CHK - Chesapeake Energy

[fareastwarriors]

http://www.cnbc.com/id/100669188

 

 

What Chesapeake's Tax Bill Tells Us About Its Profits

 

[nkp007]

http://www.cnbc.com/id/100669188

 

 

What Chesapeake's Tax Bill Tells Us About Its Profits

 

Chesapeake is spending a very elevated amount on capex as it transitions to more liquids production. As a result, the accelerated deductions it takes due to increased capex makes sense.

 

Hopefully in 2014 and 2015, they reduce the capex as they become satisfied by both 1) better natural gas prices and 2) their liquids production.

[fareastwarriors]

Chesapeake Earnings: Driller Boosts Output Targets .

 

http://online.wsj.com/article/SB10001424127887323628004578456754091183418.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Revenue rose 42% to $3.42 billion. Analysts polled by Thomson Reuters expected a profit of 25 cents on revenue of $2.85 billion.

 

Total production increased 9% from the year earlier, to 4.0 billion cubic feet per day.

 

 

 

Separately Wednesday, Semgroup Corp. SEMG +3.16%said it has agreed to buy Mid-America Midstream Gas Services LLC—the owner of gas-gathering and gas-processing assets in the Mississippi Lime formation—from Chesapeake for $300 million in cash. The deal is expected to close in the third quarter.

[muscleman]

Chesapeake Earnings: Driller Boosts Output Targets .

 

http://online.wsj.com/article/SB10001424127887323628004578456754091183418.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Revenue rose 42% to $3.42 billion. Analysts polled by Thomson Reuters expected a profit of 25 cents on revenue of $2.85 billion.

 

Total production increased 9% from the year earlier, to 4.0 billion cubic feet per day.

 

 

 

Separately Wednesday, Semgroup Corp. SEMG +3.16%said it has agreed to buy Mid-America Midstream Gas Services LLC—the owner of gas-gathering and gas-processing assets in the Mississippi Lime formation—from Chesapeake for $300 million in cash. The deal is expected to close in the third quarter.

 

Nice!

The media kept talking about CHK's liquidity short fall, but when I look at CHK's long term bonds, they are trading at a yield of 2-4%. That clearly says that CHK's liquidity position is solid.

[plato1976]

don't think chk has a short term liquidity issue

but what really worries me is their asset sale plan

Seems they can only sell assets at fire sale price now - this will dramatically reduce IV

Every single buyer on this earth knows CHK needs money, and even SINOPEC got a pretty sweet deal - historically Chinese corps usually overpaid for oversea assets due to various reasons

 

Chesapeake Earnings: Driller Boosts Output Targets .

 

http://online.wsj.com/article/SB10001424127887323628004578456754091183418.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Revenue rose 42% to $3.42 billion. Analysts polled by Thomson Reuters expected a profit of 25 cents on revenue of $2.85 billion.

 

Total production increased 9% from the year earlier, to 4.0 billion cubic feet per day.

 

 

 

Separately Wednesday, Semgroup Corp. SEMG +3.16%said it has agreed to buy Mid-America Midstream Gas Services LLC—the owner of gas-gathering and gas-processing assets in the Mississippi Lime formation—from Chesapeake for $300 million in cash. The deal is expected to close in the third quarter.

 

Nice!

The media kept talking about CHK's liquidity short fall, but when I look at CHK's long term bonds, they are trading at a yield of 2-4%. That clearly says that CHK's liquidity position is solid.

[muscleman]

don't think chk has a short term liquidity issue

but what really worries me is their asset sale plan

Seems they can only sell assets at fire sale price now - this will dramatically reduce IV

Every single buyer on this earth knows CHK needs money, and even SINOPEC got a pretty sweet deal - historically Chinese corps usually overpaid for oversea assets due to various reasons

 

Chesapeake Earnings: Driller Boosts Output Targets .

 

http://online.wsj.com/article/SB10001424127887323628004578456754091183418.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Revenue rose 42% to $3.42 billion. Analysts polled by Thomson Reuters expected a profit of 25 cents on revenue of $2.85 billion.

 

Total production increased 9% from the year earlier, to 4.0 billion cubic feet per day.

 

 

 

Separately Wednesday, Semgroup Corp. SEMG +3.16%said it has agreed to buy Mid-America Midstream Gas Services LLC—the owner of gas-gathering and gas-processing assets in the Mississippi Lime formation—from Chesapeake for $300 million in cash. The deal is expected to close in the third quarter.

 

Nice!

The media kept talking about CHK's liquidity short fall, but when I look at CHK's long term bonds, they are trading at a yield of 2-4%. That clearly says that CHK's liquidity position is solid.

 

This is why we need margin of safety before investing in stocks.

CHK's NAV according to some chatters in a LongLeaf Partners' presentation, is $51 assuming $75 oil and $4.5 gas.

That is about $33 Bn. Even if in the worst case scenario, CHK has to erode $10 Bn in value to achieve these sale targets, we are still buying at 60% of NAV. The current situation looks to me that they would erode at most $3-5 bn of value, so we should be in good shape.

[compoundinglife]

Hmm, Lou resigned from the board. I really liked having him there. Will be interesting to see if keeps his shares.

 

http://www.ogfj.com/articles/2013/05/simpson-to-resign-as-chesapeake-energy-director-.html

[fareastwarriors]

http://www.bloomberg.com/news/2013-05-13/chesapeake-ruling-shocks-with-117-million-loss-credit-markets.html

 

Chesapeake Ruling Shocks With $117 Million Loss

[nkp007]

Hmm, Lou resigned from the board. I really liked having him there. Will be interesting to see if keeps his shares.

 

http://www.ogfj.com/articles/2013/05/simpson-to-resign-as-chesapeake-energy-director-.html

 

Any ideas why he left?

[LC]

Hmm, Lou resigned from the board. I really liked having him there. Will be interesting to see if keeps his shares.

 

http://www.ogfj.com/articles/2013/05/simpson-to-resign-as-chesapeake-energy-director-.html

 

Any ideas why he left?

Not sure...do you know if he sat on any committees? I know when auditors resign it's a bad sign, not sure what it says when a board member resigns.

[muscleman]

http://www.bloomberg.com/news/2013-05-13/chesapeake-ruling-shocks-with-117-million-loss-credit-markets.html

 

Chesapeake Ruling Shocks With $117 Million Loss

 

Cool. Looks like CHK just picked up a little bit more money.

I am surprised that no one posted the ruling updates on May 8th.

[nkp007]

http://www.sec.gov/Archives/edgar/data/1056831/000105683113000002/submission051513.txt

 

berkowitz picks up some $chk - hopefully it doesn't drop by 50% like $bac did after he picked it up.

 

anyways, this doesn't make our facts any more or less right.

[muscleman]

http://www.sec.gov/Archives/edgar/data/1056831/000105683113000002/submission051513.txt

 

berkowitz picks up some $chk - hopefully it doesn't drop by 50% like $bac did after he picked it up.

 

anyways, this doesn't make our facts any more or less right.

 

This is weird.....

Is he good at energy companies?

I thought he only sticks to Insurance, REIT and Financials.

[PlanMaestro]

this doesn't make our facts any more or less right.

 

Specially when we already have T-bone.

[compoundinglife]

http://www.sec.gov/Archives/edgar/data/1056831/000105683113000002/submission051513.txt

 

berkowitz picks up some $chk - hopefully it doesn't drop by 50% like $bac did after he picked it up.

 

anyways, this doesn't make our facts any more or less right.

 

This is weird.....

Is he good at energy companies?

I thought he only sticks to Insurance, REIT and Financials.

 

http://www.dataroma.com/m/hist/p_hist.php?f=fairx

 

I think he sticks to whatever he feels his cheap. Has some history in the energy/utility space.

[nkp007]

http://www.sec.gov/Archives/edgar/data/1056831/000105683113000002/submission051513.txt

 

berkowitz picks up some $chk - hopefully it doesn't drop by 50% like $bac did after he picked it up.

 

anyways, this doesn't make our facts any more or less right.

 

This is weird.....

Is he good at energy companies?

I thought he only sticks to Insurance, REIT and Financials.

 

http://www.dataroma.com/m/hist/p_hist.php?f=fairx

 

I think he sticks to whatever he feels his cheap. Has some history in the energy/utility space.

 

$CHK is cheap with limited downside in 2013 and into 2014 due to hedges but...

 

the crux of this investment is a bet on oil prices. If oil stays above $80, $CHK wins.

 

Meanwhile, everyone else thinks $CHK is a natural gas company that is almost bankrupt due to debt issues. Check out the maturity schedule in the presentation for reality.

[ShahKhezri]

BB was pretty early on CNQ.

[plato1976]

what if oil falls below 80 but NG rises above $6 ?

 

http://www.sec.gov/Archives/edgar/data/1056831/000105683113000002/submission051513.txt

 

berkowitz picks up some $chk - hopefully it doesn't drop by 50% like $bac did after he picked it up.

 

anyways, this doesn't make our facts any more or less right.

 

This is weird.....

Is he good at energy companies?

I thought he only sticks to Insurance, REIT and Financials.

 

http://www.dataroma.com/m/hist/p_hist.php?f=fairx

 

I think he sticks to whatever he feels his cheap. Has some history in the energy/utility space.

 

$CHK is cheap with limited downside in 2013 and into 2014 due to hedges but...

 

the crux of this investment is a bet on oil prices. If oil stays above $80, $CHK wins.

 

Meanwhile, everyone else thinks $CHK is a natural gas company that is almost bankrupt due to debt issues. Check out the maturity schedule in the presentation for reality.

[T-bone1]

this doesn't make our facts any more or less right.

 

Specially when we already have T-bone.

 

Thanks Plan, it's nice to see both Pabrai and Berkowitz investing in the company (alongside Icahn & Southeastern) . . . of course we won't know if we are correct until Ericopoly takes a position.

 

BTW I really enjoyed and was impressed with your tweet on "roads not taken" . . . some very good points to be made there.

 

T-Bone1

[nkp007]

Looks like Chairman Archie Dunham bought a lot of shares yesterday - http://www.sec.gov/Archives/edgar/data/895126/000089512613000160/xslF345X03/edgardoc.xml

 

450,000 @ $20.89 ($9.4 million)

 

His total stake is now 799,138 shares or approximately $16.7 million as of today's close.

 

Impressive.

[plato1976]

Pretty intensive insider buy recently. I suppose these money is from their own pockets...

 

May 20, 2013 RYAN THOMAS L

Director

2,000 Direct Purchase at $20.95 per share. 41,900

May 20, 2013 RASPINO LOUIS

Director

15,000 Direct Purchase at $21.12 per share. 316,800

May 19, 2013 RASPINO LOUIS

Director

10,000 Direct Purchase at $20.86 per share. 208,600

May 19, 2013 DUNHAM ARCHIE W

Director

450,000 Direct Purchase at $20.89 per share. 9,400,500

 

Looks like Chairman Archie Dunham bought a lot of shares yesterday - http://www.sec.gov/Archives/edgar/data/895126/000089512613000160/xslF345X03/edgardoc.xml

 

450,000 @ $20.89 ($9.4 million)

 

His total stake is now 799,138 shares or approximately $16.7 million as of today's close.

 

Impressive.

[fareastwarriors]

http://dealbook.nytimes.com/2013/07/03/chesapeake-discovers-the-price-of-a-costly-quest-for-oil/

 

Chesapeake Discovers the Price of a Costly Quest for Oil

[plato1976]

Quite a mystery to me that the share price keeps depressed although they are deleveraging their balance sheet gradually

 

http://dealbook.nytimes.com/2013/07/03/chesapeake-discovers-the-price-of-a-costly-quest-for-oil/

 

Chesapeake Discovers the Price of a Costly Quest for Oil

[nkp007]

Quite a mystery to me that the share price keeps depressed although they are deleveraging their balance sheet gradually

 

http://dealbook.nytimes.com/2013/07/03/chesapeake-discovers-the-price-of-a-costly-quest-for-oil/

 

Chesapeake Discovers the Price of a Costly Quest for Oil

 

 

Lot of the articles that have come out recently definitely paint the company in a desperate light because of the cheap sale price of their closed sales.

 

However,

 

1) The consensus is ignoring the immense cash flow that the company generates and that only 36% of revenues come from natural gas (and I'm sure a lot of this production is incidental to oil and NGL). It's amazing to me that even Chesapeake touts the "we are the natural gas champion" story. People will eventually be very surprised.

 

2) The consensus is ignoring that if these are the properties that Chesapeake is selling, imagine the value of what they are keeping.

 

This investment for me has hinged on whether oil will stay above $80 in the long-term. Given that the marginal cost of production of a barrel in the U.S. is apparently closer to $90, I feel it's a decent bet.

[plato1976]

May I know where did you get the $90 marginal cost data ?

looks like CHK and SD have a much lower cost profile for oil

, and I used to think they are the "marginal" suppliers, esp. CHK

 

Quite a mystery to me that the share price keeps depressed although they are deleveraging their balance sheet gradually

 

http://dealbook.nytimes.com/2013/07/03/chesapeake-discovers-the-price-of-a-costly-quest-for-oil/

 

Chesapeake Discovers the Price of a Costly Quest for Oil

 

 

Lot of the articles that have come out recently definitely paint the company in a desperate light because of the cheap sale price of their closed sales.

 

However,

 

1) The consensus is ignoring the immense cash flow that the company generates and that only 36% of revenues come from natural gas (and I'm sure a lot of this production is incidental to oil and NGL). It's amazing to me that even Chesapeake touts the "we are the natural gas champion" story. People will eventually be very surprised.

 

2) The consensus is ignoring that if these are the properties that Chesapeake is selling, imagine the value of what they are keeping.

 

This investment for me has hinged on whether oil will stay above $80 in the long-term. Given that the marginal cost of production of a barrel in the U.S. is apparently closer to $90, I feel it's a decent bet.