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Wed, Jan. 13, 5:47 PM
- Operators of 27 oil and natural gas wastewater disposal wells in northwest Oklahoma are asked by the Oklahoma Corporation Commission to reduce volume following an outbreak of moderate earthquakes in the past week.
- Under the voluntary directive, the regulator is asking operators to reduce total volumes into saltwater disposal wells by ~18%, or nearly 54.9K bbl/day.
- Among the 27 disposal wells are seven operated by SandRidge Energy (NYSE:SD), which has defied a December commission directive to limit disposal well activity in another area of the state; the new directive also includes disposal wells operated by units of Chesapeake Energy (NYSE:CHK) and Midstates Petroleum (NYSE:MPO).
- More than 30 earthquakes greater than magnitude 3.0 have struck in the area during the past month, including a 4.8-magnitude quake last Thursday.
- Separately, SD says it is laying off 226 workers at its Lariat Services Group subsidiary in northwestern Oklahoma, ~87% of the total workforce.
Tue, Jan. 12, 10:34 PM
- Guggenheim analysts say natural gas fundamentals are improving but they nevertheless cut their earnings forecasts on Chesapeake Energy (NYSE:CHK), Cabot Oil & Gas (NYSE:COG) and Range Resources (NYSE:RRC).
- Supporting the firm's confidence are EPS revisions for a number of gas operators today suggest that gas supply growth in 2016 could flatline; EIA data for summer 2015 indicates 100% absorption of U.S. supply growth in the power markets through coal displacement; and summer 2016 injections could be the lowest since 2012, despite assumptions for mild weather and recovery in hydro.
- However, Guggenheim cuts its 2016 EPS forecast for COG to a $0.21 loss from an $0.11 loss, CHK to a $0.59 loss from a $0.54 loss, and RRC to a $0.64 loss from a $0.33 loss; its estimate for Southwestern Energy (NYSE:SWN) improves to a $0.38 loss from a $0.71 loss.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
Mon, Jan. 11, 5:58 PM
- Williams Cos. (NYSE:WMB) and Williams Partners (NYSE:WPZ) both finished today's trade ~8% lower as crude oil prices plunged again and Fitch issued downgrades.
- The ratings agency cut WMB to BB+, down from BBB-, putting it officially in junk bond status, and lowered WPZ BBB-, the last rung of investment grade, from BBB.
- Fitch says it now expects WPZ’s adjusted leverage, which it defines as debt-to-adjusted EBITDA, to remain above 4.5x for a "sustained period," and says its concern regarding WPZ's significant exposure to Chesapeake Energy (NYSE:CHK) - which is responsible for ~20% of WPZ’s revenues via gathering and processing - has increased; Fitch’s downgraded CHK's rating by two notches in December.
- Earlier: Moody's downgrades Williams, cuts outlook for Energy Transfer (Jan. 8)
Tue, Jan. 5, 11:49 AM
- Chesapeake Energy (CHK +0.2%) is maintained with a Buy rating at Wunderlich, citing company management and financial stability as well as strong optionality in terms of its asset base, but with a price target cut nearly in half to $7 from $13.
- The firm praises CHK's move into 2016 with a lower overall debt level, but lowers its price target because of low natural gas prices and lower peer group multiples.
- The firm says CHK is trading at 3x its 2016 cash flow forecast of $1.57/share, while the peer group is trading at an average price-to-cash flow multiple of 5x, and believes an in-line multiple is warranted for CHK given its improving balance sheet and strong asset base, which results in the $7 price target.
Mon, Jan. 4, 11:58 AM
- Chesapeake Energy (CHK +3.3%) is sharply higher despite a Raymond James downgrade to Underperform from Market Perform based on a "weak natural gas price forecast and balance sheet concerns."
- The outcome of CHK's recent effort to exchange notes coming due in 2017 and 2018 was "relatively weak," and the fact that the company had to resort to this measure at all is a sign of trouble, RJ's John Freeman says.
- Sterne Agee CRT's Tim Rezvan had written in November shortly before CHK announced its offering that "second-lien loans are perceived like scarlet letters," and shares fell 29% since the warning, so Freeman's note seems late to the game, according to TheStreet.com's Carleton English.
Fri, Jan. 1, 4:53 AM
- Dow: NKE +29%; HD +27%; MCD +25%; GE +21%; V +16%.
- S&P 500: NFLX +135%; AMZN +119%; ATVI +90%; NVDA +61%; CVC +54%.
- Nasdaq: NFLX +135%; AMZN +119%; CTRP +104%; ATVI +90%; NVDA +61%.
- Dow: WMT -29%; CAT -28%; AXP -26%; CVX -21%; UTX -18%.
- S&P 500: CHK -77%; CNX -77%; SWN -75%; FCX -71%; FOSL -67%.
- Nasdaq: MU -59%; WDC -47%; STX -47%; VIAB -46%; BBBY -37%.
Dec. 30, 2015, 12:46 PM
- Hit hard two days ago as oil fell below $37/barrel, oil/gas industry names are seeing more pain today after the EIA reported U.S. crude inventories rose by 2.6M barrels last week - expectations were for a decline. The report comes shortly after the API estimated U.S. crude inventories rose by 2.9M barrels during the most recent weekly period.
- After rising yesterday, WTI crude is down 3.1% to $36.71/barrel. Brent crude is down 2.9% to $36.69/barrel. Nymex natural gas is down 7.3% to $2.20/MMBtu.
- The biggest decliners include Chesapeake Energy (CHK -4.1%), Petrobras (PBR -4.1%), Linn Energy (LINE -7.5%), Gulfport Energy (GPOR -5.2%), SeaDrill (SDRL -5.5%), MV Oil Trust (MVO -4.5%), EV Energy Partners (EVEP -6.7%), and Southwestern Energy (SWN -5.7%).
- Other notable decliners include Hercules Offshore (HERO -5.2%), Marathon Oil (MRO -4%), Devon Energy (DVN -4.4%), Encana (ECA -4.1%), Range Resources (RRC -4.7%), Sandridge Mississippian Trust (SDR -4%), Newfield Exploration (NFX -3.8%), BP Prudhoe Bay Royalty Trust (BPT -3.1%), Enerplus (ERF -3.9%), and ONEOK Partners (OKS -2.5%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Dec. 29, 2015, 5:42 PM
Dec. 24, 2015, 12:27 PM
- While Citigroup believes Chesapeake Energy’s (CHK +2.5%) debt load is unsustainable given low energy prices. Morningstar analyst Mark Hanson argues that "default is far from imminent.”
- Harmon says CHK's two most important milestones over the next few quarters are the final results of the debt exchange offer at the end of this month, and the company’s borrowing base re-determination in mid-April 2016; if each plays out favorably, CHK "should be fine from a covenant and liquidity standpoint through 2018 (albeit without much cushion should oil and gas futures prices fall from current levels)."
Dec. 23, 2015, 3:19 PM
- Chesapeake Energy (CHK +9.4%) continues to power higher even after S&P’s revision of its corporate credit rating to B from BB-, while noting CHK will face challenging industry conditions which will be intensified by high debt levels.
- Wunderlich analyst Jason Wangler believes CHK is “doing all it can in a tough market... We feel overall the company can make it through and continue to improve its balance sheet to provide liquidity and stability going forward."
- SunTrust’s Neal Dingmann maintains his Buy rating on CHK even as he cuts the target price to $7 from $10; while acknowledging continued potential near-term pressure, he says CHK’s "solid liquidity, financial engineering along with asset heavy portfolio sets up for improved longer term story with each $0.10/Mcf increase in natural gas price potentially adding ~$100M in EBITDA."
Dec. 22, 2015, 5:54 PM
- Chesapeake Energy's (NYSE:CHK) credit rating is downgraded to B from BB- at S&P with a negative outlook, as the ratings agency's business risk assessment for CHK is lowered to fair from satisfactory.
- S&P also cuts CHK's senior unsecured debt rating to CCC+ from BB-, CHK's senior secured debt to BB- from BB+, and CHK's preferred stock to CCC from B-.
- S&P expects natural gas and crude oil prices to remain under pressure from excess production capacity, and sees CHK's profitability suffering from the high costs associated with its gathering and processing agreements.
- While CHK's outstanding debt should fall by ~$1.5B based on preliminary results of the recent exchange offer, S&P says the tendered offer failed to significantly ease the upcoming need to address $2.5B of debt maturities or puts through 2017.
Dec. 22, 2015, 11:46 AM
- Chesapeake Energy (CHK -0.2%) is reiterated with an Underperform rating at Citigroup, which says CHK's levered capital structure is unsustainable given the ongoing low commodity prices it faces.
- Results of CHK's debt exchange showed $2.8B of total par amount was tendered, translating into a $1.7B second lien, and increased the maximum potential size of the new second lien to $3B from $1.5B; Citi believes CHK pushed back the early deadline hoping additional short-maturity paper would tender.
- In CHK's final early tender results, only ~24% of the outstanding 2017 notes were tendered and the total amount of unsecured notes due within the next 4 years tendered increased to 24% from 22%; Citi says a majority of the incremental tenders came from longer-dated paper, which means CHK still has a sizable maturity wall over the next 2-3 years.
- Earlier: Reuters: Chesapeake Energy debt swap offers "fails miserably" (Dec. 18)
Dec. 18, 2015, 3:58 PM
- Chesapeake Energy's (CHK +8%) attempt to ease its short-term liquidity woes looks set to "fail miserably," according to a Reuters report, after CHK had extended Wednesday's deadline for the bond exchange by two days.
- Participation rates from holders of CHK's 2017 and 2018 bonds were just 10%-28%, amounting to just $352M tendered overall on $1.7B in face value, while longer-dated bonds saw ~40% participation.
- "There remains a lot of work for the company to get through this maturity wall and commodity price downdraft," CreditSights analyst Brian Gibbons says on the early tender results.
- Investors have until 5 pm ET today to decide whether to commit at the early deadline for the aggressive offer, which aims to persuade creditors to swap their current bonds for new senior secured second-lien bonds.
- CHK's bonds have tanked since the exchange was announced on Dec. 2; the 5.75% 2023s are trading at just $0.27 on the dollar, while the 6.25% euro-denominated 2017s were quoted at 61% of face value, and the 6.5% 2017s at 57%.
Dec. 14, 2015, 3:43 PM
- Chesapeake Energy (CHK -4.3%) is working with restructuring advisers at Evercore on potential measures to reduce its $11.6B debt load, such as exchanging existing bonds at a discount for new securities or selling assets, Dow Jones reports.
- CHK bonds, considered a junk bond benchmark because of the company's large debt load, are tumbling today, with a 2019 bond down $0.02 to $0.30.
- The tumble in natural gas prices has hurt CHK, which has posted three straight quarterly losses this year.
Dec. 10, 2015, 11:34 AM
- Companies such as Chesapeake Energy (CHK +1.8%) pushed the SEC for an accounting change in 2009 that made it easier to claim reserves from wells that would not be drilled for years, but Bloomberg says the chickens will come home to roost in the next few months when billions of barrels of shale drillers’ reserves are wiped out.
- The rule requires the undrilled wells to be profitable and be drilled within five years, but now the time is up, and the companies must soon report 2015 figures - and prices are down, way down.
- Regulatory filings show CHK's inventory will be cut by 45%, Bill Barrett (BBG +4.1%) will lose as much as 40%, and Oasis Petroleum (OAS +5.8%) will loss 33%.
- "How are these reserves going to come back?” says a Guggenheim Securities analyst. “Because if you have to spend within cash flow, those reserves aren’t coming back. Not unless we get a spike in prices, or we return to levered growth.”
Dec. 9, 2015, 5:27 PM
- Pennsylvania’s attorney general's office says it is suing Chesapeake Energy (NYSE:CHK) over claims the company cheated thousands of landowners who signed drilling leases.
- The lawsuit alleges that CHK tricked landowners into signing one-sided leases in the early years of the Marcellus Shale drilling boom and then improperly deducted certain post-production expenses from landowner royalties.
- CHK says the allegations are baseless and that it will challenge the lawsuit.
Chesapeake Energy Corp is a natural gas and oil exploration and production company. It explores, develops and acquires properties for the production of natural gas and crude oil from underground reservoirs and also provides marketing & midstream services.
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