Replies to This Discussion

Permalink Reply by Jack Blake on October 10, 2008 at 5:56

Well maybe they won't drill my section before the next 2.5 years and then I'll be able to get a big bonus again!!!!!!!!!!!The gas is there. It ain't going away.

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Permalink Reply by H P Bryant on October 10, 2008 at 6:19

All this talk about the o&g companies being broke and us not receiving our money will probably seem a small thing about 6-mo from now. If Obama gets elected we all better plow up the back yard and plant potatoes and beans. We're gonna need em. That pipe and gas don't taste so good.

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Permalink Reply by Bill G on October 10, 2008 at 6:29

LOL! Seriously!....I like that idea Bryant! Last I checked Iron ore gas pads dont grow good Greens....

Permalink Reply by Grillin' - MmmMmm on October 10, 2008 at 7:44

Bill: do you realize that they actually have $1.5 B in cash in their accounts and another $2 B they pulled from their line of credits a couple of weeks ago? They have enough money plus cashflow from operations to easily clear this quarter. Next quarter they will have to further restrict their drilling and lease acquisition but if they do so, they should be able to cover. Yes they are in debt but most of that debt doesn't come due for several more years. Their current cashflow will easily cover debt servicing and some, repeat some, drilling. But they won't be able to drill at the rate they were going to drill. And they won't be able to keep leasing acreage. So, yes they are in a world of hurt, but no they are not broke. At least in the operational sense. Look for them to do another deal like the PXP and BP deal, but without the huge leverage since they are the ones that will have to take the pain. Probably some kind of deal where someone with deep pockets and lots of cash comes in and drills the wells to earn a back-in. BP and PXP are paying 100% plus cash to earn 25%. New deal will look different: probably pay 100% to earn at least 50% and no cash up front or maybe a little bit. If all of you guys that got those big lease bonuses stuck together and pooled your money, you could get them to do a deal like that for YOU!!

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Permalink Reply by P.G. on October 10, 2008 at 8:24

Maybe we all should take some of our bonus money and help them out, huh?

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Permalink Reply by Wolverine on October 10, 2008 at 8:36

Hey P.G I agree if I get some bonus!!! Alot that is!!!

Permalink Reply by Bill G on October 10, 2008 at 9:05

Mmmarkkk Put some money on them! Put your life savings....look whent back up to 15+ today! Im not going to....when you see a stock go to 1/7 its value in 3 months that is not good....but hey if you trust them and want to bet your farm on them go ahead....I wouldnt bet used lawnmower blades on that company in times like this! Thats just my opinion! and 3B worth of cash...thats nothing when you are talking about overhead like they have.....note that there will be NO ONE to do that deal for next quarter cause the co that have that capitol are not going to invest in them...they will let them come to there knees and then purchase there existing assets for pennies on a dollar! WATCH!

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Permalink Reply by Grillin' - MmmMmm on October 10, 2008 at 9:45

I've got some money already in them, but not my life's savings. More like this week's beer money! And after this week, that's a lot of beer!!!

Yes, they are risky. But I put a lot of stock in the analysis I've read that went through their entire debt stream and cash need. I can see what they are spending and where. I know what they can and can't do to reduce the need for cash. And I believe if they choose, they will weather the storm. They may not choose to as they will, as you mentioned, get some pretty good offers to sell...pretty good to them as their price continues to fall. The triggers on their shortest term debt are tied to their EBITDA which actually looks pretty good. I think they will either be bought out by a major or will have to do a very very large deal that gives the buyer extreme leverage. I know of at least 3 companies with billions of dollars in cash that would love to have those Haynesville shale leases. They wouldn't have to raise money as they have it in the bank and could walk in and drill wells for CHK, reducing CHK's overall need for cash in the short term. Just depends on how hot it gets for Aubrey. He's been here before...twice...and pulled out of the dive just before bankruptcy. He's no where near bankruptcy at this point but it is interesting that the last time he got hammered like this it was after a large investment in NORTH LOUISIANA in the Bossier Trend. Now, he's going "all in" in North Lousisiana and the world financial system implodes!! I think he will be wary of the area!

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Permalink Reply by Grice on October 10, 2008 at 10:01

Chesapeake is scheduled to hold a shareholders meeting on Monday. One of the elective will be to allow Mr. McClendon to retain his position in the company. It may be difficult to digest, but what if the shareholders were to blame him for the crisis, and remove him from his position. Either way, he will walk away with a few coins in his pocket.

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Permalink Reply by Gas Baron on October 10, 2008 at 9:49

Looks like the Stock guys like CHK
and have it listed as a Strong Buy
http://finance.yahoo.com/q/ao?s=CHK

Revenue Est
Current Year Dec-08 / No. of Analysts 9 / Sales Growth (year/est) -6.9%
Next Year Dec-09 / No. of Analysts 4 / Sales Growth (year/est) 51.0%
http://finance.yahoo.com/q/ae?s=CHK

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Permalink Reply by Father of the Year on October 10, 2008 at 11:32

That's funny. The strong buy was issued on August 4th, when CHK was at $48 or so. Someone who bought on that date is now down 65%.

I guess if it was a strong buy at $48, it's an unbelievable buy at $16, but you have to question the competence of the group that issued the strong buy at $48.

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Permalink Reply by Gas Baron on October 10, 2008 at 11:48

If you bought almost any stock on that date you will be down. I think the average Stock Price is down38%

The Market is a volatile place now. Fear Mongers are what is keeping it that way, they cause lack of Confidance.

9 of the last 10 major Market Drops have corrected themselves within 1 year and have generally went up 33% in that time period

Below is the Analyst Estimate of CHK in a regular Market
Median Target: $67.00
High Target: $103.00
Low Target: $40.00

Now is the time to buy, I have done it before and will do it now. Just remember to Diversify
In a year or two I will be cashing in $$$$$$

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