Farewell. The Flying Pig Has Left The Building.

Steve Hynd, August 16, 2012

After four years on the Typepad site, eight years total blogging, Newshoggers is closing it's doors today. We've been coasting the last year or so, with many of us moving on to bigger projects (Hey, Eric!) or simply running out of blogging enthusiasm, and it's time to give the old flying pig a rest.

We've done okay over those eight years, although never being quite PC enough to gain wider acceptance from the partisan "party right or wrong" crowds. We like to think we moved political conversations a little, on the ever-present wish to rush to war with Iran, on the need for a real Left that isn't licking corporatist Dem boots every cycle, on America's foreign misadventures in Afghanistan and Iraq. We like to think we made a small difference while writing under that flying pig banner. We did pretty good for a bunch with no ties to big-party apparatuses or think tanks.

Those eight years of blogging will still exist. Because we're ending this typepad account, we've been archiving the typepad blog here. And the original blogger archive is still here. There will still be new content from the old 'hoggers crew too. Ron writes for The Moderate Voice, I post at The Agonist and Eric Martin's lucid foreign policy thoughts can be read at Democracy Arsenal.

I'd like to thank all our regular commenters, readers and the other bloggers who regularly linked to our posts over the years to agree or disagree. You all made writing for 'hoggers an amazingly fun and stimulating experience.

Thank you very much.

Note: This is an archive copy of Newshoggers. Most of the pictures are gone but the words are all here. There may be some occasional new content, John may do some posts and Ron will cross post some of his contributions to The Moderate Voice so check back.


Sunday, April 22, 2012

It's a Fracking Ponzi Scheme

Commentary By Ron Beasley

Hydraulic Fracking can recover otherwise unrecoverable natural gas but it's expensive.  With natural gas around $2.00 there is simply no way there is any money to be made leading some to refer to it as a ponzi scheme.  Chesapeake Energy is a big player in the fracking business and the chickens may be coming home to roost.

To plug what's been estimated as a $9.2 billion gap between Chesapeake Energy's (CHK, Fortune 500) 2012 capital expenditures and its cash flow, CEO Aubrey McClendon needs to sell assets fast.

Record low natural gas prices have the potential to bankrupt a highly indebted company that was built on $4 natural gas. As natural gas prices hit 10-year lows in recent months, that's put Chesapeake on thin ice.

McClendon has said that Chesapeake plans to sell up to $17 billion in assets by the end of 2013 to fill that gap, but analysts and M&A advisors question whether Chesapeake's assets are worth as much as McClendon claims.

While Chesapeake has valuable assets, it's unlikely to be a takeover target because it also has a heavy debt burden of roughly $10 billion, say analysts.

This has put Chesapeake's CEO Aubrey McClendon in the sites of investors and his 1.1 billion dollar loan from the company didn't help.

We believe the best thing for investors would be to replace the board and/or CEO," Phil Weiss, an analyst at Argus Research, wrote in a research note. Weiss cited not only McClendon's personal loans as reasons for shareholders to push him out, but Chesapeake's "use of financial engineering" and "the relatively low quality of its financial data."


"Since 2001, their capital expenditures have always exceeded their cash flows," said Weiss.

So how do you spell ponzi?

Overall, investors remain a bit befuddled by how Chesapeake accounts for interest expenses and where profits come from.

"They're spending a lot of money and the money they're making seems to be coming from raising more money," said Daniel Yu, a private investor who has been studying the company but does own any shares or short positions on Chesapeake.

Like many of its competitors, Chesapeake must wrestle with a new world of $2 and under natural gas prices. "If gas stays at $2, there's not a single company out there that's prepared for it," said Chandra.

Cross posted at The Moderate Voice


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