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Chesapeake Energy: Natural Gas Price Helps

Dec. 05, 2021 9:53 AM ETChesapeake Energy Corporation (CHK)35 Comments
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  • Chesapeake reported a net loss of $345 million in 3Q21, or $3.51 per share, compared to a $745 million loss, or $76.18 per share, in the year-ago period.
  • Production was 436K Boep/d this quarter, down 2% from the same quarter a year ago and up 0.7% sequentially.
  • Chesapeake Energy increased the base dividend by 27% to $1.75 per share annually. The board authorized a $1 billion stock repurchase.
  • Looking for a helping hand in the market? Members of The Gold And Oil Corner get exclusive ideas and guidance to navigate any climate. Learn More »
Fracking Oil Well

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Oklahoma City-based Chesapeake Energy (NASDAQ:CHK) and 40 affiliates voluntarily filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on June 28, 2020.

On February 10, 2021, Chesapeake Energy Corp. emerged from

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This article was written by

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Fun Trading is a retired engineer and independent investor. In addition to writing on investing in all aspects of gold, oil, and gas, he runs his own portfolio..

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (35)

Does this dog still have any oil in portfolio?
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@EF Hutton

Look at my article, you have the graph repartition oil, NG, NGL.
@EF Hutton if you follow CHK like me since 2010, the original unadjusted price is at 500 dollars per share. like me, i bought at 300. then it went bankrupted. got delisted, stock disappeared, i lost all the shares. now it relisted in nasdaq JUST BECAUSE every stock is overvalue and they can squeeze more money.
@karondongotbanned I sold my small position for huge tax loss yesterday. I was an unsecured bond holder
elliot_mllr profile picture
Has the dramatic decline in the Henry Hub price in the last week of trading impacted your view, or do you think that it is temporary based on short term weather conditions and predictions?
Elliot Miller
Fun Trading profile picture

I believe this setback is temporarily based on short-term weather conditions, as you said. The underlying fundamentals are strong and getting stronger. Natural gas is highly cyclical and will create volatility.
kwayne01 profile picture
Hedging was specifically not discussed, but it is a big part of the story for CHK. The company is currently highly hedged, something like 75% for the remainder of 2021 and 50% for 2022. The hedges were made during bankruptcy at relatively low prices. The result of the hedges is that CHK is showing an accounting loss while still being cash flow positive. Being cash flow positive allows them to pay the dividend without increasing debt. To me a big part of the upside for CHK is that the company could become extremely profitable when the hedges roll off.
Fun Trading profile picture

Thank you, good points, It is always possible, but it is dangerous to think too far into the future. Ask a few old shareholders how they learn that.
Joe Away from Beach profile picture
The in the money long term warrants might the best way play this stock
Fun Trading profile picture
@Joe Away from Beach

Thank you for your suggestion.
Optionputter profile picture
@Joe Away from Beach How does one trade warrants? Sounds interesting.
Joe Eifrid profile picture
@Optionputter The warrants trade like a stock. I dont have the symbols but easily found typing CHK in a popup menu.
Would not buy the warrants. Deep in the money. Buy the common and get the dividend.
Previous CHK shareholders would like a word with management.
Fun Trading profile picture

I can understand that...
@jminni i lost all my shares at 300 dollars per share. it wasnt pretty
Optionputter profile picture
Yield trap? Pass.
Fun Trading profile picture

CHK is in much better shape now after the restructuring and the jump in NG. What do you mean by yield trap? Thank you for explaining...
Littlebeef2 profile picture
@Fun Trading Not sure how a 345 million dollar less leads to a large dividend increase and a billion dollar share purchase. Isn’t the corporate goal to make profit? Maybe not if they Woke.
Fun Trading profile picture

I am generally against those buybacks. $1 billion over two years is a lot of cash that they are not making. Increased dividends could eventually be explained by future free cash flow. This policy of dead money (in business terms) could backfire.
Philip3 profile picture
Not sure how a 345 million dollar less keads to a large dividend increase and a billion dollar share purchase.
Fun Trading profile picture

Yes, I think they bet on the next few quarters bonanza?
nathanjw7453 profile picture
@Philip3 was thinking the same
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