Monday, August 13, 2012

Pre market news: Chesapeake Energy Corporation (NYSE:CHK)

Federal investigators are probing whether Chesapeake Energy Corporation (NYSE:CHK) violated antitrust laws when it purchased leases to drilling rights in Michigan, the company said in a SEC filing Thursday.
Chesapeake said it had been subpoenaed by the antitrust investigators belonging to the U.S. Department of Justice to produce documents related to the purchase.

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The Atlanta-based natural gas producer has to submit the documents for review by a grand jury in the Western District of Michigan, it said in the filing. It added that it was co-operating with the antitrust authorities in their investigations.

In the filing it also said it had received, "demands for documents and information from state governmental agencies in connection with other investigations relating to the company's purchase and lease of oil and gas rights."   The company's board is also conducting its own investigations into the matter, it said.
Reuters had reported about a possible collusion between Chesapeake and Canada's Encana Corp to suppress land lease prices in the Michigan area. The subpoena to the company was served on June 29, four days after that news report.

Reuters had cited emails between the executives of the two companies conspiring not to bid against each other for the drilling rights.

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Chesapeake's shares have fallen 32 percent so far this year amidst concerns over its business strategy, executive perks and business decisions that have left i with a debt worth $14.3 billion. The company is also going through a severe cash crunch.

Chesapeake shares fell more than 3 percent to $19.68 on Friday and now down over 1% in the pre-market session.

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