Harry Johnson

Harry Johnson
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  • Chesapeake Energy: Managing Its Way Into Analysts' Good Graces  [View article]
    Thanks Mike , Jeep and Fracjob. A lot of food for thought in your comments. May take me a while to digest it all. Think I read that EU is China's biggest market. Don't think China can build domestic demand fast enough to replace what they lose in the EU market. EU banks have more sovereign debt on the books than capital. Unless there is some special dispensation to carry this debt at par, the banks are insolvent. Even if that could be accomplished, how would the weaker EU countries finance their deficits in the future ? Guess one of the biggest questions is whether the near term will bring inflation or deflation. Mathematically impossible for a country to de-leverage government and private debt at the same time unless the country runs a trade surplus. Everybody can't be a net exporter - somebody has to import. Lots of cross currents. The two big crackers in the works for Marcellus ethane could be the start of an Appalachian petrochem complex modeled after the gulf coast. NG to liquid fuel may only be a couple of years away. This sort of activity could narrow the spread between the price of NG and crude. Wonder what that spread is likely to be two or three years out..... Still, right now, it is hard for the price of oil to pass a gut check when just about everything else is falling in value.
    Jan 13, 2012. 01:28 PM | 3 Likes Like |Link to Comment
  • Chesapeake Energy: Managing Its Way Into Analysts' Good Graces  [View article]
    Copper and numerous other commodities have priced in the eminent depression in Europe and the coming hard landing for the Chinese economy. Any chance that the price of oil will experience the same fate in the near future ? Anybody done any number crunching on the oil price that would put 50 % of land based rigs on the ground and make a lot of shale acreage worthless ?

    (I think 60% of U.S. land rigs were idled when oil went to $40/barrel just a few years ago after the short squeeze on The SEM Group ended.)
    Jan 12, 2012. 04:55 PM | 3 Likes Like |Link to Comment
  • A $2 Billion Deal With Total The Latest Update For The Chesapeake Energy Joint-Venture Scorecard  [View article]
    A true statement Craig, and all it takes is money.
    Jan 7, 2012. 01:08 PM | Likes Like |Link to Comment
  • A $2 Billion Deal With Total The Latest Update For The Chesapeake Energy Joint-Venture Scorecard  [View article]
    Don't forget, CHK uses full cost accounting. Under Full Cost you can capitalize all expenditures except those for Mr. Coffee and Charmin. If balance sheets were to ever reflect the true worth of an oil company's assets, it would be mere coincidence. But those based on Full Cost are prone to be more egregiously inflated than would be the case were they based upon Successful Efforts. Also, it might prove useful to bear in mind that Full Cost was the gift of the old Arthur Anderson firm that went down with the Enron shipwreck.
    Jan 6, 2012. 01:56 PM | Likes Like |Link to Comment
  • 3 Reasons To Buy Linn Energy This Week  [View article]
    Todd:
    Your four points bring to mind the old saw "Judgment comes from experience and experience from bad judgment." In that context, I confess to being highly experienced.

    No. 4 has bitten me more than once. In the past, when concerned employees came to me with great apprehension about some new crippling regulation, my advice was "Do the best you can and don't lose sleep over it - the federal government can put us out of business on any given morning with the stroke of the pen."

    Takes me back to the Silver corner the Hunts pulled off until the "regulators" announced one bright morning that physical silver could no longer be delivered against long contracts, but instead long contracts must be matched with a short. This, of course, compelled the Hunts to sell for the first time, breaking the market and returning the price of silver to single digits.
    Jan 5, 2012. 01:15 PM | 3 Likes Like |Link to Comment
  • A $2 Billion Deal With Total The Latest Update For The Chesapeake Energy Joint-Venture Scorecard  [View article]
    Could be wrong, but I think CHK's 2011 Form 10K will answer all of our questions, especially if they file copies of their JV Agreements with it.
    Jan 5, 2012. 12:44 PM | Likes Like |Link to Comment
  • Gasfrac Energy Services: Fracturing Game Changer  [View article]
    From at least 1960 on, fracturing has required a minimum of two casing strings covering aquifers, sands, shale fissures and other underground repositories of fresh water. In the simplest application, surface casing is set through all fresh water sources, followed by production casing which is set from ground level through the surface casing to the prospective production zone. Thus, for fracture fluids to reach fresh water repositories, they must first rupture the production casing; then, the surface casing and its concrete shroud.

    It isn't hard to pressure test the casing prior to fracing. In all probability, operators do this routinely. The casing is full of fluid prior to the frac and all that is required is to kick in one of the frac pumps for a couple of minutes and run the pressure up to the target pressure of the frac job.

    Adideo, you have nailed the only risk, that being a legislative one. And that is a big one so long as the Country operates on emotion rather than a careful consideration of scientific fact.
    Jan 4, 2012. 05:32 PM | 5 Likes Like |Link to Comment
  • A $2 Billion Deal With Total The Latest Update For The Chesapeake Energy Joint-Venture Scorecard  [View article]
    Don't purport to understand all this, and there is no denying that the CHK folks are absolute magicians at pulling rabbits out of the hat, but the boat is leaking somewhere. If you dump $13 billion on top of all of CHK's ongoing successes in the internal development of their acreage, shouldn't it show up somewhere in more dramatic numbers on their financial statement, notwithstanding the fact that some of that $13 billion has yet to be realized in drilling cost carries ?

    A couple of things might be detering a major from acquiring CHK. First, the JV partners are a turn off for the likes of XOM. Second, the U.S. majors have seen a lot of things come and go and probably are not as excited about shale as some of the rest of the global community. Third, at some point in their history, the majors have shed a lot of the hardware that CHK owns (drilling rigs, fracturing equipment, heavy oilfield rig-up trucks, etc.). Acquiring a popular company and chopping it up to fit another corporate culture doesn't work too well for the retail end of a major oil company's business. Corporate raiders don't seem to mind the stigma, but I doubt that very many Fortune 500 execs are anxious to go there.
    Jan 4, 2012. 03:52 PM | 1 Like Like |Link to Comment
  • Chesapeake Energy Corporation Announces Substantial Progress in Achieving Its 30/25 Plan 
    "Chesapeake cautions you not to place undue reliance on its forward-looking statements, which speak only as of the date of this news release, and undertakes no obligation to update this information."

    What is the status of the $4 billion revolver ?
    Jan 4, 2012. 11:42 AM | Likes Like
  • 3 Reasons To Buy Linn Energy This Week  [View article]
    Ah yes, the SEM Group. Everybody and their pup analyzed the oil price movement from $70 to $150, which of course was occasioned by the squeeze the people that read other peoples mail put on Sem's short position. I didn't see any comment (other than mine, which never saw the light of day) pointing out that three days after Sem took Chapter 11, the price of crude broke and didn't stop falling until it reached $40. The lesson to be learned from the Sem disaster is never bet too heavily on fundamentals. It has been my experience that loses that result from stupidity are more easily endured than loses that result from being right, but getting killed before your position is vindicated by popular opinion.
    Jan 4, 2012. 11:37 AM | 3 Likes Like |Link to Comment
  • 3 Reasons To Buy Linn Energy This Week  [View article]
    rip: Thanks for the link. LINE's hedging is well diversified. Some surprising names among the counterparties. On second thought, it shouldn't be surprising, since banks behave much like sheep, or perhaps to be more accurate, like lemmings.
    Jan 4, 2012. 11:17 AM | 2 Likes Like |Link to Comment
  • Chesapeake Energy: Managing Its Way Into Analysts' Good Graces  [View article]
    Come, come children. Like Will Rogers said "We are all ignorant - just about different things."
    Jan 4, 2012. 10:54 AM | 2 Likes Like |Link to Comment
  • 3 Reasons To Buy Linn Energy This Week  [View article]
    Hedges on natural gas have been beneficial to a number of companies during the past several years. I always wonder who the counterparties are that are taking the hit. Can't imagine any end users of NG getting into that saddle, so it must be the same breed of financial geniuses that gave us subprime mortgages, CDSs, CDOs, etc. using OPM. Makes it nice for oil and gas companies, but hard on investors who let these types run their money.
    Jan 3, 2012. 12:02 PM | 5 Likes Like |Link to Comment
  • Chesapeake Energy: Managing Its Way Into Analysts' Good Graces  [View article]
    It would be interesting to see the cumulative profit (or loss) from CHK's hedging from day one. I'm too lazy to do this, but if someone does undertake the project, remember to include commissions and cost of capital to maintain the hedge. Exclude any open contracts of course.
    Jan 3, 2012. 11:48 AM | Likes Like |Link to Comment
  • Chesapeake Energy: Managing Its Way Into Analysts' Good Graces  [View article]
    David: Think CLR has done some 8 lateral wells on 1280 acre units, both in OK in the Woodford Cana and in ND in the Bakken. Devon is also active in the OK Woodford.

    Used to think I was born 20 years too late to see the most exciting times in the oil industry. Now it appears I was born 20 years too early.
    Jan 2, 2012. 07:53 PM | 2 Likes Like |Link to Comment
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