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  • Chesapeake Energy: Buy Into The Weakness Post-Earnings [View article]
    Here's one from the heart of the oil patch, a petroleum engineer with 30+ years of experience in upstream finance and evaluations and a life-long personal investment manager: Aubrey is nothing more than a very aggressive landman. His best deals have always been based on getting to the play first, leasing the fastest for the lowest prices, then leveraging the land position through JVs and asset sales. That's fine, but it's always a quick shot and never sustained growth. If you want to know how badly that can turn out, go back 15 or so years and look at how CHK handled Masters Creek. Aubrey's real value is in finding the next big thing and driving his people to lease, lease, lease. Once he's exhausted his JV capabilities the company's left with "nothing" but the option to drill and produce, like a real company. Two big problems with that: 1) you can't horizontally drill, frac and produce gas properties at $2/MCF (or $3, or even $4). 2) CHK is not particularly good at drilling and producing. The only hope here is that gas prices will begin to recover and the unwashed masses will stream back into CHK because they're always attracted by bright lights and loud noises. But why take the chance that CHK is going to dissolve in Aubrey's mistakes when there are a dozen or more great nat gas companies that are well run and crisis free? Take a look at UPL and compare all meaningful metrics; there's no reason to own CHK.
    May 3, 2012. 12:44 AM | 1 Like Like |Link to Comment
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