Zman

Chesapeake Energy: Value is the Gas in the Ground

Is any institution conerned about the non-cash charge? It's valued cash flow, not earnings anyway.

As far as CHK goes, much of the Street is sorely underestimateing the asset here. Producing > a Bcfgpd gross from the Barnett with 300 wells spud to date. With 8 to 12x that many prospects left. It's not like their slacking off else either. They replaced 400% of 1Q production so their reserve life is expanding rapidly but they don't get the multiple of an EOG. Why is that? After their numbers I wrote:

* 1Q Production of 154 Bcfe beat guidance range of 150 to 152.5 Bcfe.

* Production growth of 14-18% expected for 2007. No change from previous. (but they hinted guidanced will be increased on the conf call)

* LOE increased a little but not bad. 1Q07 $0.93/Mcfe vs $0.87/Mcfe in 1Q06. Guidance was $0.85 to $0.95 so this is a little high considering they topped the production number. They’re looking for $0.90 to $1.00 going forward. Still,