JWD

Chesapeake Energy: Back from the Dead

Aubrey just personally paid $1.6 billion to gain some experience. Given that price I imagine he has learned something.

Chesapeake Energy Pre-Call Notes: Another Quarter, Another Beat

Hedging Liability at 3/31/08 is Negative $2.1 Billion. By the end of the 2nd qtr becuase gas prices went higher to end at $13.25 MCF, CHK hedging liability increased another $2.1 billion to a total of $4.2 Billion on 6/30/2008. But gas prices fall from $13.25 on June 30 to to $10.25 on July 25. The $3 difference times the 1.5 trillion prouction volume hedged (over next 2.5 years) results in a Mark to Market gain of $4.7 Billion (see earning release)reversing entirely the first half 2008 hedging loss. Long story short CHK does much better in the next two years if the price stays at $10 per MCF or lower.