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Harry Johnson

Harry Johnson
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  • Chesapeake Energy's Spin-Off Of Seventy Seven Energy: A Strong Buy? [View article]
    I think for the reasons cited, there will be a prolonged dumping of the shares of Seventy Seven. The institutions, as well as Mr. Icahn will be sellers. I suspect that the last thing he wants in his portfolio is a capital and labor intensive oilfield service company that will be losing 85% of its customer base. I guess the key questions are: (1) How will one know when the sell off is concluded and (2) What will it take to lure investors into buying the stock ?

    One thing folks sometimes miss in analyzing a company like this is the fact that EBITDA isn't applicable. The DA part is real and you can't keep the equipment in the condition needed to keep customers if you are putting the DA on debt service.
    May 26 11:43 PM | Likes Like |Link to Comment
  • Why Investing In Chesapeake Energy Is Not A Good Idea [View article]
    Billions in asset sales; billions from JV partners, billions in revenue, year after year and yet no meaningful reduction in debt. But as long as CHK can keep rolling it into the distant future, I guess it isn't anything to worry about.
    Mar 24 06:42 PM | 5 Likes Like |Link to Comment
  • Chesapeake files for possible spinoff of oilfield services [View news story]
    176 pages of data in the Form 10, but maybe the only question that needs to be asked is why a buyer couldn't be found. Some reasons might be that CHK is the major (maybe only) customer of the oil services division. When it becomes Seventy Seven Energy, it will have to bid for work like all the other service companies. Another might be the relatively heavy debt load. Financial statement charges for depreciation of drilling rigs, heavy trucks, frack pumps and the like is real (if not understated) and you can't maintain the equipment and service debt with the same dollar. In other words it may turn out to be EBIT and not EBITDA.
    Mar 17 10:57 PM | Likes Like |Link to Comment
  • Will Icahn Finally Push For A Takeover Of Chesapeake? [View article]
    Does this really apply to CHK ?

    "Icahn recently endorsed his activist investment style arguing that there has never been a better time for activist investing than today: Acquisitions are highly attractive due to persistently low interest rates and, correspondingly, funding costs. Many companies also hold vast amounts of cash on their balance sheets which ultimately needs to be deployed, for instance for acquisitions. .... Thirdly, activist involvement is necessary to ensure efficient resource allocation and ensure the competitiveness of corporate America."

    None of the three fit Chesapeake. Does a leveraged buyout of a company leveraged out the wazoo make sense ? CHK doesn't have any cash to speak of, much less "vast amounts." Thirdly, "activist involvement" has already been employed in CHK's case and about the only thing that CHK might be able to do that they aren't doing would be to speed up the divestiture process.
    Feb 16 06:04 PM | Likes Like |Link to Comment
  • Chesapeake Energy: Net Debt Gutting Shareholder Value [View article]
    I am sure Lawlor will do the job right, but the historic veracity of "CHK News" tends to color current releases with some skepticism.
    Feb 6 10:10 AM | Likes Like |Link to Comment
  • Chesapeake Energy: Net Debt Gutting Shareholder Value [View article]
    And kept selling valuable assets to do so.
    Feb 6 10:05 AM | Likes Like |Link to Comment
  • Short Interest On Chesapeake Energy Could Lead To A Big Short Squeeze [View article]
    All very interesting, but I have never believed the market is efficient and to imagine that all of the players can absorb this much information and act upon it in a rational manner is a stretch. Almost like fine tuning the reduction in mileage on an 18 wheeler that has low pressure in two tires on the trailing axle.
    Jan 29 08:36 PM | 2 Likes Like |Link to Comment
  • Chesapeake Energy: Benefiting From Utica And Reducing Non-Core Assets [View article]
    Good article. Think this is first time in recent history that CHK has shown an improvement in Debt to EBITDA ratio. May be the best litmus test of turn around success. A lot more confidence in the turn around will come if CHK exits the service business (drilling, pumping and rental subs).
    Jan 22 07:21 AM | 2 Likes Like |Link to Comment
  • Can SandRidge Find A Solution For The Variability Of The Mississippian Play? [View article]
    Excellent article. Needless to say, not much can be added. Zeits nails it succinctly when he leads off with "The difficult to control variability of well results in the Mississippian fractured carbonate play remains one of the main challenges for operators." To which could be added "since the late 1950's."

    Although it isn't an excuse to avoid science, nor a valid reason to escape tedious analyses, the Mississippi is a game of averages. Sandridge has entered that fray with the only formula that has a prayer for ultimate success. First SD has acquired a huge block of acreage. Second, SD has installed the infrastructure to handle Mississippian production at the lowest possible long term costs (e.g.: their own electrical power generation and grid, as opposed to using antiquated single phase rural power; permanent company operated salt water disposal systems, as opposed to using third party contractors to truck produced water to commercial sites; a intensely focused effort to reduce costs, which can pay dividends when drilling and development is very repetitive and takes place in a contiguous geographic area.)

    Prior to development of the techniques currently in use to study fracture systems, the quality of a Mississippi well could never be known until it had been completed and fracked. This resulted in a significant number of wells on the books that would never pay out, but keeping them around insured the recovery of at least part of the investment (and sometimes improved prices put their PI to one and above). I don't think things have changed that much, the new techniques notwithstanding.

    Jan 14 02:03 PM | 10 Likes Like |Link to Comment
  • Keystone pipeline loses support from key customer [View news story]
    There is a piece or two of the puzzle missing here. The reason CLR signed up for the pipeline was to ameliorate the $20/barrel cost for rail. (The $20/barrel for Burlington Northern was the same reason Buffet told Obuma to oppose the pipeline.)
    Dec 17 05:36 PM | 3 Likes Like |Link to Comment
  • Is Chesapeake Still A Turnaround Story? [View article]
    Will analysts, investors, speculators, CEOs, etc. never learn that the book value of an E & P company that uses full cost accounting is meaningless ????
    Nov 24 09:44 PM | Likes Like |Link to Comment
  • 2 Takeout Candidates: Continental Resources And EOG Resources [View article]
    I can't imagine Harold Ham selling out at this point. He has realized the dream of every congenital oilman that ever lived; to wit: the discovery of a huge oil deposit, an inventory of PUD drill sites as far as the eye can see, relatively stable oil prices (unprecedented in the history of the industry), and the availability of all of the capital needed at a reasonable cost. What could be more fun than that ? Certainly not sitting on a pile of cash as high as Mount Everest and trying to keep every financial charlatan in the world including the federal government from stealing it.
    Nov 22 08:43 PM | 11 Likes Like |Link to Comment
  • Why Chesapeake Energy Isn't A Takeover Target [View article]
    I often wonder if the advocates of wind and solar think the Tooth Fairy pays for the solar panels, windmills and costly transmission lines needed to carry electricity from solar and wind farms to places where the electricity is needed. Moreover, do they actually think that the laws of physics and thermodynamics don't apply to the conversion of solar hear, or to the effect the pressure sink created at a concentration of windmills has on wind patterns in the upper atmosphere ???
    Oct 28 07:16 PM | 6 Likes Like |Link to Comment
  • Chesapeake moves higher after Citi upgrades shares to Buy [View news story]
    Classic Wall Street. Citi's "Buy" is just another superficial guess, reminiscent of the parrots who said Chesapeake could do no wrong when it was the darling of the day. Traders will jump on the bandwagon; prudent investors may want to wait for the 2013 financials to see if any of this falls to the bottom line, or if any of CHK's debt has gone away.
    Oct 24 04:52 PM | Likes Like |Link to Comment
  • Chesapeake Energy: As Takeover Rumors Swirl, Here Are A Few Things To Keep In Mind [View article]
    Got to get rid of the service companies before the big fish bite.
    Oct 18 08:04 PM | Likes Like |Link to Comment
COMMENTS STATS
480 Comments
671 Likes