Chesapeake Still Spells Trouble To Me [View article]
What I see as the problem is concept of developing horizontal shale wells. Every well drilled is completed. To unlock the potential each well has to be cased and fraced. CHK takes it a step further and constructs massive production facilities (liquids plays) and most of the infrastructure prior to completion. This includes incredible lease roads (6"-8" gravel), pipelines and massive locations. Spare no expense on anything. At $6 to $12 million a well, it adds up. Wall Street and CHK lead investors to believe that shale play acreage is cookie cutter guaranteed economic production. Investors love the claim that every well drilled is a producer. Many wells are so bad they will not even cover the expense of the surface roads and facilities. From what I see the good well revenue will not come close to covering the expense of the bad wells. CHK's financial condition is proving me right. Couple that with the structure of the JV deals where CHK has to keep drilling and completing wells no matter what and we have a formula for disaster. I like the old method of drilling, sampling, logging and then making the decision whether or not to spend more money developing a well. With shale wells you have to go all the way.
It Is Chesapeake's Board Of Directors That Needs To Go First [View article]
SM70, I have read many of your comments and am confused. You complain about the jaded media and politics but you have no problem with manipulating gas markets for personal gain. You are a complex person.
Why Chesapeake's Low Price Is The Right Time To Buy [View article]
SM70, CHK does not drill economic wells. Can it get any simpler. Do you honestly think they would have this magnitude of financial problems if they drilled economic wells? Aubrey claims to have made CHK $6 billion hedging and paid for all the acreage acquisitions with JV cash participation contributions. CHK has received billions from IPO's and VPP's. Carries anywhere from $12-20 billion in LTD. Now they need $4 billion from Goldman Sachs just to get thru the year. They even borrow money to pay dividends. This does not look like a viable oil and gas company to me.
Gastar Exploration: Taking Unconventional Profits From Chesapeake [View article]
I like the claim of switching drilling programs to liquids rich wells with high rates of return. Do people realize the risk in oil and gas exploration? CHK and Wall Street teamed up to convince investors that all acreage acquired is economically productive. Somehow they took the risk out of the oil and gas business. Analysts even state that "no one questions the valuation of CHK's acreage". Are you kidding me? Now other public exploration companies are using the same tactics. Finding viable prospects and drilling economic wells is tough. Drilling Wall Street investors is a lot easier.
How are CHK's total assets worth $45 billion? Where do you come up with this? Just like Jim Cramer on CNBC this morning stated that no one questions the value of CHK's assets. If CHK has quality acreage and drills economic wells why are the in such trouble? THINK!
Carl Icahn can't squeeze any more oil and gas out of non economic wells than Chesapeake and Halliburton can. The root of CHK's problem is production revenue does not begin to cover the cost of wells drilled. Its that simple.
It Is Chesapeake's Board Of Directors That Needs To Go First [View article]
The conflict I see is Aubrey guaranteeing loans on his 2.5% FWPP undrilled acreage with future production. This might give him the incentive to commit CHK to drill wells that are non-economic just to get some production.
I will admit shale plays are nothing more than a land grab. Most leases even state that it is at the operators sole determination if a well is economic and shut-ins can be indefinite. I think attorneys and even Oil and Gas Commissions will be able to bust those clauses. Another issue is that oil and gas operators are patriotic and concerned with American's Energy Independence. Refiners want less expensive crude delivered by the Keystone pipeline to make gasoline for export. They could care less about energy independence as long as they can make the most profit possible. Same with Natural Gas. They want to reduce the oversupply by exporting as much NG as possible in order to drive the price as high as possible. The high profile shale players don't even care about impacts to neighborhoods or surface owners. The patriotic spin is just part of the con.
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Chesapeake Still Spells Trouble To Me [View article]
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Why Chesapeake's Low Price Is The Right Time To Buy [View article]
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And now to the rescue: Chesapeake Energy (CHK) says it's gotten a $3B unsecured loan from Goldman Sachs and Jefferies Group, to be repaid from those 2012 asset sales. [View news story]
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And now to the rescue: Chesapeake Energy (CHK) says it's gotten a $3B unsecured loan from Goldman Sachs and Jefferies Group, to be repaid from those 2012 asset sales. [View news story]
And now to the rescue: Chesapeake Energy (CHK) says it's gotten a $3B unsecured loan from Goldman Sachs and Jefferies Group, to be repaid from those 2012 asset sales. [View news story]
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It Is Chesapeake's Board Of Directors That Needs To Go First [View article]
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Another issue is that oil and gas operators are patriotic and concerned with American's Energy Independence. Refiners want less expensive crude delivered by the Keystone pipeline to make gasoline for export. They could care less about energy independence as long as they can make the most profit possible. Same with Natural Gas. They want to reduce the oversupply by exporting as much NG as possible in order to drive the price as high as possible. The high profile shale players don't even care about impacts to neighborhoods or surface owners. The patriotic spin is just part of the con.
Stop Selling Chesapeake Short [View article]