company didn't break out the liabilities as a separate item. Instead, Chesapeake added them to total operating costs that it estimated at between 95 cents and $1.05 per share.
Kehs said the rest of the $1.4 billion is reflected in an estimate of future net revenue from Chesapeake's oil and natural gas reserves, which the company put at $48 billion in a Feb. 29 regulatory filing.
The Journal report is the latest in a string of recent headlines that have called the company's leadership and oversight into question. During the past few weeks, other news reports revealed that CEO Aubrey McClendon had taken out personal loans from a company while that company was planning to buy Chesapeake assets. Reuters also reported that McClendon ran a private hedge fund that made bets on the price of oil and natural gas – commodities that Chesapeake produces.
McClendon has since been stripped of his board chairmanship. Chesapeake is also ending a program that allows McClendon to make personal investments in the company's wells.
Shares have dropped 33 percent since peaking this year on March 20. Low natural gas prices and reports of McClendon's financial dealings helped push them lower. They fell 32 cents, or 1.9 percent, to $16.86 in early trading.
Bob Brackett, a senior analyst at Bernstein Research, defended the company's handling of the liabilities tied to the production deals. Its operating expenses are well understood by Wall Street analysts, Brackett said in a research note.
"We do not believe these quoted amounts were `previously unreported,' and, in fact, we already include an estimate of the costs in our models."