Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
Zebra: what do you mean debunked? The US is awash in natural gas to the point where the price has collapsed and we are shutting in wells and no longer drilling new ones. That tells you that we have a crap load of nat gas.
Reserves being reduced can occur for lots of reasons, many due to the goofy way the SEC forces companies to account for them. Did you know that if a company won't drill for reserves in the next 5 years, then the SEC forces those volumes to be written off and not included as reserves. The gas is still in the ground, but it is not technically "reserves". When gas prices were $5/mmBtu, companies had drilling plans that included thousands of wells over the next 5 years, allowign them to "book" the reserves. Now that prices are below $2/mmBtu, companies are reducing their drilling budgets and only drilling 20% of the wells. So, the other 80% of those wells won't be drilled in the near term and so the companies had to reduce their reserves. Guess what? That gas is still down there and if 6-10 years it will be drilled and the gas will flow.
Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
Correct me if I'm wrong, but I believe South Korea is part of the Free Trade agreement and can obtain exports of LNG.
But, Cheniere still has a head start since it has an export license in hand. Also, If I'm not mistaken, the contract they have signed with BG has BG paying them 115% of Henry Hub prices plus a $3 fixed premium per mmBTU. That minimizes the risks to Cheniere should prices change over the years. Basically, if nat gas sells at $2/mmBtu, Cheniere makes $0.30 plus $3.00 (minus any transactional price which should be roughly 2% of Henry Hub). if nat gas goes up to $8/mmBtu, then they get $1.20 plus $3.00 per mmBtu. If nat gas prices drop to $0.50, then they get $0.075 plus $3.00. That $3.00 premium really gives them a great floor. The cost of building and operating the plant is probably in the $2-3 range.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
While we can all debate the compensation and the margin call, to say he "gives himself 2.5% of every well" is not quite right. Aubrey founded the company and when he took it public, that was part of the deal. At the IPO, this was clear. A condition of him selling HIS company and making it a public entity was that he be granted the 2.5% WI in each well. Buyers of the stock knew that as should anyone who buys it now if they did their due diligence. The market value at the time of the IPO was whatever the market was willing to pay and the 2.5% WI was part of the deal the public market paid him.
Also, to say he "gives" himself 2.5% isn't quite accurate. He has a 2.5% Working Interest which means he has to pay for his 2.5% share of the drilling and operating costs as well, just like any onther WI owner.
Please get the facts, then bash if you like. But if you want to be granted "founders shares", I suggest you invest your money and start your own company that you can take public. When you take it public, ask for whatever you what.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
The reason production keeps increasing as they sell off production and assets is that the overall production number is increasing rapidly. So they are outrunning their sales.
And the "borrow money guaranteed by future production payments" angle is called a VPP. When a VPP is put in place, the assets/reserves that back the VPP are written off of the company's assets and the production associated with it are no longer reported as the company's production. Title to the reserves under the VPP changes hands.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
Uhhh, you may want to go back and look at CHK's portfolio again. They are a major player in several huge liquid's rich shale plays. They have commanding acreage positions in almost every major shale play in the US except for Bakken.
But I would agree with many: CHK and LINE are very different animals and should be analyzed as such. LINE is much safer and will generate steady returns and gains. CHK has the capability, and the portfolio, to make very large jumps in price. yes there is risk, but I believe it will eventually make a big jump. The "sales" of their assets that people worry about are very different. The are selling only parts of the individual assets at the very early stage of development. This allows them to have other people's money funding the de-risking program. They are at the very front end of many big plays and 5 years from now, you will be very happy with CHK. You may not be happy in years 1 through 4 though so take that into accoutn.
Chesapeake Energy Creates $34 Billion Of Value At A Net Cost Of Zero [View article]
Georgia: you don't quite understand the transactions. In each of the JV deals, the partner bought a percentage of the entire holdings, not specific parts of the holdings. For instance, if CHK owned 100,000 acres, and the JV partner bought 30%, they bought a 30% share of the entire 100,000 acre package. They didn't get to go out and pick which 30,000 acres they wanted.
Cramer Likes Continental In The Bakken: Here Are Some Others With Plenty Of Upside [View article]
toomuchgas: Remember the old commercials where the nice young lady said "If you don't own an oil well, GET ONE!!" Follow her advice!!! That was quite some time ago!
Cramer Likes Continental In The Bakken: Here Are Some Others With Plenty Of Upside [View article]
sligoo: It is very expensive to buy companies. All 3 of those mentioned have bought companies in the recent past, with Exxon buying XTO, Chevron buying Atlas and Shall buying Duvernay.
Chesapeake Has The Best Energy Portfolio In The Continental U.S. [View article]
GreenPlease: you and another author oft quoted in "news" articles need to understand a small and simple fact. When CHK says that its leasehold acres could be "worth $15 to $20 billion", they are not saying that's what they could sell the rights for. That is the value of the oil/gas underlying the leases once it is developed and produced. In overly simplistic terms, say a company has 500 acres and under that land it is estimated that there are 300,000 barrels of oil to be recovered. In "land leasing" terms, that acreage would be worth $2 MM at $4000 per acre. However, the oil underlying that acreage, at $80 per BO would be worth $24 MM. Now you'll have to take out drilling costs and operating costs plus royalties, but you still see a lot more value in the developed acreage than just the raw leasehold. Simple issue, and Citi's analyst is a dolt for that quote.
Chesapeake Has The Best Energy Portfolio In The Continental U.S. [View article]
Moon: I seriously doubt your profitability estimates for oil shale wells. Unless you define profitable as an after tax rate of return of 30-40%! For most, chasing a 20% return should be economical well south of those oil prices. More like $60-70. Maybe less once a company gets up the learning curve and has their infrastructure built.
Uhh, GreenRiver, last I checked, the House pass a bill last week that would have ended this debt ceiling issue. What happened? Grimy Reid refused to let it be voted on in the Senate, for fear that it might pass. Seems like a Dem digging in his heels. Or Prez Obama saying he'll veto anything coming out of the House!
Lest we forget, it was the Democrat controlled House and Senate who decided to not even draft a budget last year, AS CALLED FOR IN THE CONSTITUTION. The slackers didn't even try. At least the new House leadership are putting out proposals. But alas, the Dem's won't even debate them.
Also remember that before you give Clinton all this credit, most of his gains were made once the Repub's took over the House. Then he had to compromise. Obumma refuses to compromise. Actually, his definition of compromise is "you do what I want"
To all: can a pure-play Large E&P really continue the high dividend and aggressive buy back plans as per COP? In it's new peer group, COP will be alone in doing so, and I wonder where the cash will come from to grow production and reserves?? Many analysts have stated COP's E&P is low-to-no growth over the short term. How can they continue to compete in their new space but not reinject capital back into the growth side of the business? Buying back shares makes for a great retirement package, but does it work for long?
The Conoco Philips Refining Spinoff: Another Warning Signal for the Oil Refiners [View article]
Fairly simplified view of a much more complex global market. With tight supplies, a producer can get that $100 (or whatever the market is pricing crude at) in a variety of places. Since the US imports close to 70% of its crude oil, if you cut back your refining capacity, that oil will find a home somewhere else.
Encana break up a very different story my man. Breaking up into an oil E&P and a gas E&P is way different from breaking up into an Oil/Gas E&P and a REfining/Marketing Company.
Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
Reserves being reduced can occur for lots of reasons, many due to the goofy way the SEC forces companies to account for them. Did you know that if a company won't drill for reserves in the next 5 years, then the SEC forces those volumes to be written off and not included as reserves. The gas is still in the ground, but it is not technically "reserves". When gas prices were $5/mmBtu, companies had drilling plans that included thousands of wells over the next 5 years, allowign them to "book" the reserves. Now that prices are below $2/mmBtu, companies are reducing their drilling budgets and only drilling 20% of the wells. So, the other 80% of those wells won't be drilled in the near term and so the companies had to reduce their reserves. Guess what? That gas is still down there and if 6-10 years it will be drilled and the gas will flow.
Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
But, Cheniere still has a head start since it has an export license in hand. Also, If I'm not mistaken, the contract they have signed with BG has BG paying them 115% of Henry Hub prices plus a $3 fixed premium per mmBTU. That minimizes the risks to Cheniere should prices change over the years. Basically, if nat gas sells at $2/mmBtu, Cheniere makes $0.30 plus $3.00 (minus any transactional price which should be roughly 2% of Henry Hub). if nat gas goes up to $8/mmBtu, then they get $1.20 plus $3.00 per mmBtu. If nat gas prices drop to $0.50, then they get $0.075 plus $3.00. That $3.00 premium really gives them a great floor. The cost of building and operating the plant is probably in the $2-3 range.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
Also, to say he "gives" himself 2.5% isn't quite accurate. He has a 2.5% Working Interest which means he has to pay for his 2.5% share of the drilling and operating costs as well, just like any onther WI owner.
Please get the facts, then bash if you like. But if you want to be granted "founders shares", I suggest you invest your money and start your own company that you can take public. When you take it public, ask for whatever you what.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
And the "borrow money guaranteed by future production payments" angle is called a VPP. When a VPP is put in place, the assets/reserves that back the VPP are written off of the company's assets and the production associated with it are no longer reported as the company's production. Title to the reserves under the VPP changes hands.
Chesapeake's 50% Upside Well Ahead Of Linn [View article]
But I would agree with many: CHK and LINE are very different animals and should be analyzed as such. LINE is much safer and will generate steady returns and gains. CHK has the capability, and the portfolio, to make very large jumps in price. yes there is risk, but I believe it will eventually make a big jump. The "sales" of their assets that people worry about are very different. The are selling only parts of the individual assets at the very early stage of development. This allows them to have other people's money funding the de-risking program. They are at the very front end of many big plays and 5 years from now, you will be very happy with CHK. You may not be happy in years 1 through 4 though so take that into accoutn.
Chesapeake Energy Creates $34 Billion Of Value At A Net Cost Of Zero [View article]
Cramer Likes Continental In The Bakken: Here Are Some Others With Plenty Of Upside [View article]
Cramer Likes Continental In The Bakken: Here Are Some Others With Plenty Of Upside [View article]
Cramer Likes Continental In The Bakken: Here Are Some Others With Plenty Of Upside [View article]
Chesapeake Has The Best Energy Portfolio In The Continental U.S. [View article]
Chesapeake Has The Best Energy Portfolio In The Continental U.S. [View article]
$2 Trillion Tuesday: Still No Deal [View article]
Lest we forget, it was the Democrat controlled House and Senate who decided to not even draft a budget last year, AS CALLED FOR IN THE CONSTITUTION. The slackers didn't even try. At least the new House leadership are putting out proposals. But alas, the Dem's won't even debate them.
Also remember that before you give Clinton all this credit, most of his gains were made once the Repub's took over the House. Then he had to compromise. Obumma refuses to compromise. Actually, his definition of compromise is "you do what I want"
Playing the ConocoPhillips Breakup [View article]
To all: can a pure-play Large E&P really continue the high dividend and aggressive buy back plans as per COP? In it's new peer group, COP will be alone in doing so, and I wonder where the cash will come from to grow production and reserves?? Many analysts have stated COP's E&P is low-to-no growth over the short term. How can they continue to compete in their new space but not reinject capital back into the growth side of the business? Buying back shares makes for a great retirement package, but does it work for long?
The Conoco Philips Refining Spinoff: Another Warning Signal for the Oil Refiners [View article]
Playing the ConocoPhillips Breakup [View article]