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    Chesapeake Energy: Managing Its Way Into Analysts' Good Graces

    Fri, 12/30/2011 - 11:48 EDT - Seeking Alpha
    • CHK
    • CHKM
    • David White

    By David White:Chesapeake Energy’s (CHK) recent deal to sell its Appalachian Midstream Services, LLC, for $865 million to its spin off, Chesapeake Midstream Partners, LP (CHKM), may seem like hand waving to some. However, it is not. Via this deal CHK has transferred debt obligations to an independent subsidiary, and it has gained a greater interest in the subsidiary. The publicly owned subsidiary has then taken on this debt load. This all means that CHK cannot be held liable for it. Plus the near monopoly pipeline business, CHKM, can borrow the money to finance this debt on good terms because it has a steady and defined income stream from its pipeline operations. Banks don’t like the big morass that is CHKComplete Story »

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