Chesapeake Energy Is A Great Retirement Fund Stock [View article]
"Because it has all of the above features, it is not a stock that is likely to go to zero or near zero in a downturn. "
Wait what? Current liabilities are much higher than current assets. Income from operations of only ~1.5B a year. Cashflow from ops roughly of only $2B a year. Cashflow will be simply destroyed in a downturn. Losses will mount quickly due to minimal hedging. Between Q1 and Q2 they actually significantly reduced their 2013 hedging. They are already at $5.1B in D&C costs for the first six months on cash from operations of $1B in the same period. They are 100% completely dependent on asset sales which isn't going to fly in a downturn.
The above is enough to sink them in a decent length downturn even without talking about their debt. They have tons of debt with a significant amount due in 2013. They are responsible for $700 million of interest due each year not counting the recent loan shark rates on the $4B loan. They sport a convoluted capital structure with continual dilution.
They just keep digging the hole deeper. I've got an article coming out about their cash flow gap and extravagant capex program whenever SA approves it.
Even with asset sales I'm sure they will still be cashflow negative. Their planned capex for 2012 is 11.6 to 13.1B. Cash from ops is a piddly 1.1B. Asset monetizations aren't going to cover that balance.
They just took $3B in senior FIVE year notes at a floor of 8.5% to refinance a revolver that is at the max fed funds +1.75%. In February 2012 they were able to place seven year notes for 6.775%. That should tell you something about the deterioration of their credit worthiness and what lenders think.
Any jobs analysis that does not include population growth is simply not complete. The US adds 175k people to the population per month. http://1.usa.gov/w29v6u
175,000 * 12 * 4 = 8,400,000 people added since Jan 2009.
We aren't even in the ballpark on jobs. Government policies are not working and the jobs picture is much much worse than the headline numbers would like you to believe.
Almost No One Makes Money From The Stock Market Alone [View article]
Plot a chart of total systemic debt vs the stock market. You'll see why the stock market has been up since the 80s. That can't and won't continue. Exponential growth will always unsustainable. Timing is the only thing we are debating.
Every time it crashes and tries to correct, another bubble is blown to try to keep the markets up. Internet, housing, and now govt deficit spending/central bank intervention? The last (at least) 15 years in the stock market have been fake. Most recently, this whole rally we have had since 2009 started when banks were allowed to lie about assets on their balance sheets. Recently, its internet bubble 2.0 with a bunch of these companies. AMZN at, what, a 300 p/e? WDAY jumping to an 8.8B valuation on its IPO day? $8.8B for a company that has never made a profit and actually had negative book value before the IPO? It's insanity and it can't last.
Given the size of the bubble that has been blown this time and the fact that the market is ~9% off of its all time nominal highs, I think I'll watch from the sidelines and only do some speculation with money I can lose.
Facebook Investors: Your Nightmare Has Just Begun [View article]
More allegations have arisen that FB is possibly using bots to click on ads.
Question for the SA community:
Does anyone themselves click on ads on FB or GOOG? Or know anyone who does? I personally do not know a single person who does this other than by accident.
"Our current budget for 2012 includes drilling and completion capital expenditures, net of drilling and completion carries, of $7.5 – $8.0 billion and net undeveloped leasehold expenditures of $1.6 billion."
"During the Current Quarter, our capital expenditures related to our midstream, oilfield services and other assets were approximately $770 million. Our projected 2012 and 2013 capital expenditures are $2.5 –$3.5 billion and $2.0 – $2.5 billion, RESPECTIVELY"
LOW END RANGE: $7.5B D&C + $1.6B LAND + $2.5B MOO = $11.6B CAPEX
HIGH END RANGE: $8.0B D&C + $1.6B LAND + $3.5B MOO = $13.1B CAPEX
I think they forgot to include this paragraph in the S-1:
You're buying (essentially non-voting) stock in an IPO by a company who has no need for more capital (4B in cash/marketables & no debt) & is only offering stock so we can dump this trash on you before growth flatlines and P/E multiples drop.
Will Chesapeake Energy's Actions To Support Natural Gas Prices Help? [View article]
HBP acreage is no problem to hold. We aren't talking about HBP acreage. We are talking about undrilled acreage. You have to DRILL. Even on 640s you are talking a massive number of wells to hold the amounts of acreage we are talking here. That is capital intensive.
Look at their balance sheet. 16 billion in unevaluated properties. That's well....larger than their market cap. Even if you are very generous and give that a $5,000/acre number, that's 3.2MM acres. There's a reason why CHK has been approaching COP level capital spending. It's either ramp up capital spending or get behind and start to lose leases. And in the process they've managed to drive down gas prices, essentially forcing their hand as we saw from their press release.
I think I'd be worried about an oil & gas producer that is massively cash flow negative without hedges and the proceeds from land flipping, has basically no cash on hand, has $3B in accounts receivable, has $11B in long term debt w/ interest payments of over $500MM a year, and is still spending a large amount of capital in dry gas areas.
A WHOPPING reduction of $284 million. A 2.4% reduction. The new deal that closed at the end of 2011, is going to net them a lump sum of $610 million that they have said will go towards the revolver. Still at over $11B in long term debt.
How is a company desperate for cash going to pay down debt? They've already ended two of their drilling carries early at a discount in exchange for a lump sum payment. They've only got $100 million in cash and accounts payable of almost $3 billion!
They have essentially no hedges for 2012. They have interest payments due to the tune of over $500 million a year (most of which they are capitalizing). They have already sold out chunks in most of their plays. The drilling carries are starting to run out. Only ~$3B total remaining including the new Total JV. $500 million of that is in the Marcellus. Their "oil" production is misleading asa good majority of it is NGLs. Realized prices for "oil" are around $65 dollars.
CHK is basically a bet on natural gas prices bouncing back sharply AND rapidly. 41% of their Q3 revenues were from derivatives. Those are gone now. What's going to happen to revenues without the derivatives and in a declining price environment?
Finally - Reality Is About To Hit Amazon Shareholders [View article]
Sorry but retail isn't buying 100 share blocks of AMZN at $290/share. $29,000 a pop? Okkkkkk. 100 share blocks to me sounds like computers doing the dirty work.
Higher Click-Through Rates On Facebook Ads Drive Advertisers And Revenue To The Social Network [View article]
How many of those clickthroughs are accidental? I have no data on it (would like to see some), but I would say a large majority of them. They put ads in inconvenient spots to get folks to unintentionally click on them. Shady.
People aren't on FB to click on ads. They are on there to check out pictures or see what their friends are doing. How many people do you know that click on ads at FB or GOOG? GOOG is at least a little bit more believable as you can actually be searching for something to buy and see a link at the top of the search page to click on. In the end, I'm still convinced most of the clicks on both of these sites comes from bots. There will probably be some huge scandal in the future regarding it....ha.
Top 10 Pick: Amazon Financials Understate Growth [View article]
AMZN in 2000: The profits will come...be patient with us. AMZN in 2005: The profits will come...be patient with us. AMZN in 2012: The profits will come...be patient with us.
Meanwhile Bezos unloads more in stock than AMZN has ever made in net income.
AMZN is nothing more than Bezos' cash register and some day investors are going to realize that a company only making 0.01/share in income is not worth $105 billion dollars regardless of the revenue it pulls in. Business is ultimately about the bottom line.
Amazon's Growth Story Continues And Will Pay Off [View article]
I agree. Why the gross numbers?
They made $7 million on $13 billion in revenue. It's nothing more than Bezos' cash register. Churning through $13 billion to only earn $7 million? That pretty much sucks.
If you scaled these number down to something more "understandable" (average folks can't really comprehend millions and billions very well. Just too big.) and went up to folks on the street and tried to sell them the scaled down business for the multiples AMZN trades at they would tell you to get lost.
The Good, The Bad, And The Ugly [View article]
Chesapeake Energy Is A Great Retirement Fund Stock [View article]
Wait what? Current liabilities are much higher than current assets. Income from operations of only ~1.5B a year. Cashflow from ops roughly of only $2B a year. Cashflow will be simply destroyed in a downturn. Losses will mount quickly due to minimal hedging. Between Q1 and Q2 they actually significantly reduced their 2013 hedging. They are already at $5.1B in D&C costs for the first six months on cash from operations of $1B in the same period. They are 100% completely dependent on asset sales which isn't going to fly in a downturn.
The above is enough to sink them in a decent length downturn even without talking about their debt. They have tons of debt with a significant amount due in 2013. They are responsible for $700 million of interest due each year not counting the recent loan shark rates on the $4B loan. They sport a convoluted capital structure with continual dilution.
Tell me again how do they survive a downturn?
And now to the rescue: Chesapeake Energy (CHK) says it's gotten a $3B unsecured loan from Goldman Sachs and Jefferies Group, to be repaid from those 2012 asset sales. [View news story]
Even with asset sales I'm sure they will still be cashflow negative. Their planned capex for 2012 is 11.6 to 13.1B. Cash from ops is a piddly 1.1B. Asset monetizations aren't going to cover that balance.
They just took $3B in senior FIVE year notes at a floor of 8.5% to refinance a revolver that is at the max fed funds +1.75%. In February 2012 they were able to place seven year notes for 6.775%. That should tell you something about the deterioration of their credit worthiness and what lenders think.
Job Creation Under President Obama [View article]
175,000 * 12 * 4 = 8,400,000 people added since Jan 2009.
We aren't even in the ballpark on jobs. Government policies are not working and the jobs picture is much much worse than the headline numbers would like you to believe.
Almost No One Makes Money From The Stock Market Alone [View article]
Every time it crashes and tries to correct, another bubble is blown to try to keep the markets up. Internet, housing, and now govt deficit spending/central bank intervention? The last (at least) 15 years in the stock market have been fake. Most recently, this whole rally we have had since 2009 started when banks were allowed to lie about assets on their balance sheets. Recently, its internet bubble 2.0 with a bunch of these companies. AMZN at, what, a 300 p/e? WDAY jumping to an 8.8B valuation on its IPO day? $8.8B for a company that has never made a profit and actually had negative book value before the IPO? It's insanity and it can't last.
Given the size of the bubble that has been blown this time and the fact that the market is ~9% off of its all time nominal highs, I think I'll watch from the sidelines and only do some speculation with money I can lose.
Facebook Investors: Your Nightmare Has Just Begun [View article]
Question for the SA community:
Does anyone themselves click on ads on FB or GOOG? Or know anyone who does? I personally do not know a single person who does this other than by accident.
And now to the rescue: Chesapeake Energy (CHK) says it's gotten a $3B unsecured loan from Goldman Sachs and Jefferies Group, to be repaid from those 2012 asset sales. [View news story]
"Our current budget for 2012 includes drilling and completion capital expenditures, net of drilling and completion carries, of $7.5 – $8.0 billion and net undeveloped leasehold expenditures of $1.6 billion."
"During the Current Quarter, our capital expenditures related to our midstream, oilfield services and other assets were approximately $770 million. Our projected 2012 and 2013 capital expenditures are $2.5 –$3.5 billion and $2.0 – $2.5 billion, RESPECTIVELY"
LOW END RANGE: $7.5B D&C + $1.6B LAND + $2.5B MOO = $11.6B CAPEX
HIGH END RANGE: $8.0B D&C + $1.6B LAND + $3.5B MOO = $13.1B CAPEX
Analyzing Facebook's Risk Factors [View article]
You're buying (essentially non-voting) stock in an IPO by a company who has no need for more capital (4B in cash/marketables & no debt) & is only offering stock so we can dump this trash on you before growth flatlines and P/E multiples drop.
Will Chesapeake Energy's Actions To Support Natural Gas Prices Help? [View article]
Look at their balance sheet. 16 billion in unevaluated properties. That's well....larger than their market cap. Even if you are very generous and give that a $5,000/acre number, that's 3.2MM acres. There's a reason why CHK has been approaching COP level capital spending. It's either ramp up capital spending or get behind and start to lose leases. And in the process they've managed to drive down gas prices, essentially forcing their hand as we saw from their press release.
I think I'd be worried about an oil & gas producer that is massively cash flow negative without hedges and the proceeds from land flipping, has basically no cash on hand, has $3B in accounts receivable, has $11B in long term debt w/ interest payments of over $500MM a year, and is still spending a large amount of capital in dry gas areas.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
Q3 2009: 12,073
http://1.usa.gov/wYI88x
Q3 2011: 11,789
http://1.usa.gov/x4tx9I
A WHOPPING reduction of $284 million. A 2.4% reduction. The new deal that closed at the end of 2011, is going to net them a lump sum of $610 million that they have said will go towards the revolver. Still at over $11B in long term debt.
How is a company desperate for cash going to pay down debt? They've already ended two of their drilling carries early at a discount in exchange for a lump sum payment. They've only got $100 million in cash and accounts payable of almost $3 billion!
They have essentially no hedges for 2012. They have interest payments due to the tune of over $500 million a year (most of which they are capitalizing). They have already sold out chunks in most of their plays. The drilling carries are starting to run out. Only ~$3B total remaining including the new Total JV. $500 million of that is in the Marcellus. Their "oil" production is misleading asa good majority of it is NGLs. Realized prices for "oil" are around $65 dollars.
CHK is basically a bet on natural gas prices bouncing back sharply AND rapidly. 41% of their Q3 revenues were from derivatives. Those are gone now. What's going to happen to revenues without the derivatives and in a declining price environment?
Finally - Reality Is About To Hit Amazon Shareholders [View article]
The Great Recession Is Over: Time To Back Up The Truck [View article]
Higher Click-Through Rates On Facebook Ads Drive Advertisers And Revenue To The Social Network [View article]
People aren't on FB to click on ads. They are on there to check out pictures or see what their friends are doing. How many people do you know that click on ads at FB or GOOG? GOOG is at least a little bit more believable as you can actually be searching for something to buy and see a link at the top of the search page to click on. In the end, I'm still convinced most of the clicks on both of these sites comes from bots. There will probably be some huge scandal in the future regarding it....ha.
Top 10 Pick: Amazon Financials Understate Growth [View article]
AMZN in 2005: The profits will come...be patient with us.
AMZN in 2012: The profits will come...be patient with us.
Meanwhile Bezos unloads more in stock than AMZN has ever made in net income.
AMZN is nothing more than Bezos' cash register and some day investors are going to realize that a company only making 0.01/share in income is not worth $105 billion dollars regardless of the revenue it pulls in. Business is ultimately about the bottom line.
Amazon's Growth Story Continues And Will Pay Off [View article]
They made $7 million on $13 billion in revenue. It's nothing more than Bezos' cash register. Churning through $13 billion to only earn $7 million? That pretty much sucks.
If you scaled these number down to something more "understandable" (average folks can't really comprehend millions and billions very well. Just too big.) and went up to folks on the street and tried to sell them the scaled down business for the multiples AMZN trades at they would tell you to get lost.