Chesapeake Energy Boosts Payout; Sees Regular Increases

(Dow Jones Newswires), June 13, 2011

Chesapeake said Monday it raised its common-stock dividend by 17%, marking the natural-gas company's first increase since June 2008.

"It is our goal to be able to increase our common-stock dividend regularly in the years ahead," said Chief Executive Aubrey K. McClendon.

The company raised its quarterly dividend to 8.75 cents a share from 7.5 cents; the increased payout will cost the company an additional $32.9 million a year.

"From a value perspective, this announcement is negligible though it does paint a positive picture from an optical standpoint," analysts with Canaccord Genuity wrote in a note to clients.

Chesapeake Energy, the second-largest U.S. natural-gas producer after Exxon Mobil Corp. (XOM), joins a long list of companies that have increased payouts to shareholders in recent months using stockpiled cash. Last month, Chesapeake Energy reported that it swung to a first-quarter loss on steep derivatives losses and a 42% drop in revenue as energy prices declined, while production increased from a year ago.

On Friday, shareholders demonstrated dissatisfaction with the company's board and pay practices as about 22% of votes were withheld in McClendon's re-election as chairman, up from only 4% that opposed his election in 2008. In an advisory say-on-pay vote, only 58% said they approved of Chesapeake's executive-compensation plan.

Chesapeake spokesman Jim Gipson said Monday that the dividend hike had "been planned for many months" and wasn't made in response to Friday's shareholder votes.

Shares, which have risen 19% in the last year, recently traded down 77 cents, or 2.63%, at $28.47.

Copyright (c) 2011 Dow Jones & Company, Inc.


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