BrotherMaynard

Total Rating:
0 / 0

31 Comments

    • Wed Nov 19th 21:18 PM | Rating: 0 0
      Commented on:
      Chesapeake Energy Continues to Shore Up Its Balance Sheet
      Furthermore, there are PLENTY of other companies out there that aren't even close to violating covenants (maybe or maybe not in the energy sector) yet trade at similar if not even more distressed valuations...so its time to move on folks. It was a bubble. Let it go!
      View article »
    • Wed Nov 19th 20:56 PM | Rating: 0 0
      Commented on:
      Chesapeake Energy Continues to Shore Up Its Balance Sheet
      fyi...here is the RJ news piece via platts that i cited above:

      www.platts.com/Natural...
      View article »
    • Wed Nov 19th 20:55 PM | Rating: 0 0
      Commented on:
      Chesapeake Energy Continues to Shore Up Its Balance Sheet
      A little common sense goes a long way here. Berkshire hathaway is arguably one of the most well capitalized companies on the planet and they are getting hammered by credit markets...with $40bn in cash.

      The fact that CHK is levered 1.5x, and runs a perpetually diminished cash balance, should be viewed as totally unacceptable by any prudent investor...esp. those investors that give two bits about management. Its the hubris of management that will kill this company, as they fail to care or believe that Nat gas sunk to as low as 2.50 during the last recession (and that was not a consumer led recession). Lord knows demand isn't going to pick up in this environment save for a ridiculously cold winter (4 months out of the year), but even then, industrial capacity is being laid idle writ large....yet supply is at levels net seen in a long time (b/c of finds like CHK's). We can't export the stuff (need LNG capacity for that...and its as big an eyesore as refiners, apparently), so we have to deal with what we pump. As a result, Raymond James made this prediction:

      "With the exception of a brief winter spike, US natural gas prices will
      have to tank in 2009 to rebalance a glutted market...[RJ's] model, which is based on 30-year average weather, shows the US reaching a theoretical 4.25 Tcf of gas in storage at the end of 2009's injection season based on gains in US production and a slackening of demand in a weak US economy... "This cannot physically happen (due to storage constraints)," Adkins said, noting that there is only about 3.75 Tcf of US gas storage available. "This means that gas prices must fall sufficiently to whack the gas rig count and force some producers to shut in gas production over the next year. For that to happen, the gas market will need to take prices even lower than our current forecast to rebalance the system."

      Meanwhile, addressing the covenants that mmarrk is complaining about, we will cite a Johnson and Rice piece from 10/13/08:

      "The key covenant is the debt-to-EBITDA ratio which is maxed out in the covenants at 3.75x. As of September 30, 2008, this stood at roughly 2.05:1...to push CHK into violation of this covenant, we estimate that all hedging positions must be lost (failure of counter parties?), not just the knock-out provisions, and NYMEX gas and oil prices would have to fall to $4/mcf and $60/bbl for a prolonged period, basically a doomsday scenario."

      So there you have it. $4 is more real than anyone wants to admit given the RJ comments and where nat gas went last recession. $60 oil has been breached.

      You have been warned.


      View article »
    • Fri Nov 14th 15:20 PM | Rating: 0 0
      Commented on:
      Chesapeake Energy Unlikely To Remain this Cheap
      "They don't show something below $5 because that scenario is just a 1% probability."

      I'm not sure where you derived that probability from...but how soon everyone forgets...the 2001-2002 recession saw sub $2.50
      gas. CHK likely doesn't exist (assuming this capital structure) at $2.50

      tfc-charts.w2d.com/his... (pull use the pull down menu to view year by year)
      View article »
    • Fri Nov 14th 15:10 PM | Rating: 0 0
      Commented on:
      Time to Fill Up on the Strategic Petroleum Reserve
      why don't we wait until oil hits $30 until we fill up.
      View article »
    • Wed Nov 12th 16:46 PM | Rating: 0 0
      Commented on:
      Chesapeake Energy Unlikely To Remain this Cheap
      come to think of it....here's the most recent presentation from their site (10/14, analyst day...its a big file, like 12mb just to warn you): media.corporate-ir.net...

      Go to page 3.

      Look at NAV with a $5 nat gas scenario...$29 pershare (a lot higher than today, obviously). However, notice the difference between NAV at $6 and NAV at $5 (or the second derivative of change)...its a 37% drop. The drop is the same from $7 to $6. Yet from $8 to $7 it was only a 25% change...so the lower the prices go, the faster the NAV falls. If nat gas hits $4 will NAV be worth maybe, 50% less? Who knows...they, for whatever reason, won't show us.
      View article »
    • Wed Nov 12th 16:37 PM | Rating: 0 0
      Commented on:
      Chesapeake Energy Unlikely To Remain this Cheap
      Show me one presentation given by CHK that gives an NAV scenario with nat gas at $4.

      I sure haven't found one...maybe if they illustrated what happens to their model at $4, more people would be buyers.

      there are ebitda covenents on their debt and ebitda is directly tied to nat gas prices...therefore, if nat gas drops below $5, they are really going to have problems with the liability side. this is what the XOM's and CVX's are waiting for...picking through the wreckage of independant E&P's that extrapolated the most fleeting of overly optimistic trends at the very top.
      View article »
    • Fri Nov 7th 16:41 PM | Rating: 0 0
      Commented on:
      Gold Miners: Biggest Drag on My Portfolio, Yet the Biggest Opportunity
      take ag/commodity prices today and whack those in half...then ask your self if you would want to own the equity names. i promise those names you mentioned above would all of the sudden look extremely expensive (NOV might be the exception).
      View article »
    • Fri Nov 7th 16:39 PM | Rating: 0 0
      Commented on:
      Gold Miners: Biggest Drag on My Portfolio, Yet the Biggest Opportunity
      Wow a bunch of commodity/ag plays. lots of imagination there.
      View article »
    • Mon Nov 3rd 00:14 AM | Rating: 0 0
      Commented on:
      Why I Sold National Oilwell Varco and Bought WMS Industries
      As far as NOV goes, you did exactly the wrong thing. All i can say is, with the vix this high, you should be buying the dips and selling the rips.
      View article »
    • Sun Nov 2nd 01:31 AM | Rating: 0 0
      Commented on:
      Chesapeake Energy Unlikely To Remain this Cheap
      nat gas at $4mcf renders this company near b/k. keep in mind, the long-term historical average price for nat gas is in fact markedly lower than $4. Nothing has changed with respect to the nat gas demand pic back when nat gas was sub $4 vs. today...we still can't export it...yet we increased drilling to levels not seen since the 80's.
      View article »
    • Mon Oct 20th 15:03 PM | Rating: 0 0
      Commented on:
      Getting Clobbered: Why I Changed My Investment Rules
      "check insider trading"

      following insiders never helps you to see the bullet that actually kills the company...e.g. Aubrey McClendon was recently blown out of his ownership stake in CHK. I'm not saying insider buying is bad, just make sure you know management well enough to make sure that they're not trying to be icarus (Al Lord from SLM corp was another headline grabber last year when the SLM buyout deal tanked...he then proceeded to drop f-bombs on the ensuing conference cal)l.
      View article »
    • Mon Oct 20th 11:04 AM | Rating: 0 0
      Commented on:
      Getting Clobbered: Why I Changed My Investment Rules
      First of all...you're reacting...you don't have a real game plan. That's fatal in a normal environment much less in an environment that shows the vix at 63. If you're an amateur, don't short-term trade in this environment (i.e. vix above 60-70)...you will continue to get your head handed to you. Buy cheap etfs and forget about them.
      View article »
    • Fri Oct 10th 16:53 PM | Rating: 0 0
      Commented on:
      Roger Wiegand: Oil to Reach New Highs by Year-End
      he's a real-estate developer but he's trading commodities!?!? enough said.
      View article »
    • Mon Oct 6th 21:20 PM | Rating: 0 0
      Commented on:
      Four Energy Bargains
      p/e's are cheap until the e gets cut to smitherines.
      View article »
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»