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Thread: Chesapeake Business Practices

  1. #476

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by RedDollar View Post
    Won't find anything substantial, just the usual nitpiking stuff to justify the trip.
    Apparently you didn't read the latest Reuters piece: a business professor said his secret hedge fund could amount to securities fraud.

    This is bad news for OKC, but it's going to get worse if they don't chop the head off the snake. McClendon needs to go and his cozy GOP politico buddies on the board.

  2. #477

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by jn1780 View Post
    Confirms what we already knew was going to happen: Chesapeake and Aubrey McClendon are under the SEC's magnifying glass.
    Right right, saw that headline--my "in English" request was actually for red dollar, whose post I couldn't make out.

    Now I'm particularly curious what red dollar meant, now that he's asserting above that the SEC won't find anything. Let's hope that is the case, because I don't know how much more chaos such a volatile company could take.

  3. #478

    Default Re: Chesapeake empire marches on

    Quote Originally Posted by RedDollar View Post
    Uhhhhhh ... not quite , there seems to be real support at 17. No matter the news, they havin trouble driving this lower than 17.

    http://finance.yahoo.com/q?s=chk&ql=1

    Support was $16.78, which was breached yesterday ($16.74 close). A new 52-week low was put in at 9:30 this morning @ 16.70. Some think yesterday was capitulation. Some don't.

  4. #479

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by Spartan View Post
    Right right, saw that headline--my "in English" request was actually for red dollar, whose post I couldn't make out.
    .
    He's talking about the long term technical patterns a stock follows. Its basically a imaginary line drawn across a graph that marks when people and computers buy or sell, but a lot more complex than this. Lol

    Usually goes out the window when something unexpected happens like more bad news coming out.

  5. #480

    Default Re: Chesapeake Business Practices

    Something to watch... the Sandridge conference call in the a.m. may bring some clarity/scrutiny on the McClendon/Ward hedge fund activity. Or maybe not. Sandridge may need to distance themselves from the Chesapeake story...I have no idea how this will play out!

  6. #481

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by soonerguru View Post
    Apparently you didn't read the latest Reuters piece: a business professor said his secret hedge fund could amount to securities fraud.

    This is bad news for OKC, but it's going to get worse if they don't chop the head off the snake. McClendon needs to go and his cozy GOP politico buddies on the board.
    did he stay at holiday inn express??

  7. #482

    Default Re: Chesapeake Business Practices

    Some people are certainly drinking the Kool-Aid.

    It wasn't a "business professor", it was a securities law professor. This isn't just smoke now, there are open flames.

  8. #483

    Default Re: Chesapeake Business Practices

    TEXT-Fitch revises Chesapeake Energy outlook to negative 05/04 09:15 AM

    --------------------------------------------------------------------------------

    (The following statement was released by the rating agency)

    May 4 - Fitch Ratings has revised Chesapeake Energy Corporation's Rating Outlook to Negative from Stable. In addition, Fitch affirms the company's existing ratings. A complete list of ratings is provided at the end of this release. Approximately $13 billion in debt is affected by today's rating action. The revised Outlook stems from a still aggressive capital spending program for 2012 in a very weak natural gas environment. The company's 2012 spending plans remain essentially unchanged in terms of magnitude and will create a large funding gap between cash flow from operations and capital spending and leasehold acquisitions which is expected to be filled mostly from proceeds from asset sales and various monetizations. Given the size of this gap (estimated by Fitch to be approximately $10 billion for 2012) Fitch believes that the company's credit quality is likely to come under pressure. As result of weak natural gas prices, operating cash flow before changes in working capital was just $910 million for the quarter. The difference between this and amounts spent during the quarter for capital expenditures and leasehold acquisition led to an increase in long-term debt of approximately 23%, from $10.6 billion at year-end 2011 to approximately $13 billion at March 31, 2012.

    Long-term debt plus non-controlling interests increased 29% to $15,455 at March, 31, 2012 from $11,963 at year-end 2011. Given the weak natural gas pricing environment, there exists the potential for a shortfall or delay in some of the expected proceeds from the remaining planned asset sales and monetizations this year. In the first quarter (1Q), Chesapeake announced an upward revision to 2012 capex guidance for well costs on proved properties from the $6 billion-$6.5 billion range to the $6.5 billion-$7 billion range, and for acquisition of unproved properties from $1.4 billion to $1.6 billion, despite the dramatic fall-off in organic cash flow from weak natural gas prices. Also of note was the fact that the company spent $2,182 million and $1,079 million in these categories respectively in the 1Q. While it had been clear that the 1Q would be higher than the remainder of the year due to time required to ramp down spending, these levels leave relatively little room in the next three quarters for the company to stay within its full year capex guidance. Fitch anticipates the company will be sharply free cash flow negative over the next three years.

    Chesapeake also announced an increase in the projected level of asset sales to meet the company's funding needs: Chesapeake has increased its planned asset sales in 2012 from $10 billion-$12 billion to $11.5 billion-$14 billion range. The inventory of assets to sell is deep (Permian Basin, Mississippi Lime, Eagle Ford VPP, Chesapeake Oilfield Services IPO), but the extent of sales raises questions about the ability to execute on all of these transactions in such a short timeframe, and the potential impact that sales could have on core operations and medium term growth prospects. The largest mitigating factors to this concern are Chesapeake's robust track record in executing monetizations at attractive valuations over the past four years, and the updated guidance still provides for $1.6 billion-$2.65 billion in post-asset sale free cash flow for debt pay down (before working capital changes). This debt is not maturing in 2012, which provides some flexibility to the expected funding requirements.

    Catalysts for a downgrade center among other things on the potential for further increases in debt levels, driven by failure to stay within outlined capital spending targets; further erosion in natural gas pricing; an inability to execute on asset monetizations on a timely basis, or a shortfall in monetization proceeds. Other negative catalysts include additional encumbrances of assets, or downward revisions to production guidance for 2012 or 2013. Corporate governance and Board of Director oversight remains a concern. Some initial steps have been recently taken that could positively affect governance and oversight over the long term. However, these are only initial steps and bear monitoring as governance and oversight can pose indirect issues for bondholders. Liquidity is primarily provided by the company's $4 billion senior secured revolver due 2015. Nearer-term maturities for Chesapeake are $464 million in 2013 and $1.6 billion in 2015. Key covenants are primarily associated with the senior secured credit facility and include maximum debt-to-book capitalization (70% covenant threshold) and maximum total debt-to-EBITDA (4.0 times covenant level).

    Fitch has affirmed the ratings for Chesapeake as follows: --Issuer Default Rating (IDR) at 'BB'; --Senior unsecured debt at 'BB'; --Senior secured revolving credit facility at 'BBB-'; --Convertible preferred stock at 'B+'. The Rating Outlook is Negative. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

  9. #484

    Default Re: Chesapeake Business Practices

    So has the stock been downgraded to junk status?

  10. #485

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by soonerguru View Post
    So has the stock been downgraded to junk status?
    "Junk" is a term used in connection with debt (bonds), not equity (stock).

    My understanding is that any bonds rated below BBB are considered junk. So, in the above Fitch ratings:

    --Issuer Default Rating (IDR) at 'BB JUNK';
    --Senior unsecured debt at 'BB' JUNK;
    --Senior secured revolving credit facility at 'BBB-'BORDERLINE JUNK;
    --Convertible preferred stock at 'B+JUNK

  11. #486

    Default Re: Chesapeake Business Practices

    The stock is still trading in the low 17's and is up slightly thus far today.

  12. #487

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by Maynard View Post
    TEXT-Fitch revises Chesapeake Energy outlook to negative 05/04 09:15 AM

    --------------------------------------------------------------------------------

    (The following statement was released by the rating agency)

    May 4 - Fitch Ratings has revised Chesapeake Energy Corporation's Rating Outlook to Negative from Stable. In addition, Fitch affirms the company's existing ratings. A complete list of ratings is provided at the end of this release. Approximately $13 billion in debt is affected by today's rating action. The revised Outlook stems from a still aggressive capital spending program for 2012 in a very weak natural gas environment. The company's 2012 spending plans remain essentially unchanged in terms of magnitude and will create a large funding gap between cash flow from operations and capital spending and leasehold acquisitions which is expected to be filled mostly from proceeds from asset sales and various monetizations. Given the size of this gap (estimated by Fitch to be approximately $10 billion for 2012) Fitch believes that the company's credit quality is likely to come under pressure. As result of weak natural gas prices, operating cash flow before changes in working capital was just $910 million for the quarter. The difference between this and amounts spent during the quarter for capital expenditures and leasehold acquisition led to an increase in long-term debt of approximately 23%, from $10.6 billion at year-end 2011 to approximately $13 billion at March 31, 2012.

    Long-term debt plus non-controlling interests increased 29% to $15,455 at March, 31, 2012 from $11,963 at year-end 2011. Given the weak natural gas pricing environment, there exists the potential for a shortfall or delay in some of the expected proceeds from the remaining planned asset sales and monetizations this year. In the first quarter (1Q), Chesapeake announced an upward revision to 2012 capex guidance for well costs on proved properties from the $6 billion-$6.5 billion range to the $6.5 billion-$7 billion range, and for acquisition of unproved properties from $1.4 billion to $1.6 billion, despite the dramatic fall-off in organic cash flow from weak natural gas prices. Also of note was the fact that the company spent $2,182 million and $1,079 million in these categories respectively in the 1Q. While it had been clear that the 1Q would be higher than the remainder of the year due to time required to ramp down spending, these levels leave relatively little room in the next three quarters for the company to stay within its full year capex guidance. Fitch anticipates the company will be sharply free cash flow negative over the next three years.

    Chesapeake also announced an increase in the projected level of asset sales to meet the company's funding needs: Chesapeake has increased its planned asset sales in 2012 from $10 billion-$12 billion to $11.5 billion-$14 billion range. The inventory of assets to sell is deep (Permian Basin, Mississippi Lime, Eagle Ford VPP, Chesapeake Oilfield Services IPO), but the extent of sales raises questions about the ability to execute on all of these transactions in such a short timeframe, and the potential impact that sales could have on core operations and medium term growth prospects. The largest mitigating factors to this concern are Chesapeake's robust track record in executing monetizations at attractive valuations over the past four years, and the updated guidance still provides for $1.6 billion-$2.65 billion in post-asset sale free cash flow for debt pay down (before working capital changes). This debt is not maturing in 2012, which provides some flexibility to the expected funding requirements.

    Catalysts for a downgrade center among other things on the potential for further increases in debt levels, driven by failure to stay within outlined capital spending targets; further erosion in natural gas pricing; an inability to execute on asset monetizations on a timely basis, or a shortfall in monetization proceeds. Other negative catalysts include additional encumbrances of assets, or downward revisions to production guidance for 2012 or 2013. Corporate governance and Board of Director oversight remains a concern. Some initial steps have been recently taken that could positively affect governance and oversight over the long term. However, these are only initial steps and bear monitoring as governance and oversight can pose indirect issues for bondholders. Liquidity is primarily provided by the company's $4 billion senior secured revolver due 2015. Nearer-term maturities for Chesapeake are $464 million in 2013 and $1.6 billion in 2015. Key covenants are primarily associated with the senior secured credit facility and include maximum debt-to-book capitalization (70% covenant threshold) and maximum total debt-to-EBITDA (4.0 times covenant level).

    Fitch has affirmed the ratings for Chesapeake as follows: --Issuer Default Rating (IDR) at 'BB'; --Senior unsecured debt at 'BB'; --Senior secured revolving credit facility at 'BBB-'; --Convertible preferred stock at 'B+'. The Rating Outlook is Negative. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
    Yet, they keep charging the Cheaspeake credit card. They do realize their not the United States or Ben Bernake don't they? LOL

  13. #488

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by BoulderSooner View Post
    large yes blighted no ...
    Quote Originally Posted by soonerguru View Post
    So has the stock been downgraded to junk status?
    Junk does NOT mean default. It simply is means the bond goes into a higher risk pool. You may be surprised at how many companies/names are "junk" status on the bond market.
    There is good reason for CHK to be "junk" status at the moment, especially considering the situation continues to deteriorate. CHK has a vast asset base to tap and will likely do so to keep the company afloat. But their ability to raise cash is likely compromised due to the vents of the past week.

    CHK has enough operating margin to service their debt but capex will have to be greatly scaled back.

  14. Default Re: Chesapeake Business Practices

    CHK is still listed as the number one shale-drilling company to invest in according to the Bloomberg terminal.... They do have a lot of debt, but the cost/barrel compared to Devon and CLR is way below either company.

  15. #490

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by sooner88 View Post
    CHK is still listed as the number one shale-drilling company to invest in according to the Bloomberg terminal.... They do have a lot of debt, but the cost/barrel compared to Devon and CLR is way below either company.
    Cost per bbl and/or cost/MCF is very easy to manipulate. Just make sure you look at the entire picture when doing financial analysis

  16. #491

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by OUGrad05 View Post
    Junk does NOT mean default. It simply is means the bond goes into a higher risk pool. You may be surprised at how many companies/names are "junk" status on the bond market.
    There is good reason for CHK to be "junk" status at the moment, especially considering the situation continues to deteriorate. CHK has a vast asset base to tap and will likely do so to keep the company afloat. But their ability to raise cash is likely compromised due to the vents of the past week.

    CHK has enough operating margin to service their debt but capex will have to be greatly scaled back.
    Then why have they been conducting the fire sale of assets?

  17. #492

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by OUGrad05 View Post

    CHK has enough operating margin to service their debt but capex will have to be greatly scaled back.
    duplicate post. sorry.

  18. #493

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by RedDollar View Post
    Won't find anything substantial, just the usual nitpiking stuff to justify the trip.
    I especially like the announcement CHK released on the SEC probe,
    that it includes a disclaimer about "forward looking statements".

    Only humor I can find in this.....

    http://www.chk.com/News/Articles/Pages/1691417.aspx

  19. #494

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by Oil Capital View Post
    Then why have they been conducting the fire sale of assets?
    Well I'm not exactly sure they're taking it on the chin when they have been selling assets the last few years. Their methodology is, buy up all the leasehold, drill enough to prove some reserve potential and then sell off pieces of it to fund more leasehold purchases and drilling. That's been their strategy and they've been selling assets to fund various portions of capex basically since inception. You can pull the financials for yourself and see just how outrageous their capital expenditures have been...

  20. #495

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by soonerguru View Post
    Apparently you didn't read the latest Reuters piece: a business professor said his secret hedge fund could amount to securities fraud.

    This is bad news for OKC, but it's going to get worse if they don't chop the head off the snake. McClendon needs to go and his cozy GOP politico buddies on the board.
    No , its not.

  21. #496

    Default Re: Chesapeake empire marches on

    Quote Originally Posted by Maynard View Post
    Support was $16.78, which was breached yesterday ($16.74 close). A new 52-week low was put in at 9:30 this morning @ 16.70. Some think yesterday was capitulation. Some don't.
    Support is at 17.30 , someone steps in and buys at that level

    http://finance.yahoo.com/q/bc?s=CHK+Basic+Chart&t=1d

  22. #497

    Default Re: Chesapeake Business Practices

    This is a whole bunch of crap being thrown against the wall, hoping something sticks.

    As Aubrey says, its merely a distraction.

    Someone is gunning for Aubrey, someone very powerful. Could be a number of forces, he's made a lot of enemies.

  23. #498

    Default Re: Chesapeake Business Practices

    Quote Originally Posted by OUGrad05 View Post
    Well I'm not exactly sure they're taking it on the chin when they have been selling assets the last few years. Their methodology is, buy up all the leasehold, drill enough to prove some reserve potential and then sell off pieces of it to fund more leasehold purchases and drilling. That's been their strategy and they've been selling assets to fund various portions of capex basically since inception. You can pull the financials for yourself and see just how outrageous their capital expenditures have been...
    That's pretty much SOP in the oil industry, you get a lease, then you find the money to drill it, and you spread the risk.

  24. Default Re: Chesapeake Business Practices

    Yeah you are right, it was just pretty interesting how high CLR was compared to both Devon and CHK.... I agree when you look at CHK's statements it's pretty hard to see something that looks positive, but it is so cheap right now if natural gas consumption increases it could be a pretty good buy

  25. #500

    Default Re: Chesapeake empire marches on

    Quote Originally Posted by RedDollar View Post
    Support is at 17.30 , someone steps in and buys at that level
    ---
    ---

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