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bwilliams10

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  • Chesapeake (CHK) will no longer be run by Aubrey McClendon, but the company he founded is far from rid of him. He is entitled to ~$47M in total compensation, but the most enduring entanglement is his interests in up to 2.5% of ~45K producing wells, which could make it harder to structure a takeover deal. "It's hard for me to imagine anyone wanting to take it all on," Argus' Phil Weiss says. [View news story]
    What does that mean? "It's hard for me to imagine anyone wanting to take it all on," Argus' Phil Weiss.

    McClendon has a working interest in the wells, big deal. He pays his proportionate share and that's kinda it.
    Jan 31 01:23 PM | Likes Like |Link to Comment
  • Falling Oil Knife Means Stick A Fork In Chesapeake [View article]
    No drinking water, not told what's in the frac material, no recourse.
    Come on!
    Oil & Gas Companies pay out huge damage settlements every day. Texas has been fracing since 1948 without 1 confirmed account of damage to groundwater due to fracing, Casing leaks yes, but they can be fixed. 99% of fracing material is water & sand, that's why it is called "hydraulic" fracturing. Have you ever considered what type of material occurs 5,000 to 12,000 feet beneath the earth's surface naturally?
    I don't want to argue the benefits of green energy vs. fossil fuels. The truth is we need them all. But when we have the capability of being energy independent now, we are morons for not capitalizing on that capability. Instead we continue to send our wealth to other nations. Oil & Gas = Jobs & Money
    Jun 22 10:40 AM | 1 Like Like |Link to Comment
  • Chesapeake's (CHK -1.7%) use of off-balance sheet liabilities via "volumetric production payments" is considered accepted practice in energy production, prompting FT's Izabella Kaminska to wonder if CHK is just the first of many to have these deals outed. "If banks were willing to do such deals for Chesapeake... who’s to say other companies are not saddled with similar liabilities?"  [View news story]
    I agree, this is another case of media piling on. I research oil and gas property records for a living. VPPs are recorded just like a lien in the courthouses in the counties where the associated properties are located.
    I have attached below an excerpt from an article on CHK's investors page of their website dated 4/9/12.

    Chesapeake has also completed the sale of a 10-year volumetric production payment (VPP) to an affiliate of Morgan Stanley (NYSE:MS) for proceeds of approximately $745 million, or approximately $4.68 per thousand cubic feet of natural gas equivalent (mcfe), for certain producing assets in its Anadarko Basin Granite Wash play. The transaction included approximately 160 billion cubic feet of natural gas equivalent (bcfe) of proved reserves and current net production of an estimated 125 million cubic feet of natural gas equivalent (mmcfe) per day. Chesapeake has retained drilling rights on the properties above and below currently producing intervals and outside of existing producing wellbores. Including this transaction, the company has completed 10 VPP transactions since December 2007 and, in doing so, has sold approximately 1.37 trillion cubic feet of natural gas equivalent (tcfe) of proved reserves for combined proceeds of approximately $6.4 billion, or approximately $4.65 per mcfe, which is approximately 300% more than the company’s current drilling and completion cost per mcfe.

    CHK stockholders should be pleased, it looks as if they found a way to get $4.68 per mcf for their gas when the current market is $2.48 per mcf. If you're going to slam CHK for utilizing an industry accepted tool, you've got to do it across the board.
    May 11 12:14 PM | 2 Likes Like |Link to Comment
  • Perfect Time For An Options Play On Chesapeake Energy [View article]
    This may be rudimentary math but if a bank is willing to loan $1.1B on a 2.5% working interest in the wells that Aubrey owns, does that mean that the remaining 97.5% working interest that CHK owns is worth at least $42.9B?
    (1.1/0.025=44*0.975=42.9)
    Plus, I don't know many banks that make 100% loans and those figures only take into account producing wells, they don't include proven undeveloped acreage. It seems to me that CHK may be undervalued.
    Apr 19 04:43 PM | 5 Likes Like |Link to Comment
  • Chesapeake Energy (CHK -0.3%) trades flat a day after disclosure of the CEO's loan practices, and another analyst comes to its defense as BofA sees the news as “immaterial to the investment case” and yesterday's stock drop as “unfounded." Sterne Agee says the focus should be the “impact of prolonged weak gas prices on [CHK's] cash flow generation ability," hardly a ringing endorsement.  [View news story]
    This may be rudimentary math but if a bank is willing to loan $1.1B on a 2.5% working interest in the wells that Aubrey owns, does that mean that the remaining 97.5% working interest that CHK owns is worth at least $42.9B?
    (1.1/.025=44*.975=42.9)
    Plus, I don't know many banks that make 100% loans and those figures only take into account producing wells, they don't include proven undeveloped acreage. It seems to me that CHK may be undervalued.
    Apr 19 04:34 PM | 1 Like Like |Link to Comment
  • How Sandridge Energy Turned A $400 Million Investment Into $8.7 Billion Of Value In 2 Years [View article]
    I'm a petroleum landman, which I've seen referred to as a used car salesman on this site, like it or not we are the ones that are present for the acquisition phase of these diamonds in the rough ($200/acre tracts that morph into $4,300/acre). I've had the opportunity to hear Tom Ward speak at industry events and this guy has a plan. It looks like his plans thus far have been successful. I was at Summer NAPE last August and the Mississipian was all you heard and Tom Ward had been buying it for 2 years.
    When Nat Gas prices began to lag and there was no recovery in site, Tom Ward moved Sandridge quickly to Oil and NGLs again much more quickly than other companies in the industry and he did it with Permian and Mississipian assets. Now he has come up with a plan to finance his Mississipian drilling efforts that doesn't require borrowing money. If Tom Ward is buying shallow offshore production today at a discount, where do you think it will be in two years?
    Sometimes there is a plan, but not everyone sees it. I agree that running the company with a large amount of debt is risky, but as you mentioned the true valuation of Sandridge's assets is not recognized in its Balance Sheet.
    Mar 2 12:30 PM | 6 Likes Like |Link to Comment
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