Christopher's Feed
May 12, 2012
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Pricey Chesapeake medicine highlights its sickness

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By Christopher Swann and Robert Cyran

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Pricey medicine can help. But in Chesapeake Energy’s case, it shows how sick the company is. The embattled energy firm is borrowing $3 billion at 8.5 percent to repay a loan whose terms might otherwise prevent asset sales. This buys time. But it makes even more obvious Chesapeake’s unsustainable reliance on selling assets to fund its persistent cash drain.

May 4, 2012
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Review: Exxon’s shareholder fetish, good and bad

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Exxon Mobil shareholders may feel a warm glow when reading Steve Coll’s history of their firm. “Private Empire” reveals the company’s single-minded devotion to investors and shows that it has helped the oil giant earn world-beating returns. But other readers will be struck by the downside of this obsession.

May 1, 2012
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Chesapeake board does too little, too late

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By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Chesapeake Energy’s decision to do the right thing shouldn’t impress investors. Its directors are only doing so under duress. Stripping Chief Executive Aubrey McClendon of the chairmanship and ending his personal investments in the firm’s wells are obvious and very belated moves. But McClendon’s deal-making and borrowing have accompanied lagging returns. Shareholders deserve more radical changes in the boardroom.

Many of Chesapeake’s woes may have been exacerbated by allowing McClendon to take a slice of each of the company’s wells. Sure, he shared the costs of drilling but the way he borrowed reduced his personal risk, giving him an incentive to push Chesapeake into a perpetual spending spree. Furthermore, as a risk-taker by nature, McClendon pushed the firm to take on far too much debt – close to half of which resides off the balance sheet. The firm’s monstrous complexity, thanks to dozens of side deals, also looks to have been driven partly by a desire to fund this empire-building.

Apr 26, 2012
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Chesapeake tangle goes far beyond CEO

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By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.Questions about Chesapeake Energy go beyond its chief executive’s dubious dealings. Aubrey McClendon’s personal stakes in oil and gas projects and the extent of related disclosure have put the $12 billion U.S. energy giant on the back foot and tied its board in knots. But investors should also be wary of the company’s monstrous complexity. It has convoluted off-balance sheet liabilities thanks to convoluted partnerships; hedging gains have dwarfed profit since 2006; and cash flow is consistently negative.

Chesapeake, the nation’s second-largest gas producer, has become its own worst enemy. Revelations that McClendon, the company’s flamboyant co-founder, failed to disclose $1.1 billion of personal borrowing to co-invest in wells with the company have raised the specter of serious conflicts of interest and shaken investors. The company originally said its board was “fully” aware of the CEO’s financing transactions, but on Thursday said the directors were only “generally” aware and moved to end the co-investment program – which U.S. regulators are now scrutinizing.

Apr 23, 2012
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Growth gap puts IMF in endless campaign mode

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By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It’s not just America’s electorate that’s at risk of campaign fatigue. At the International Monetary Fund spring meetings held this past week, the BRIC nations – Brazil, Russia, India and China – were in full campaign mode even before the ink has dried on previous increases made to their voting strength at the international lending body.

Apr 12, 2012

Green energy may yet survive poison of cheap gas

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)

By Christopher Swann

NEW YORK, April 12 (Reuters Breakingviews) – The cheapest
natural gas price for a decade is a boon for American
homeowners. At less than $2 per million British thermal units,
though, it looks toxic for its already troubled rival, the solar
energy sector. But gas isn’t close to chocking the life out of
it just yet.

Apr 11, 2012
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Long life may cost world’s governments dear

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By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Underestimate the elderly at your peril is the warning from the International Monetary Fund. Statisticians and economists may be downplaying the lengthening of the human lifespan. If they’re doing so by the same three years as in recent decades, the IMF reckons the cost of pensions and healthcare will be 50 percent higher than estimated. Something, almost certainly the age of retirement, will have to give.

Mar 28, 2012
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Dodger blue outshines gold after $2 bln deal

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By Christopher Swann and Martin Hutchinson
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The $2 billion deal for the Los Angeles Dodgers is a home run for sports owners everywhere. The near five-fold rise in the value of the West Coast baseball team since it last changed hands in 2004 underlines a surge in the value of top sports franchises. Only gold comes close to keeping pace as an investment. Rising television revenue is bringing in more cash. But it’s the swelling ranks of the ultra-rich in search of trophy investments that’s stoking prices.

These new owners usually stem from the ranks of high finance. Last year, Apollo co-founder Joshua Harris bought basketball’s 76ers in Philadelphia while Tom Gores and his buyout firm Platinum Equity snapped up the Detroit Pistons. And only last month, hedge fund manager Steven Cohen bought a 4 percent slug of the Mets.

Mar 28, 2012
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Pricey exploration means dear oil is here to stay

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By Christopher Swann and Kevin Allison

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Gas guzzlers may wait in vain for a return to cheap oil. Big producing nations like Saudi Arabia, which handed out cash to restive citizens during last year’s Arab Spring, need higher oil prices to balance their books. Meanwhile, a three-fold increase in the costs associated with extracting crude over the past decade has made expensive oil more a necessity than a luxury for energy firms, according to a Morningstar study. Put the two trends together and it looks like dear oil is here to stay.

Mar 23, 2012
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Obama doesn’t even name banker to run World Bank

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By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Barack Obama’s pick to head the World Bank comes out of the blue – or, rather, Dartmouth green. Bypassing the usual array of bankers and ambassadors, the president has opted for Jim Yong Kim, a disease-fighting medic who heads the Ivy League college. Kim’s Korean birth and physician’s pedigree may mollify critics of America’s monopoly on the top job. But without the customary grounding in diplomacy or finance, he’s got his work cut out for him.

    • About Christopher

      "I am a columnist at Thomson Reuters focusing on the energy industry and hedge funds. Prior to this I worked at Bloomberg and the Financial Times."
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