Aubrey McClendon Selling Off His Prized Wine?

Is Aubrey McClendon
Selling Off His Prized Wine?

Even though the market for collectible wines is slumping, Sotheby’s recently announced it will sell off 9,000 bottles in two auctions in March and April. The sale is titled “Classic Cellar from a Great American Collector.”

It is large by any standard. But what really caught my eye was the statement in Sotheby’s news release that the sale is a “single owner collection,” meaning that it is all coming from one seller’s cellar.

Who is this “Great American Collector?” And why would he or she try to unload 9,000 bottles at a time when wine prices are collapsing?

Sotheby’s won’t say. Jamie Ritchie, head of Sotheby’s North American wine department, was uncharacteristically silent when I asked about the seller. “Sorry, I just can’t comment,” he said.

According to three people familiar with the auction, the seller is Aubrey McClendon, chief executive of Chesapeake Energy. These people say at least one other broker kicked the tires on Mr. McClendon’s collection before it went to Sotheby’s.

McClendon is one of the top wine collectors in the country, known for his love of Burgundy and Bordeaux. He also is known for his cash crunch. Last fall, he was forced to sell 94% of his stake in Chesapeake to pay back margin loans. Mr. McClendon’s stake once was valued at more than $2 billion. So it wouldn’t be surprising if he were to want to liquidate some of his, er, liquid assets.

Mr. McClendon, through a spokesman, didn’t respond to a request for comment.

Sotheby’s says it expects the sale to fetch at least $5 million–not much for a former billionaire, but these days every little million helps.

It also remains to be seen whether the auction will be a success. An article in the San Francisco Chronicle quotes experts saying that lot prices for wines at auction have fallen as much as 30% since the summer. Some bottles, like 1986 Leoville-Las-Cases, averaged around $360 a bottle in the past two years but are now trading closer to $200. (For those interested in current wine prices, Steve Bachmann of Vinfolio has an informative blog analyzing auctions, valuations and advice for sellers and buyers).

The McClendon collection may fare better than others. It features more than 1,500 bottles of Domaine de la Romanee Conti–a favorite Chateaux of the nouveaux that has held up relatively well in price. The collection also has plenty of Mouton Rothschild, Margaux and Lafite, also blue-chip names.

What is more, Sotheby’s is hedging its bets by splitting the auction in two, with half being offered in New York and half in Hong Kong. While U.S. collectors are pulling back, Hong Kong collectors have proven more resilient, with recent auctions there posting healthy results. (Sotheby’s is shipping 4,000 or more of the bottles in temperature-controlled containers to Hong Kong, something it has never done before).

Mr. McClendon may be the biggest wine seller so far in the financial crisis, but he most certainly won’t be the last. With many collectors running light on cash, I suspect more and more will turn to their wine cellars in search of real liquidity.

Devon Energy announces dividend

Look like Devon
is doing GREAT !

Unlike Aubrey
LOL

Devon Energy Corporation today announced that its board of directors declared a quarterly cash dividend on Devon's common stock for the fourth quarter of 2008.

The dividend is payable on Dec. 31 at a rate of $0.16 per share based on a record date of Dec. 15.

Nov. 5, Oklahoma City’s Devon Energy Corporation reported 2008 third-quarter results. For the quarter that ended Sept. 30, the energy company’s net earnings totaled $2.6 billion or $5.92 per common share ($5.87 per diluted share), a 256-percent increase versus the 2007 third quarter.

Compared to the 2006 third-quarter, Devon’s 2007 third-quarter net earnings increased $30 million from $705 million to $735 million and their common share jumped from $1.59 to $1.65 ($1.57 to $1.63 per common diluted share). The increase from $735 million to $2.6 billion ($1.65 to $5.92 per common share) is the company’s highest ever quarterly earnings, officials said.

Chesapeake Energy to sell $1.8B stock for cash

In the Dark of Night, Chesapeake Energy Corp. is seeking to raise up to $1.8 billion through common stock sales in an effort to fund its activities.

In two filings with the Securities and Exchange Commission late Wednesday, the company said it will issue shares worth as much as $1 billion before fees and also registered 50 million shares worth at most $791 million for potential sale.

Chesapeake said it will use proceeds from the $1 billion offering for general corporate purposes, and other capital expenditures.

The move would dilute holdings of shareholders, who already suffered through a substantial decline in Chesapeake's stock price this year. Shares closed at $20.24 on Wednesday, off 73 percent from the stock's $74 52-week high set this summer.

But the company said cash flow, borrowings and cash on hand have not been enough to pay for capital expenditures.

Chesapeake has used up the remaining financing available under its $3.5 billion bank credit facility and only $251 million is left of another $460 million credit line. Credit markets remain tight with financial institutions under duress.

Chesapeake has hedged about 73 percent of its remaining natural gas and oil reserves in 2008 and 67 percent of expected production in 2009 at average prices of $9.09 and $8.65 per thousand cubic feet equivalent (Mcfe), respectively. In Nymex trading Thursday, natural gas for January delivery slid 9.7 cents to $6.781 per 1,000 cubic feet.

The company has cut back on its capital expenditure budget through 2010 in light of global economic distress and concerns about oversupply of natural gas in the U.S. market.

In September, BP PLC's U.S. arm said it plans to buy a 25 percent stake in Chesapeake's Fayetteville Shale assets in Arkansas for $1.9 billion. A month earlier, BP said it had bought similar Chesapeake assets in Oklahoma for $1.7 billion.

Earlier this month, Chesapeake sold even more natural gas assets to Norwegian energy company StatoilHydro for $3.38 billion.