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Here's Chesapeake's (CHK -13.5%) conundrum: CHK has been touting its shift from natural gas to...

Here's Chesapeake's (CHK -13.5%) conundrum: CHK has been touting its shift from natural gas to liquids as a way to overcome low natural gas prices, but its production of liquids is unimpressive so far. And weak nat gas prices make it more difficult to find the funds needed to drill the wells for producing the liquids. For today at least, this explains more of CHK's price swoon than McClendon's antics.
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Comments (7)
  • Harry Johnson
    , contributor
    Comments (482) | Send Message
     
    Or, it could be that after numerous JVs, VPPs and outright asset sales, LTD went up 2.5 billion dollars; or, hedges that were supposed to protect, lost 165 million even though they were taken off at less than half the price at which they were put on.

     

    Just saw a presentation this morning by independent third party that shows CHK's great acreage holdings. I only follow the stock out of curiosity, but I am unable to fit the pieces together. The Company is hemorrhaging somewhere and needs to go to the ER soon. A new "outside" Chairman isn't going to cut the mustard. Going to take someone in charge who can read an oil company financial statement, differentiate between cost accounting and financial accounting B.S., speak the language of people in the field, get service costs under control, stop hiring 100 new people every month, realize that the loan window is closed, etc. etc. Wouldn't hurt if the person has been baptized previously at least once by falling prices and a heavy debt load.
    2 May 2012, 03:54 PM Reply Like
  • TippingPoint
    , contributor
    Comments (159) | Send Message
     
    It's going to be fun to watch. I think they are in a lot more trouble than they even realize, and it's all due to the Boards failure to do it's job in the first place. Now the horse is out of the barn. I haven't seen such bad corporate governance since Enron, although I think the situation at CHK is more an act of omission than commission, but time will tell. What a mess.
    2 May 2012, 06:48 PM Reply Like
  • Harry Johnson
    , contributor
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    The majority of the Board members are politicians. Nuff said.
    3 May 2012, 09:11 PM Reply Like
  • auto44
    , contributor
    Comments (3284) | Send Message
     
    The sky is falling the sky is falling run for your life.Be greedy when others are fearful. What is the value of CHK's 19 trillion cubic feet of natural gas even at two dollars? Way way more than the silly market cap, all the rest is a tempest in a pot of tea.
    2 May 2012, 09:15 PM Reply Like
  • TippingPoint
    , contributor
    Comments (159) | Send Message
     
    Not if it's all leveraged.
    2 May 2012, 09:36 PM Reply Like
  • wald22
    , contributor
    Comments (227) | Send Message
     
    @Auto44 - Will you please enlighten us on your math. Saying CHK has 19T cubic feet of gas is possible in a year or two. It costs them $6 to produce a unit they are getting a little more then $2. So if you are loosing $4 a unit, how many units must you produce to make a profit????????! A lot of this natural gas is getting flared (burned) right on location before it gets piped anywhere. In North Dakota a lot of it is just flared for there is nothing to hook the production up to. In the middle east more natural gas gets flared then what gets produced in the USA. But they are trying to do something about that. They can produce it a lot cheaper then we can.
    6 May 2012, 09:15 AM Reply Like
  • W. Walker Jr.
    , contributor
    Comments (271) | Send Message
     
    I belive that CHK says they need $3 NG prices to be profitable.
    9 May 2012, 04:12 PM Reply Like
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