jakedeez

Loss of Clarity on Chesapeake's Peak

The trend is not broken... not the longer term trend anyway. The shorter term, six month spike may give some up, but that isn't a function of the stock it is a function of the futures. They are pulling NG out of the ground at 2-3 bucks, they are the most active hedgers out there for a reason... their reserves are growing at a crazy rate.

There is nothing wrong with your suggestion of being on the sidelines, because it could come down to the mid 40's if oil breaks to maybe 100-115... but even with oil at 50 they will still be supplying an increasing percentage of the US grid power gas. (they may go this year from 1-2% of the total grid)

Also realize, even if gas were to collapse down to say $5, the major costs of drilling have been paid. Their future pumping costs will be much less, and they can convert unproven reserves to proven reserves to back out any effects from the drop in the spot prices.

They will continue to pay down debt, and beat earnings. Personally, I have puts on the XOP against my CHK position, and couldn't feel safer.