CorpRaider Posted November 6, 2013 Share Posted November 6, 2013 CHK, DVN and SD were all taken to the woodshed. Figured maybe the crappy woodford wells at SD hit DVN and SD, but not sure if CHK even has any exposure there. I'm not optimistic for the price of crude or I would get long, especially SD and CHK with former great wildcatters putting together the assets and now rational financial minds at the helm for development of those assets. Link to comment Share on other sites More sharing options...
alertmeipp Posted November 7, 2013 Share Posted November 7, 2013 the hot money is going for Twitter IPO, once the IPO is done, we are back to new high. 8) Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted November 7, 2013 Share Posted November 7, 2013 Chesapeake's reserve estimation and accounting are very aggressive. 1- They book PDNPs when they probably shouldn't. I think it's too early to tell if secondary recovery techniques will be economic on shale deposits. 2- They capitalize a lot of internal costs and interest into their properties. My blog post on the company: http://wp.me/p1mOGr-vM *I own CHK puts. I don't know why I'm often on the other side of CoBaF (e.g. JCP, BBRY, etc.). Link to comment Share on other sites More sharing options...
fareastwarriors Posted November 7, 2013 Share Posted November 7, 2013 http://online.wsj.com/news/articles/SB10001424052702303763804579181462911999616?mod=WSJ_business_whatsNews Chesapeake Energy Production Outlook Sparks Anxiety New Chief Aims to Narrow Gap Between Spending and Cash Flow Link to comment Share on other sites More sharing options...
alertmeipp Posted November 13, 2013 Share Posted November 13, 2013 Insider just bought 200k shares @ 25-26 range Link to comment Share on other sites More sharing options...
plato1976 Posted November 18, 2013 Share Posted November 18, 2013 Are you talking about this one ? Nov 8, 2013 DUNHAM ARCHIE W Director 200,000 Direct Acquisition (Non Open Market) at $25.86 per share. 5,172,000 It's a huge order - but I just wonder what does "Acquisition on non-open market" mean ? I don't think it's an option grant or sth similar b/c it's so huge - it seems a trade out of this guy's own pocket Insider just bought 200k shares @ 25-26 range Link to comment Share on other sites More sharing options...
alertmeipp Posted November 19, 2013 Share Posted November 19, 2013 Are you talking about this one ? Nov 8, 2013 DUNHAM ARCHIE W Director 200,000 Direct Acquisition (Non Open Market) at $25.86 per share. 5,172,000 It's a huge order - but I just wonder what does "Acquisition on non-open market" mean ? I don't think it's an option grant or sth similar b/c it's so huge - it seems a trade out of this guy's own pocket Insider just bought 200k shares @ 25-26 range Yeah, here is the filing. I take non-public mean privately negotiated transaction with a seller. http://www.sec.gov/Archives/edgar/data/895126/000089512613000344/xslF345X03/edgardoc.xml Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 2, 2014 Share Posted January 2, 2014 Does anybody know how the accounting for unproved properties work? As I understand it, this is an area where Chesapeake may be inappropriately capitalizing expenses. Its unproved properties may be carried on the books for far more than what they're worth. How do you know if unproved acreage is any good? You drill a well on it. If you don't want to commit too much money then a vertical well is cheaper. Sometimes you will get mixed results on an exploration well. Perhaps re-fracturing the well will improve well economics. You might hold off on re-fracking the well until there is infrastructure in the area to transport the hydrocarbons away. Perhaps the acreage is uneconomic until the right infrastructure in the region is built. (This legitimately exists in some areas. See my blog post on it: http://wp.me/1mOGr ) According to accounting rules, you are allowed to capitalize exploration costs into unproved properties. If you perform 2d/3d seismic on a property, you can capitalize that expense. I think most people would agree with capitalizing seismic costs is legitimate. But what happens if the company finishes drilling an exploration well? In my opinion, the company should be forced to convert those properties into proved properties or to write them off. Chesapeake seems to have billions of dollars in unproved properties with capitalized well costs. The company may have already proven that the acreage is uneconomic. However, accounting rules technically allow them to keep all of their expenses capitalized without having to perform a ceiling test on the unproven properties or to write them down. On page 93 of the 10-K (http://www.sec.gov/Archives/edgar/data/895126/000089512613000076/chk-2012123110k.htm): 2012 Leasehold acquisition cost - $1,826 Exploration cost - $1,213 Capitalized interest - $810 Total - $3,849 This seems to be a huge change from the past as Chesapeake did not capitalize exploration costs into unproved properties in 2009 and the years before that. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 2, 2014 Share Posted January 2, 2014 Have any of you read the SEC correspondence letters? I'm very impressed by the questions that the SEC is asking. http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000895126&type=corresp&dateb=&owner=exclude&count=40 Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 3, 2014 Share Posted January 3, 2014 http://petroleumtruthreport.blogspot.ca/2009_09_01_archive.html This blog post explains how EURs can be inflated. While the EUR doesn't have much of an impact on the SEC PV-10 value or the standardized measure, it does affect Chesapeake's depreciation (and amortization) costs. Chesapeake uses the units of production method for its wells. I believe that doubling the EUR will halve the depreciation costs. Link to comment Share on other sites More sharing options...
phil_Buffett Posted February 6, 2014 Share Posted February 6, 2014 http://www.chk.com/news/articles/Pages/1897556.aspx Link to comment Share on other sites More sharing options...
plato1976 Posted February 6, 2014 Share Posted February 6, 2014 what will be the debt level at the end of 2014 following this guidance ? I think the market is highly disappointed by their growth duidance http://www.chk.com/news/articles/Pages/1897556.aspx Link to comment Share on other sites More sharing options...
phil_Buffett Posted February 6, 2014 Share Posted February 6, 2014 what will be the debt level at the end of 2014 following this guidance ? I think the market is highly disappointed by their growth duidance http://www.chk.com/news/articles/Pages/1897556.aspx i dont know the exact debt Level :/ mr market dont like it, and i cant understand it. production growth and less cost. it is great for me Link to comment Share on other sites More sharing options...
nkp007 Posted February 6, 2014 Share Posted February 6, 2014 My main concern was that as good as 2014 looks, the operating cash flow doesn't show significant improvement. This seems like the type of business where all the capital the business generates needs to be pumped back into the business to maintain a low level of growth. And even then it looks like they are going to have a cash shortfall as compared to capex. Management is doing a lot of good things and I don't think the stock is overpriced, but I'm having a hard time figuring out the upside. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted February 6, 2014 Share Posted February 6, 2014 If their cash flow looks weak, it is likely due to a combination of the following factors: A- Their accounting is aggressive and they capitalized more expenses than they should have (relative to the economic reality of the assets/wells). B- They are rapidly expanding. If you go through the 10-K, you can see that their accounting is very aggressive. Their accounting to related to their reserve estimation, which is also aggressive (e.g. 65 year well life). We know they aren't rapidly expanding based on their production forecasts. (Though in the past Chesapeake was rapidly expanding.) Link to comment Share on other sites More sharing options...
dutchman Posted February 6, 2014 Share Posted February 6, 2014 Would be interested in hearing tbones thoughts on latest outlook :) Link to comment Share on other sites More sharing options...
skanjete Posted February 6, 2014 Share Posted February 6, 2014 wow : another sizeable drop this week in the natural gas stocks : under 2000Bcf now, the lowest (seasonally adjusted) in 5 years. http://ir.eia.gov/ngs/ngs.html Link to comment Share on other sites More sharing options...
alertmeipp Posted February 6, 2014 Share Posted February 6, 2014 buying...they are lowballing and cheap option on ng pricing Link to comment Share on other sites More sharing options...
Hawks Posted February 6, 2014 Share Posted February 6, 2014 +1 Link to comment Share on other sites More sharing options...
argonaut Posted February 11, 2014 Share Posted February 11, 2014 Looks like Southeastern sold about 10mm shares in 4th q 2013: http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1hSFIwY0RvdkwyRndhUzUwWlc1cmQybDZZWEprTG1OdmJTOWtiM2R1Ykc5aFpDNXdhSEEvWVdOMGFXOXVQVkJFUmlacGNHRm5aVDA1TXpjek5ESXdKbk4xWW5OcFpEMDFOdz09JnR5cGU9MiZmbj1DaGVzYXBlYWtlRW5lcmd5X1NDMTNHQV8yMDE0MDIxMC5wZGY= Link to comment Share on other sites More sharing options...
investor-man Posted February 11, 2014 Share Posted February 11, 2014 Here's some nice speculation for ya: Could Icahn force Chesapeake sale to an oil giant like Exxon? http://www.bizjournals.com/dallas/news/2014/02/11/could-icahn-force-chesapeake-sale-to-an-oil-giant.html Link to comment Share on other sites More sharing options...
T-bone1 Posted February 11, 2014 Share Posted February 11, 2014 Unfortunately I think that is just a roundabout rehash of an October 21 "story" in the UK Daily Mail . . . not exactly the most reliable source of business news. Link to comment Share on other sites More sharing options...
alertmeipp Posted February 11, 2014 Share Posted February 11, 2014 It makes sense for the mega major to buy it if they want to show production growth. Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 24, 2014 Share Posted February 24, 2014 Chesapeake May Shed Oilfield-Services Unit Division With $2.2 Billion in Revenue Is Put Under Strategic Review http://online.wsj.com/news/articles/SB10001424052702304610404579402232680589654?mod=WSJ_hp_LEFTWhatsNewsCollection Chesapeake Energy Corp. CHK -0.30% , the second-largest producer of natural gas in the U.S., said Monday it is pursuing strategic alternatives for its oilfield services division, Chesapeake Oilfield Services, including a potential spin-off to Chesapeake shareholders or an outright sale. The oil-services division had revenue of about $2.2 billion in 2013, with service offerings include drilling, hydraulic fracturing, oilfield rentals, rig relocation, and fluid handling and disposal, according to Chesapeake. Link to comment Share on other sites More sharing options...
txlaw Posted February 24, 2014 Share Posted February 24, 2014 Thoughts on divestiture of the oilfield services biz and the potential buyers for the unit? I would much prefer a cash sale to spin-off in order to get rid of the "funding gap" issue once and for all. Link to comment Share on other sites More sharing options...
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