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Harry Johnson

Harry Johnson
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  • Chesapeake Energy: Great Company But Negative Free Cash Flows Are A Huge Turn-Off [View article]
    If you are below the glideslope on short final, you can change to the best pilot in the world, but at best, you won't end up with an intact airplane.
    Sep 28 02:23 PM | Likes Like |Link to Comment
  • Shell pulling up stakes, selling Kansas assets [View news story]
    So, the Mississippi Lime disappoints once again. Didn't someone say "irrational exuberance" when all this started ? (Oh, that was me.)
    Sep 23 04:53 PM | Likes Like |Link to Comment
  • Chesapeake Energy: Key Oil And Natural Gas Developments Impacting The Company's Growth [View article]
    Your comment about the safety of drinking water in fracing areas reminded me of a situation a couple of decades ago when the EPA came up with drinking water standards for water wells in Oklahoma. After water from several wells tested "High" for levels of arsenic, the bureaucrats got their bloomers in a knot and started floating all sorts of remedial balloons. That is, until it was discovered that the "High" arsenic level was common in water wells throughout Oklahoma and had been that way since the planet cooled.
    Aug 23 07:55 AM | 5 Likes Like |Link to Comment
  • SandRidge Energy: Heading To $10? [View article]
    The only things needed to make this all come true are -

    1) Oil prices at or above $100/bbl, and

    2) A residual productive capacity of Mississippi lime wells after two years on line that provides some marginal income above the high operating costs of wells with an extremely high water cut.
    Aug 23 07:30 AM | 1 Like Like |Link to Comment
  • Did Shell Just Fail To Get Lucky, Or Are Eagle Ford, Other Shale Oil Plays Potential Money Pits? [View article]
    Ah, sweet mystery of life. Titans of the oil industry blunted their picks, so to speak, in the 1950's in the Sprayberry Trend of Texas and in the 60's in the Sooner Trend (Mississippi Lime) of Oklahoma. Both areas produced dismal economic results, yet many of the wells limped along until the turn of the century when those areas again became the darlings of drillers everywhere.
    Aug 18 03:12 PM | 1 Like Like |Link to Comment
  • Earnings And Forecasts Show Chesapeake Energy Could Be Your Ultimate Growth Stock [View article]
    I am always bemused by the fact that CHK's acreage position never changes. It peaked originally at 15 million acres and after thousands of wells, numerous JVs and four or five outright sales, it is still touted as 15 million acres. The inference always seems to be that the 15 million acres is still sitting out there, waiting to be exploited.

    Caveat: Not intended to detract from an insightful analysis.
    Aug 6 05:02 PM | 1 Like Like |Link to Comment
  • 5 Things I Don't Like About Chesapeake Energy, And How They Affect Numbers [View article]
    Not to denigrate an excellent post-mortem, but a 30 second exercise in long division at the zenith of CHK's popularity and stock price would have saved a lot of people a lot of money. The mathematical exercise to which I refer was simply a determination of CHK's average net production per net well, which was less than 100 Mcf per day. No algorithms needed to tell you this wouldn't end well when drilling and completion costs were topping out at $10 million or more a pop (not even with $10/Mcf gas).
    Jul 31 03:15 PM | 2 Likes Like |Link to Comment
  • Is SandRidge Energy A Risky Bet? [View article]
    I guess if the majority of investors believe that price to book ratio is relevant, that will make it so. But as a gauge of value for a company that uses full cost accounting (as most E & P companies do), book value doesn't even rise to the level of an educated guess.
    Jul 26 10:47 PM | Likes Like |Link to Comment
  • Buy Chesapeake With A 36% Discount To Intrinsic Value [View article]
    Might be 36% if.......

    Oil prices don't soften in the face of rapidly increasing world supply and weak demand.

    Drilling and other service subs don't become too big a drag on earnings.

    CHK plugs the hundreds of wells it now operates at a loss.

    The Company can find a way to pay back $10 Billion in debt before it has to be rolled over at substantially higher rates.

    The market for assets the Company intends to sell doesn't get any softer.

    In finishing up JVs, the Company doesn't have to come up with too much out of its own pocket to replace partners' prepayments that were used for other things.

    They lose the pretense that CHK is an efficient operator and bring their overhead into line with their peers.
    Jul 9 01:51 PM | 1 Like Like |Link to Comment
  • Linn Energy: Many Ponzi-Like MLP Blow-Ups To Follow [View article]
    Since the early 1980's when oil and gas income funds first appeared, I have been a voice in the wilderness crying that oil and gas income funds, oil and gas MLPs, and oil and gas royalty funds distributions are anywhere from 50% to 90% return of capital. Thirty years and several major disasters later and still no one is listening.
    Jul 7 10:10 PM | 1 Like Like |Link to Comment
  • Chesapeake (CHK) CEO Doug Lawler says the $1B asset sale to Exco Resources (XCO) brings the value of CHK's YTD asset sales to ~$3.6B; combined with CHK's anticipated operating cash flow, the sales will allow the company to fully fund its 2013 capital spending budget. The sale is part of CHK's plan to sell up to $7B in assets to raise cash. CHK +0.2% premarket. [View news story]
    Passed by CHK sub's rig yard yesterday, and they are still building rigs. Hard to figure out that strategy when they can't keep all they already own busy. (I know the new ones are more efficient. So are new cars, but if you can't afford a new one, you make do with the old one.)
    Jul 3 05:30 PM | Likes Like |Link to Comment
  • In hundreds of cases across the U.S., drillers have agreed to cash settlements with people who say fracking ruined their water, according to a Bloomberg analysis of legal and regulatory filings. The strategy keeps data from regulators, policymakers, the media and health researchers, and makes it difficult to challenge the industry’s claim that fracking has never tainted anyone’s water. [View news story]
    "The strategy keeps data from regulators, policymakers, the media and health researchers, and makes it difficult to challenge the industry’s claim that fracking has never tainted anyone’s water."

    What a crock !

    It used to be that reporters used facts to write a story. Then came fabrications based on a few facts out of context. Now some journalists can't even tell intelligent lies.

    No doubt the tainted water went away right after the settlements; otherwise the Bloombergs of the world could compile their own private map of tainted water wells. Then they could use public records to locate fraced wells on their tainted wells map and see if they have something to talk about. But that would be too much work and, worse, it might not support the news they want to write.
    Jun 6 05:27 PM | 4 Likes Like |Link to Comment
  • Exxon Mobil CEO: We're Going In, Can't Pull Up, Brace For Impact [View article]
    Wow ! The good I see in all of this discussion is that a lot of people are giving the subject serious consideration (albeit most with a built in bias, which is okay for healthy debate) in a search for the best answer. I don't have a handle on it, but rather than "cap and trade" wouldn't a policy of "plant and trade" make more sense. Does reforestation make a dent, or is it another 1% solution ?
    Jun 3 03:45 PM | Likes Like |Link to Comment
  • The Short-Term Noise In Linn Energy May Be A Buying Opportunity [View article]


    "In addition, Mr. Schuringa mentioned that it was easy for him to project Linn Energy's future DCF as its production is 10% hedged for four to six years out."

    Very easy if you know with certainty what that production will be. Reservoir engineering isn't like counting widgets in a warehouse and selling a fixed number every year. It is somewhat analogous to storing your wheat crop, programming your business plan based on selling 10% every year, only to find out in year seven that the mice have eaten 30% out of the bottom layers that you couldn't see.
    Jun 1 10:55 AM | 4 Likes Like |Link to Comment
  • The Short-Term Noise In Linn Energy May Be A Buying Opportunity [View article]
    Every once in a while somebody reminds us that oil and gas reserves are wasting assets. Royalty trusts start with a specific set of reserves, and when they have been depleted, units in the trust are worth zero. A significant difference between RTs and MLPs is the fact that the latter can reinvent itself by acquiring additional reserves (e.g: Linn's acquisition of Berry). If the cash flow from an acquisition exceeds debt service and the excess goes to distributions, everybody is happy. If cash flow from an acquisition doesn't cover debt service and it becomes necessary to divert a portion of cash flow that was previously distributed to make up the difference, everybody is unhappy (except the folks who sold the properties to the MLP). Simple to explain; impossible to predict.
    Jun 1 10:44 AM | 4 Likes Like |Link to Comment
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