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valuationiskey77

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  • Will Icahn Finally Push For A Takeover Of Chesapeake? [View article]
    Warren Buffet has managed to EARN a multiple of Karls 20B of plunder and he's done so by actually learning about businesses that earn attractive long term returns and then giving them capital and letting them grow. Karl on the other hand chooses the lazy form of investing. Use borrowed money to make short-term (short-sighted) investments in companies across industries that he has absolutely no understanding of in the slightest, force management to make short-sighted shareholder rewards most often at the expense of long-term financial success and then take to CNBC, Twitter and whatever other carnival barking media form that will have him to create enough liquidity so that he can exit. The world will be a better place once he's just a wikipedia page entry in a few years.
    Mar 2 11:18 AM | Likes Like |Link to Comment
  • Will Icahn Finally Push For A Takeover Of Chesapeake? [View article]
    Just like he forced that sale of CVR? Never seen someone step in $#it like that. He is like one of those people playing 8 games of chess at once only he doesn't really know how to play he just hopes people will get rattled and make a mistake.
    Feb 27 08:31 AM | Likes Like |Link to Comment
  • Will Icahn Finally Push For A Takeover Of Chesapeake? [View article]
    like saying I'd be president if I get elected
    Feb 26 08:30 AM | Likes Like |Link to Comment
  • Will Icahn Finally Push For A Takeover Of Chesapeake? [View article]
    Watch the balance sheet debt level....hasn't come down even though they've had an enormous operating environment with high netbacks due to sustained high crude prices (Fed/Other central bank fueled not based on supply/demand). What happens when and if crude prices trade off? CHK still has massively under-reported liabilities to drill future wells for 3rd parties that they sold VPPs to and they have long since p!ssed away the cash they got for them. This market is way lopsided with sellers at this point so there is no point for any company to make a bid for CHK as a company. Several mid size E&Ps have remarked how the XOM/XTO acquisition was a big lesson for the majors...that the two styels of companies don't really mix well. This is why they have kept the option to spin back out XTO...and I GUARANTEE YOU we see this. So Shell, Chevron, etc. are probably not buyers. Perhaps you see the large independents like APA, DVN, NBL, EOG make corporate acquisitions but there is no way they will wreck their balance sheet with CHK. Dream on, and keep shorting CHK until the debt gets below $7.5B...i.e. forever
    Feb 14 08:49 AM | Likes Like |Link to Comment
  • Will Icahn Finally Push For A Takeover Of Chesapeake? [View article]
    Will never happen because of the massive on and off balance sheet debt obligations that still remain at CHK that would make any economic bid much lower than the current share price and thus impossible to sell to shareholders. CHK is cutting spending and predicting meager growth in 2014. Look at what happened to the likes of XCO and KWK when they cut capex, production tanks and you begin the death spiral. THIS is why CHK has not brought debt down, because they can't afford to cut capex even further to do this because production will go down even faster. CHK may be better off than it was under Aubrey, but it is still a long long way away from fixed and will not fetch a bid from any major oil and gas company. Maybe an asset or two but not the debt laden franchise
    Feb 13 02:29 PM | Likes Like |Link to Comment
  • Why I'm Still Uneasy About Chesapeake Energy [View article]
    The race is on at CHK to sell assets faster than their decline in production. Given that they bought in very late to the oil game and they're still heavily in NGLs (in heavy oversupply in US and getting a smaller and smaller % of WTI price realization) vs. actual crude. So while many peers are experiencing the benefits of pad drilling which can maintain or increase production at lower drilling costs, CHK is still drilling to hold acreage which is very expensive. Their production is guided at flat for 2013...I think it is laughable that the Board thinks they can maintain production while drastically cutting drilling costs. Don't forget too that CHK has sold forward large amounts of its production through VPPs and that is not reflected as debt on their balance sheet. So even if they are successful to lop off a few billion dollars in bond debt with asset sales, they are still just rearranging the deck chairs on the Titanic. Icahn is great at making headlines, but usually knows very little about the underlying businesses he puts his money behind. He is very good at finding companies that have way too much overhead and perks and at slashing costs, but he doesn't really understand the effects of slashing a drilling budget on a shale company. He also doesn't have a very long investment horizon. I think CHK has had a brief stay of execution here, but as they said last week Chesapeake's strategy has not changed.
    Feb 10 01:08 PM | 4 Likes Like |Link to Comment
  • Chesapeake Energy In 2013: Bankruptcy Risk Is Non-Existent [View article]
    I'd be a buyer of 1-year CHK credit default swaps in here.It's a fairly cheap option on CHK going to the brink yet again. The whole credit complex has rallied on the asset sales, but as expected they came in light and late and the company is still projected to be FCF short by the tune of $3-4B if not more. The equity is clearly massively overvalued at current levels given the negative annuity of free cash...and with CHK having already levered many of its other big plays at the operating company level and now selling everything they can sell to stop the bleeding the holding company debt is rapidly losing asset coverage. I am short the stock and the credit looks mispriced in here
    Dec 31 10:46 AM | 3 Likes Like |Link to Comment
  • Exxon Should Forget Iraq And Take Out Chesapeake Energy [View article]
    This article's premise is absurd.

    Completely agree with above comment that XOM will not pay anything for CHK's equity when they can simply wait for CHK to burn a $3-5B hole in their balance sheet and come begging to sell assets at discounts to NAV. As far as XOM getting "burned" by XTO I would say the world of '12-'13 is light years away from the world of '10. In 2010 XOM bought XTO because asset packages like that simply rarely came up for sale. These days there are assets galore for sale in North Amerian gas. CHK's myriad (pyramid) of JV's, VPPs, massive on balance sheet debt (and who knows what lurks off balance sheet) make it probably the least likely takeover candidate in the North American E&P space. That said, they're compiling one hell of a tax loss carryforward for someone like DVN who has $Bs sitting offshore with a bias toward North American land produciton. That's my only outlier threat in being short CHK. If I can keep the current management in place for a while, I'm happy to ride this pig into the dust
    Dec 21 01:04 PM | 7 Likes Like |Link to Comment
  • Chesapeake Energy: Another Step In The Right Direction [View article]
    Even if "Net Debt" does get near their $9.5B target with some cash from asset sales, they are 0%!!!!! hedged on gas and their "liquids" shift is really a significant portion NGLs whose prices are highly depressed due to massive inventories in the US. They continue to outspend cash flow by massive amounts and they continue to "unlock" value. The equity markets are coming to their senses about CHK's marginal equity value given long-term gas forward prices. I'm short CHK stock.
    Dec 14 09:05 PM | 1 Like Like |Link to Comment
  • Why Chesapeake Shares Could Be Poised For A Sharp Rally Into January [View article]
    watch the asset sales...light and late
    Dec 2 12:23 PM | 2 Likes Like |Link to Comment
  • Chesapeake Will Tumble As 10-Q Sinks In [View article]
    CHK has outspent cash flow in 19 of the past 21 years. The joke is on us as bondholders and stockholders. The equity is a Level 3 Asset with no observable inputs given the significant off balance sheet liabilities. Only in Aubreyville is the solution to a cash flow shortage to increase capex in the near term before ramping it down in the out years. Should the company get ANY credibility for its word? NO. Shuttered 1Bcf of production a few quarters ago? (it was a net 300mmcfe hit to them bc they shuttered wells where they were operator but only fractional interest owners) Now those wells are back on line. The company borrowed $15.5B on its $4B revolver in 2011 and repaid $17.4B and ended the year with $1.7B outstanding. I used to live like that in college. Maybe I should have started a public company. And for all the Icahn fans, see CVR energy. The guy thinks that because he has some capital and a frequent seat on CNBC he has a license to print money. Unlike Warren Buffet, he gets involved in businesses he does not understand. Greenmail certainly can work in the short run, but it says nothing of any actual knowlege of a company like CHK's prospects. I am short shares of CHK and unlike the textbook unlimited downside, I am happy to see the dealer keep flipping cards over and watch Aubrey's house of cards crumble. Good luck with the Permian sales Aubrey. Next up at auction....unproven Utica acreage
    Aug 19 11:04 AM | Likes Like |Link to Comment
  • Chesapeake Earnings Review: Stock Seems Geared Up For Turnaround [View article]
    Love the math....selling assets worth $21/share, Aubrey claims they added reserves value of $7/share in just the 1st half of 2012....claims that natural gas production will decline industry wide...yet they chose to take off their curtailed production in a $3/mcf environment...CHK is a complete shell game with far greater financial liabilities and cash committments than the balance sheet and income statement would have you believe.
    Aug 7 11:23 AM | 2 Likes Like |Link to Comment
  • Chesapeake's Curtailment Has Gone Pooof! [View article]
    Great point on CHK's sleight of hand gas curtailment. The key word is "operated production". CHK pretty much has a finger in every gas well drilled in the US and they time and time again think they can have their cake and eat it too. By cutting down on "operated" wells where they only owned a fraction of the overall well's production, they thought they could signal to the market that 'we're cutting 1Bcf/d' when in fact it was more like 300mmcf/d of net CHK production. And these wells are not the cash consumers at CHK. The wholly owned developments wells and agreements to drill leases are whats killing CHK. And slowing these down is like trying to turn a battleship around in the Panama Canal.

    Can't wait for Q2 Earnings Call. Judging by the "Everything Must Go" strategy something tells me that CHK is racing against the clock to have some good news to report to investors when they publish the 06/30 financials with impairments, revolver balances and all sorts of fun stuff for analysts to consume.
    Jun 11 10:51 PM | Likes Like |Link to Comment
  • Chesapeake's Curtailment Has Gone Pooof! [View article]
    from CHK 01/23/2012:
    "Chesapeake Plans to Curtail its Gross Operated Gas Production by up to 1.0 Bcf per Day and Plans to Defer New Dry Gas Well Completions and Pipeline Connections Wherever Possible "

    They said we're immediately planning on cutting 500mmcfe/d of operated production and potentially up to 1Bcfe. So why did their Q1 production not reflect this (271Bcf gas production vs. 272Bcf in Q4 '11) ? Key word is "operated" production. CHK basically has their fingers in almost every gas well drilled in America through farm in agreements with other producers. CHK thought they could have their cake and eat it too by shutting in "operated" production for wells where they were only owner of a small percentage of the total gas output, but still held the operator position to direct production decisions. They figured the market would take the signal and prices would rebound and they would have only sacrificed a small percentage of their overall output. The only problem is the market didn't recover as dramatically as CHK had planned. In addition, the daily cash drain at CHK was not coming from wells that were already online and farmed out, but at the huge committment of wells that were agreed to be drilled and completed.

    Now with old 'greenmailer' Icahn taking a lot of credit for a turnaround underway at CHK, people have taken their eye off the ball that CHK still has massive cash calls in the next few years and is continuing to try to play the musical chairs game with land that is getting cheaper by the minute. I eagerly await their Q2 call because something tells me that they are really scared about what they have to report given their willingness to sell anything and everything nailed down or unattached, recently acquired or bread and butter assets. It's a true "Everything Must Go" situation. And it'll be a race to the finish at Q2 earnings I would wager.
    Jun 11 10:43 PM | 1 Like Like |Link to Comment
  • Chesapeake: Short-Term Mess, Takeover Target [View article]
    Why would a major like CVX or XOM buy CHK now with its convoluted, debt laden capital structure and a $12B equity valuation and a portfolio of acreage with limited lease lives when they can sit back and watch CHK burn itself to the ground? You saw OXY's $3.5B bid for the Permian acreage. They are completely lowballing because they know it's only a matter of time before the music stops and CHK is exposed for what it is...a giant overlevered real estate company with more uses of cash than sources as far as the eye can see
    Jun 7 04:47 PM | 3 Likes Like |Link to Comment
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