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The general verdict on Chesapeake's (CHK -1%) asset sales: The deals keep the company afloat for...

The general verdict on Chesapeake's (CHK -1%) asset sales: The deals keep the company afloat for 2012, but there's still far to go to plug the gap between the amount it needs to spend in the future to maintain its current growth and projected revenue. While CHK has little choice but to raise money, its sale of high-quality assets throws into question some of its future growth and opportunities.
Comments (1)
  • westelk
    , contributor
    Comments (282) | Send Message
     
    Everyone is throwing figures around, but nobody is talking about the most important one: what was the value of these assets in CHK's books? This could lead to capital gains, or it might lead to a capital loss--and the necessity to write down associated holdings. Of course, only CHK insiders know, but since they are quiet on the matter, it is prudent to assume these are being sold at a loss. McClendon is not shy about bragging when things are rosy.

     

    From a Reuter's story:
    ...Chesapeake's Permian sales work out to about $3,200 per acre, less than half the $7,500-an-acre average that sellers in the Permian had reaped in 10 previous sales during 2011 and 2012, said Morningstar analyst Mark Hanson.

     

    Given the quality of Chesapeake's assets in the Permian, though, Hanson had expected a price of around $3,750 an acre.
    12 Sep 2012, 06:48 PM Reply Like
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