Essay Chesapeake Energy

1301 Words Sep 7th, 2014 6 Pages
Andrew Hayes

Advanced Financial Management

Fall 2013

Controversy in Corporate Finance: Chesapeake Energy

Controversy in corporate finance is nothing new; it has been going on well before the term “corporation” was ever used. The power of money has always been an ongoing factor ever since humans started to use it to obtain goods and services. While, controversy over money is nothing new, controversy in corporate finance is much more complex and complicated, often requiring finance managers, accountants, and sometimes the SEC to sort everything out. Sometimes an executive or executive(s) get fired, sometimes they go to prison and sometimes they are given huge amounts of money to leave the company. Most of the time it seems like
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In 2005, the company was the 7th largest producer of natural gas and has since moved into the 2nd spot on that list. The company was even named “Best Managed Oil and Gas Company” in 2007 by Forbes magazine (Forbes, 2007). Chesapeake Energy has made billions by drilling for natural gas in a controversial way. Fracking, or hydraulic fracturing, is the process of extracting natural gas from shale rock layers deep within the earth (what-is-fracking.com). This process has led to numerous controversial articles and documentaries on the impact that it has on the environment and surrounding populations. Rolling Stone’s article, The Big Fracking Bubble: The Scam Behind Aubrey McClendon's Gas Boom, and HBO’s, Gasland, represent two of the many negative media responses to fracking of natural gas and Chesapeake Energy directly. However, according to these sources, Chesapeake has made most of their billions not by selling natural gas, but by flipping land it leases. For Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas. The company is now the largest leaseholder in the United States, owning the drilling rights to some 15 million acres – an area more than twice the size of
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Maryland. McClendon has financed this land grab with junk bonds and complex partnerships and future production deals, creating a highly

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