Value Creation When it Didn't Seem Possible

Chesapeake is often criticized for its financial decisions and aggressive techniques to develop natural gas and oil. In plain and direct terms, this article analyzes each decision and the result is surprising. What are your thoughts?

 

Seeking Alpha: CHK's $34B Value Creation with Zero Net Cost

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Comment by Hopeful About Natural Gas on November 25, 2011 at 4:01am

CNBC's Mad Money show came out with strong buys for CHK and other natural gas companies.  Aubrey was a guest on the show and talked about CHK's switch to oil plus natgas.  Here is the link to the post I made about it on Nov 16.  Let's see if Mad Man Cramer is right.

 

http://www.gohaynesvilleshale.com/forum/topics/cnbc-mad-money-comes...

 

Comment by Love Horizontals on October 18, 2011 at 4:03pm
Is Chesapeake having problems? Ran across a Sept  article discussing Chesapeake nearing completion of well  they had given a tour of  back on June 21.  Well was West Spoon Haynesville well in Sabine County.  According to TXRRC, Chesapeake still has not completed the well.   http://tylerpaper.com/article/20110918/BUSINESS01/309189998
Comment by Henry on October 11, 2011 at 8:27pm

To add to my previous post, here's another Seeking Alpha article on CHK, and whether or not DVN is a better buy....

http://seekingalpha.com/article/298637-5-reasons-devon-energy-is-a-...

Not that I agree with all he says.  You just have to be careful with Seeking Alpha, and use your judgment on most of their articles.

Comment by Henry on October 11, 2011 at 5:18am

Read the disclosure at the end:  "I am long CHK."

Having said that, I will agree that CHK did very well with its JVs.  However, the company took on a tremendous amount of risk to get there.  Do I want that much risk in my publicly traded company?  No.  But that's a personal decision.  Others may want to take that risk in the hope of a big reward.  I think the jury is still out, as to the reward.  Certainly the potential is there if oil/gas prices rise. But if oil/gas prices rise, I think I can be rewarded by other more stable companies, with less risk on the table.

 

 

 

Comment by essay on October 10, 2011 at 2:18pm

currently my main criticism of chk is the subsidiary shuffle that is used to justify paying royalties based on the lowest rates of any operator in the area.  that is not good pr and certainly makes your job much more difficult.

 

as far as the article goes, yes chk has been a shale pioneer... but i do not for one second think that most of these JV's and asset sales would have been done unless it was absolutely necessary for operating capital/debt purposes.  i own chk at a dollar cost average of about $15 a share, i'm not sure why i would buy more now.  it is likely to be on sale again in the future.  but then again everything might be on sale all at once and chk is back in the same boat if that happens.

 

long term, i think chk's assets will be worth more and more, but i also think perhaps chk needs to pay down debt with cash flow, not by selling off assets piece by piece?  either way, as long as they can stay afloat long enough, we'll eventually see increased domestic demand in addition to the emergence of a global LNG market which should bring up north american gas prices sufficiently to curtail the necessity of any further asset liquidation.

Comment by DrWAVeSport Cd1 on October 10, 2011 at 11:51am

Comment/Question:

Some "contributors" get "paid" for their "promotions" of "certain" stocks...

This "contributor"  always "pumping" CHK...no matter what the stock looks like, tanks, drags, or eeks up on the tails of an "up" day in the Market or eeks "down" in a "down" day in the market.  Read more of "Devon Shire's" contributions and then "thoughts" will be clearer.  CHK is still $10+ Billion in the red.   I know former CHK stockholders who wouldn't touch CHK with a....One can finish that "thought" with anything they like... 

DrWAVeSport Cd1  10/10/2011

 

Comment by FXEF on October 9, 2011 at 1:39pm
Chesapeake has replaced the drilling rig rotary table with a roulette wheel and using stock holders money to play with.
Comment by LP on October 6, 2011 at 9:57pm
Interesting article. Interesting comments too. I wonder how different things may have been if the bottom had not fallen and natural gas price had stayed at $10.

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