Fri, Nov. 20, 3:54 PM
- U.S. natural gas in storage cracked the 4T cf level for the first time, according to the latest data from the Energy Information Administration, 10% higher than a year ago and nearly as much gas as the U.S. can store - a milestone that "should terrify energy investors," writes Heard On The Street's Spencer Jakab.
- Inventories traditionally peak at the end of the April-October season when heating demand for the fuel is low or nonexistent, but despite subdued new drilling activity, the EIA thinks storage at the end of Q1 2016 will end with a far higher than usual 1.9T cf, which creates a risk of storage filling up even sooner in next year's April-October period.
- Jakab says the situation will add to the woes among beleaguered natural gas producers, some of which are in financial distress - which could grow more acute; in related news, Chesapeake Energy (CHK -5.6%) is down another 5% today, recording new multiyear lows.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, DCNG
Thu, Nov. 19, 2:28 PM
- Chesapeake Energy (CHK -8.7%) collapses to new 52-week lows as the company's debt also plunges to record lows in heavy trading.
- CHK is today's most actively traded company in the junk debt market, and nine of its unsecured notes have fallen today - some losing more than $0.12 on the dollar - while credit default swaps have jumped to the highest ever, Bloomberg reports.
- It is not known if investors are capitulating on the credit or shorts are taking advantage of the situation, but at the short end of the curve, the CHK 6.5% notes due 2017 were trading at ~70, yielding 30%, vs. ~80 yesterday to yield 21%, and 96.5 a month ago to yield 8.7%; the once-benchmark 6.625% notes due 2020 have dropped to 45-47 today, yielding ~27.8% at the midpoint, vs. 55 early yesterday to yield 22.6%, and 76 a month ago to yield 13.7%.
- CHK stock has fallen 27% since reporting Q3 earnings on Nov. 4, when it recorded a $5.4B writedown in the value of oil and natural gas fields (I, II).
Thu, Nov. 19, 9:14 AM
Tue, Nov. 17, 11:58 AM
- Chesapeake Energy (CHK -4.5%) plunges near 52-week lows after Sterne Agee CRT downgrades shares to Neutral from Buy and removes its $13 price target.
- The firm says CHK’s fortunes would improve greatly in a $3/Mcf gas world but the macro backdrop has changed and that world is unlikely in the near-term, and Monday night’s news that $394M of convertible bonds were put to the company will refocus attention on the need to address the capital structure.
- CHK's second-lien loan may come soon but may not prove a dramatic equity value creation tool, and a second-lien stigma could overshadow any favorable balance sheet impact, the firm says.
Wed, Nov. 4, 2:18 PM
- Chesapeake Energy (CHK -6.2%) gave up premarket gains and turned sharply lower almost as soon as regular trading began even as it posted a lighter than expected Q3 loss, and Citigroup analyst Robert Morris thinks the move reflects persistent concerns about CHK's cash burn.
- Morris says CHK ended Q3 with a cash balance of ~$1.76B vs. his $1.95B forecast as the company incurred another drop in working capital ($158M) as it further reduced activity; while production exceeded expectations and costs are being sharply reduced, Morris thinks investor focus remains on "cash burn" and CHK’s ability to execute accretive asset sales to reduce leverage.
- CHK also cut its 2015 capital spending budget for the second time this year, and said it is prepared for a "significantly lower" capital program in 2016.
Wed, Nov. 4, 8:57 AM
- Chesapeake Energy (NYSE:CHK) +5.9% premarket after reporting a smaller than expected Q3 loss, which excludes impairment charges and other special items totaling $5.42B and adds to the ~$10B in impairment charges it already had booked this year.
- CHK's Q3 revenues fell 49.3% Y/Y to $2.89B from $5.7B, and adjusted EBITDA was $560M vs. $1.236B in the year-ago quarter; Q3 drilling and completion expenses fell 41% Q/Q to $467M.
- Q3 production averaged 667K boe/day, up 3% Y/Y after adjusting for asset sales, while its average realized price fell 40% to $15.45/boe.
- CHK says Q3 capital spending fell to $623M from $1.52B in the prior-year period, and cuts its full-year capex target to $3.4B-$3.9B from $3.5B-$4B.
Tue, Nov. 3, 11:45 AM
- Chesapeake Energy (CHK +6.5%) is downgraded to Market Perform from Outperform with a $9 price target, cut from $18, at Bernstein, which says Q3 earnings from several companies indicates that even low cost operators are not profitable at the current price level, and CHK’s high cost structure will make it difficult to generate cash.
- Bernstein sees a risk that in an extended pricing slump, CHK would be forced to sell assets at low- or mid-cycle prices, and believes the market should consider the value of CHK's assets along with its ability to generate near-term cash flow.
Tue, Oct. 27, 11:34 AM
- U.S. natural gas trades below $2/MMBtu for the first time since April 2012 as unusually warm weather for this time of year threatens to slow demand while supplies are high, and some companies hint at a new production boom:
- EQT Corp. (EQT -2.7%) said in an earnings call last Thursday that it had drilled wells in the Utica with very high production rates; “A year ago, it would have been hard to imagine a more prolific play than the Marcellus,” EQT CEO David Porges said. “However, if the deep Utica works, it is likely to be larger than the Marcellus over time.”
- Among major gas producers: CHK -7.8%, SM -5%.
- Earlier: Natural gas -8% as forecasts call for warmer than average weather (Oct. 26)
- ETFs: UNG, XLE, UGAZ, DGAZ, VDE, ERX, OIH, BOIL, GAZ, ERY, FCG, DIG, GASL, DUG, KOLD, BGR, IYE, UNL, FENY, FIF, PXJ, RYE, DCNG, FXN, DDG
Mon, Oct. 26, 2:18 PM
- Natural gas futures are down ~8% as supplies rise toward record levels amid expectations of a warm start to the winter, sending shares of energy companies with heavy exposure to natural gas sharply lower; CHK -8.7%, SM -7.7%, RRC -7.4%.
- Adding to the volatility is the expiration of the November futures contract Wednesday, which recently was trading at $2.06/MMBtu, a level last seen in 2012.
- "This could be a blow off bottom," says Again Capital's John Kilduff, who says the price is hit by expectations that a record amount of natural gas will soon be in storage; weekly data show gas storage at 3.81T cf vs. a record 3.93T cf in November 2012.
- Weather forecasts released last night called for “significant warm trends” across much of the U.S. in the next two weeks, according to MDA Weather Services.
- Crude oil prices also are lower, as lingering concerns over a global supply glut and weakening demand send prices toward their lowest settlement in six weeks.; WTI -1.5% at $43.95/bbl, Brent -0.8% at $47.61.
- ETFs: UNG, USO, OIL, XLE, UGAZ, UCO, DGAZ, UWTI, VDE, ERX, OIH, SCO, BNO, BOIL, GAZ, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, KOLD, BGR, USL, IYE, UNL, DNO, FENY, FIF, PXJ, OLO, SZO, RYE, DCNG, FXN, OLEM, DDG
Fri, Oct. 23, 12:37 PM
- Southwestern Energy's (SWN -6.6%) $2.8B impairment and Freeport McMoRan's (FCX -0.5%) $3.7B charge are just the beginning, as Barclays estimates at least $20B in charges are coming during Q3 for just six companies, as reported by Bloomberg.
- SWN’s $2.8B writedown was double Barclays’ forecast, which also predicts ceiling-test impairments for Apache (APA -0.1%), Chesapeake Energy (CHK -2.3%), Devon Energy (DVN -0.1%), Encana (ECA -2%) and Newfield Exploration (NFX +0.1%).
- "Many companies will have writedowns as the price of oil is about half of where it once was and gas is also down,” says T. Rowe Price's Timothy Parker, but "it won’t generally hurt the companies because very few have debt covenants that are linked to book value, which the writedowns affect."
Thu, Oct. 1, 10:58 AM
- Chesapeake Energy (CHK -4.6%) bonds plunge after the company announced an amendment to its existing $4B line of credit that would allow it to incur as much as $2B in junior debt.
- Under terms of the deal, CHK's existing credit line has become a secured credit facility, which can become unsecured again if the company meets certain conditions, which it does not disclose.
- CHK was able to extract some concessions from its lenders, such as the ability to incur new debt and the removal of the total leveraged ratio covenant.
Fri, Sep. 25, 3:15 PM
- Sterne Agee CRT’s Tim Rezvan notes that investors are still shorting oil and gas stocks, especially Chesapeake Energy (CHK -5.6%), and have been rapidly increasing their short positions in Approach Resources (AREX -7.4%), Occidental Petroleum (OXY +0.7%) and Energen (EGN -0.4%).
- According to Rezvan, AREX had a 77% increase in short interest to 7.9M shares (19.6% of shares outstanding) since the end of August, OXY had an 18.9% increase to 17.9M shares (2.3% of shares outstanding), and EGN had an 8.4% increase to 3.7M shares (4.7% of shares outstanding).
- Short interest in CHK rose another 3M shares to 220.6M (33.1% of shares outstanding), the seventh consecutive increase.
Fri, Sep. 18, 5:40 PM
Thu, Sep. 17, 3:59 PM
- Chesapeake Energy (CHK -4.4%) is a major loser today following chatter that it may not be able to raise desired capital with a sale of its Utica shale assets.
- Reports say CHK has been hoping for $2B from such a sale but instead has received "low-ball" offers of ~$700M.
- CHK has not announced it is selling these assets, but it has been rumored that the company is shopping for potential buyers.
Tue, Sep. 8, 3:49 PM
- Williams Cos. (WMB +1.4%) renegotiated contracts with Chesapeake Energy (CHK +5.3%) are supposed to be positive for WMB's EBITDA, but Amey Stone at Barron's says several MLP contracts likely will be rewritten in the coming months resulting in tougher terms for the midstream MLPs that provide the storage and transportation.
- Janney analyst Nathan Judge argues that such negotiations are healthy for the recovery of MLPs, saying the deals often will result in positive outcomes for the MLP and may be supportive for a recovery in the group as fears diminish.
- The MLP usually has the upper hand in contract renegotiations, Judge believes, as customers that wish to renegotiate must make it economically attractive to the MLP to make changes; also, if the customer expects to grow, it will need to incentivize the MLP to invest, which was clear from the WMB-CHK deal.
Tue, Sep. 8, 12:21 PM
- Chesapeake Energy (CHK +6.7%) surges higher after announcing a deal with Williams Cos. (WMB +1.4%) that will decrease its natural gas transportation costs in exchange for higher volume.
- The deal should help improve CHK's 2016 guidance by diminishing the issues of high transportation costs and minimum volume commitments that have weighed on the shares for nearly a year, Wunderlich's Jason Wangler says.
- The firm says it remains bullish on CHK’s assets and believes management "continues to navigate tough internal and external factors quite impressively."
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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