CHK - Chesapeake Energy

[Jurgis]

Yeah, I might dump my unsecureds in the $30s area if I get a bid. Almost dumped them at $20s on the scare, but did not get a bid then - the joys of illiquid (at least on Fido) bond trading.

 

I don't like holding notes junior to 2nd liens. So might exit completely or swap. I agree with Picasso that company still seems to be risky. The cash losses are high IMO. But if equity/bond markets in oil&gas come to some semblance of life, they might find ways to sell off assets or some other way to survive.

[tede02]

Hard to believe all the buying pressure is coming from the shorts covering.  Perhaps some of the bigger holders are adding.  Nice to recoup some of my losses.  I'm glad to see management making progress but agree that this company remains extremely risky (I never should have bought the common).  Natural gas prices look to remain extremely weak in the near term. 

 

I wonder who started the bankruptcy rumors in February.  Management must have been thinking "WTF" knowing they had sold assets and bought down the debt.  I haven't seen any insider buying however. 

[Picasso]

Yeah we should make a bet on how many days before Icahn announces he bought more CHK.  That will make this squeeze even higher and give them an extra life line to issue equity.  FCX has had a similar insane move.

[Jurgis]

Yeah there's a bunch of parabolic moves in common of these highly levered oil/gas/commodity plays that is leaving bonds in dust. It makes sense: common is acting pretty much as an option.

 

Swapping to bonds at the bottom for CHK (or DNR or others) was not a good move. Of course if they would have filed, it would have been. :)

[Spekulatius]

I still think that CHK will file eventually. GM stock made a parabolic move as well in 11/2008 before they filed. I think these moves are caused by momentum investors piling into these stocks.

[philly value]

It's a huge fake rally driven by a short squeeze virtually across the board in E&P stocks over the past week. You have situations i.e. EXXI where debt is trading at between 0-10 cents and yet the market cap is suddenly ~$80mm.

[tede02]

Reduced my position today at a slight gain.  What a ride.  Lots of lessons learned on this for me.  I may be lucky enough to come out OK. 

 

Out of curiosity, did anyone roll the dice sub-$3 on the common? 

[Novak]

Nope - in fact, the opposite. I jumped out of my common near the bottom, but rolled 2x my original investment into the 2020 notes at 15 (I would have bought more but they became tough to find). They're almost at 60 now - not as good a run up as the equity, but I'm happy with my net gains. If I hadn't switched into the notes I wouldn't have been willing to put more money in at the bottom.

 

Reduced my position today at a slight gain.  What a ride.  Lots of lessons learned on this for me.  I may be lucky enough to come out OK. 

 

Out of curiosity, did anyone roll the dice sub-$3 on the common?

[Ross812]

Reduced my position today at a slight gain.  What a ride.  Lots of lessons learned on this for me.  I may be lucky enough to come out OK. 

 

Out of curiosity, did anyone roll the dice sub-$3 on the common? 

 

I have been buying the preferred CHKDG since $50 and added all the way down to $6. I'm up 7% right now, but this has not been a fun experience.   

[frugalchief]

Reduced my position today at a slight gain.  What a ride.  Lots of lessons learned on this for me.  I may be lucky enough to come out OK. 

 

Out of curiosity, did anyone roll the dice sub-$3 on the common?

 

I bought around $2.60 and rode it to $5.20 within like 8 days.  Think that was 2 months ago or so.  I'm happy that I got out.  Probably the quickest trade I'll ever make.

[tede02]

I have to give management at CHK credit.  This company could have easily been bankrupt by now had they not taken swift action over the past year.  Progress continues but a lot of risk remains with the debt load and weak commodity prices. 

 

http://www.wsj.com/articles/chesapeake-energy-swaps-debt-for-stock-1463060703

 

[zippy1]

http://finance.yahoo.com/news/two-chesapeake-directors-including-icahn-124416852.html

Reuters) - Chesapeake Energy Corp (CHK.N) said on Tuesday that two board directors, including a representative of activist investor Carl Icahn, resigned on Monday, a week after Icahn more than halved his stake in the natural gas producer.

 

John Lipinski, who has been on Chesapeake's board since June 2014, and Vincent Intrieri stepped down on Monday, the company said. (http://bit.ly/2cSkDJK)

 

Intrieri, who has served as senior managing director of Icahn Capital LP, was on Chesapeake's board since June 2012, when Icahn asked to replace at least four directors and revealed a stake in the company.

 

Chesapeake in 2012 named four new independent directors, three proposed by Southeastern Asset Management, its largest shareholder then, and one proposed by Icahn, its second-largest shareholder at the time.

 

Chesapeake said the resignations were not due to any disagreement, but did not specify why the two directors had stepped down.

 

Icahn said last week that Chesapeake's management had done "an admirable job" over the last few years and that he reduced his stake in the company – by 51.6 percent to 4.55 percent – for tax planning purposes. (http://bit.ly/2cSkpT7)

 

[zippy1]

http://finance.yahoo.com/news/chesapeake-energy-corporation-announces-final-110000808.html

Chesapeake Energy Corporation Announces Final Results Of Cash Tender Offers For Non-Convertible Senior Notes

Chesapeake accepted for purchase approximately $897.7 million aggregate principal amount of Notes that were validly tendered and not validly withdrawn as of 5:00 p.m., New York City time, on August 25, 2016 (the "Early Tender Date") for an aggregate consideration of approximately $800.0 million, excluding accrued and unpaid interest. Because the aggregate purchase price (exclusive of accrued interest) of Notes validly tendered at or prior to the Early Tender Date exceeded the Aggregate Maximum Purchase Amount, no Notes tendered after the Early Tender Date were accepted.

[zippy1]

https://finance.yahoo.com/news/chesapeake-energy-corporation-reports-2017-110000609.html

OKLAHOMA CITY, May 4, 2017 /PRNewswire/ -- Chesapeake Energy Corporation (CHK) today reported financial and operational results for the 2017 first quarter plus other recent developments. Highlights include:

 

Average 2017 first quarter production of 528,000 boe per day, above midpoint of guidance of 515,000 to 535,000 boe per day

Oil production expected to reach 100,000 barrels per day by year-end 2017; average 2017 first quarter oil production of 83,700 barrels per day, above midpoint of guidance of 80,000 to 85,000 barrels per day

Combined production and G&A expenses per boe down 2% quarter over quarter

Gathering, processing and transportation expenses per boe down 6% quarter over quarter

Doug Lawler, Chesapeake's Chief Executive Officer, commented, "Our operational momentum continues to build in our Eagle Ford, Powder River Basin and Mid-Continent oil assets, as we remain on track to reach our production target of 100,000 barrels of oil per day by year-end. We expect our production to grow significantly in the second half of 2017 as we place more wells to sales, and as a result, we have raised the bottom range of our 2017 production guidance. We remain focused on improving our balance sheet and decreasing our cash costs, while improving the capital efficiency from our operations. We look forward to reporting our results as the year progresses."

 

2017 First Quarter Results

 

For the 2017 first quarter, Chesapeake's revenues increased by 41% year over year and 36% quarter over quarter primarily due to an increase in the average realized commodity prices for the company's production and unrealized hedging gains, partially offset by a decrease in production volumes sold. Average daily production for the 2017 first quarter of approximately 528,000 barrels of oil equivalent (boe) consisted of approximately 83,700 barrels (bbls) of oil, 2.342 billion cubic feet (bcf) of natural gas and 53,900 bbls of natural gas liquids (NGL).

 

Average production expenses during the 2017 first quarter were $2.84 per boe, while G&A expenses (including stock-based compensation) during the 2017 first quarter were $1.35 per boe. Combined production and G&A expenses (including stock-based compensation) during the 2017 first quarter were $4.19 per boe, an increase of 1% year over year and a decrease of 2% quarter over quarter. Gathering, processing and transportation expenses during the 2017 first quarter were $7.47 per boe, a decrease of 5% year over year and 6% quarter over quarter, primarily due to the company's Barnett and Devonian divestitures in 2016.

 

Chesapeake reported net income available to common stockholders of $75 million, or $0.08 per share, while the company's ebitda for the 2017 first quarter was $455 million. Adjusting for unrealized gains on commodity derivatives, impairments related to the reduction of crude transportation commitments on the Seaway Pipeline and other related natural gas transportation obligations of approximately $393 million, the loss on exchange of preferred stock and other items, including those that are typically excluded by securities analysts, the 2017 first quarter adjusted net income attributable to Chesapeake was $212 million, or $0.23 per common share, while the company's adjusted ebitda was $525 million in the 2017 first quarter. Reconciliations of financial measures calculated in accordance with GAAP to non-GAAP measures are provided on pages 11 – 12 of this release.

 

Capital Spending Overview

 

Chesapeake's total capital investments were approximately $576 million during the 2017 first quarter, compared to approximately $463 million in the 2016 fourth quarter and $365 million in the 2016 first quarter. A summary of the company's guidance for 2017 is provided under "Management's Outlook as of May 3, 2017," beginning on page 16.

 

 

2017

2016

2016

Operated activity comparison

Q1

Q4

Q1

Average rig count

16

12

8

Gross wells spud

87

60

41

Gross wells completed

99

82

57

Gross wells connected

76

110

80

 

 

 

 

Type of cost ($ in millions)

 

 

 

Drilling and completion costs

$

506

 

$

365

 

$

281

 

Exploration costs, leasehold and additions to other PP&E

19

 

38

 

16

 

Subtotal capital expenditures

$

525

 

$

403

 

$

297

 

Capitalized interest

51

 

60

 

68

 

Total capital expenditures

$

576

 

$

463

 

$

365

 

 

 

Balance Sheet and Liquidity

 

As of March 31, 2017, Chesapeake's principal debt balance was approximately $9.1 billion with $249 million in cash on hand, compared to $10.0 billion with $882 million in cash on hand as of December 31, 2016. The company's total liquidity as of March 31, 2017 was approximately $3.3 billion, which included cash on hand and borrowing capacity of approximately $3.1 billion under the company's senior secured revolving credit facility, which had no outstanding borrowings and $697 million utilized for various letters of credit (including the $461 million supersedeas bond with respect to the 2014 redemption of Chesapeake's 6.775% Senior Notes due 2019 ("2019 Notes") litigation).

 

On April 24, 2017, Chesapeake received notice from the U.S. Supreme Court that it would not review its appeal related to the company's 2019 Notes litigation. As a result of this decision, the company satisfied the judgment of $441 million on April 28, 2017, with cash on hand and from the company's revolving credit facility. While the company is disappointed in the Supreme Court's decision, it had posted a supersedeas bond for the full amount (reflected as an outstanding letter of credit under the company's revolving credit facility described above), and therefore the judgment had no further impact on liquidity.  As of May 1, 2017, after making the judgment payment and pro forma the relief of the associated letters of credit, Chesapeake's liquidity was approximately $3.3 billion.

[opihiman2]

So it begins:

 

https://www.reuters.com/article/us-chesapeake-enrgy-bankruptcy-exclusive/exclusive-chesapeake-energy-preparing-bankruptcy-filing-sources-idUSKBN22B31M

 

Can't believe it has taken this long.  I can't wait to post SD's bankruptcy on that inane thread as well.