Chesapeake Business Practices

[PhiAlpha]

Smart companies engage in all kinds of hedging strategies and have been dealing with pricing fluctuations for a very long time. They play the long game instead of trying to live day to day or month to month. Most banks and other institutions that lend to them understand that and try to help smooth the curves.

Tough to hedge when your primary product price has been at historic lows without much change for a decade

[Rover]

Tough to hedge when your primary product price has been at historic lows without much change for a decade

Hedging isn’t all just about getting the highest prices. It can stabilize cash flow and you can adjust expenses and predict budgets better. There are financial tools. You don’t have to be completely at the mercy of spot pricing. There’s a difference between commodity speculation and hedging strategies.

[RedDollar]

Hedging isn’t all just about getting the highest prices. It can stabilize cash flow and you can adjust expenses and predict budgets better. There are financial tools. You don’t have to be completely at the mercy of spot pricing. There’s a difference between commodity speculation and hedging strategies.

Yes, wheat farmers in Oklahoma hedge 60% of their crop. Pizza Hut hedges wheat because flour is their largest purchase.

But if prices are near or below cost of production, there's no hedging strategy that's gonna help. Ya can't get past the basic fact that this country has na gas out the wazzoo, no pun intended.

[PhiAlpha]

Yes, wheat farmers in Oklahoma hedge 60% of their crop. Pizza Hut hedges wheat because flour is their largest purchase.

But if prices are near or below cost of production, there's no hedging strategy that's gonna help. Ya can't get past the basic fact that this country has na gas out the wazzoo, no pun intended.

Exactly, no one is going to hedge their natural gas production when prices are so low that they’re barely making or losing money on it. Predictability is great but not when you’re locking yourself into a marginal profit at best or a loss.

[Rover]

Exactly, no one is going to hedge their natural gas production when prices are so low that they’re barely making or losing money on it. Predictability is great but not when you’re locking yourself into a marginal profit at best or a loss.

Hedging isn't just locking in current prices. There are many hedging strategies involving futures.

[chuck5815]

Hedging isn't just locking in current prices. There are many hedging strategies involving futures.

haven’t looked at gas lately but the oil futures strip is just complete trash.

[RedDollar]

I'm thinking about buying 500 shares of CHK.

This time next year I could've lost all of it .................... or have doubled my money.

I'm trying to convince myself to strike a match to the $455 it would take to purchase 500 shares, cuz that's how I'd have to look at it. Just figure its gone and forget about it.

[gopokes88]

That’ll end in tears

[catch22]

That’ll end in tears

Are you thinking they'll go under?

[chuck5815]

Are you thinking they'll go under?

no. Chapter 11 to shore up the balance sheet and then sell to a big player with a somewhat congruent acreage position, like XTO. Probably move most of the remaining folks to Texas.

[Edmond Hausfrau]

I'm thinking about buying 500 shares of CHK.

This time next year I could've lost all of it .................... or have doubled my money.

I'm trying to convince myself to strike a match to the $455 it would take to purchase 500 shares, cuz that's how I'd have to look at it. Just figure its gone and forget about it.

You won't double your money, likely. Especially if reverse split after you buy.
You could take a short position if you think they'll keep tumbling. Fees on penny stocks trades can also eat up any profit.

[gopokes88]

no. Chapter 11 to shore up the balance sheet and then sell to a big player with a somewhat congruent acreage position, like XTO. Probably move most of the remaining folks to Texas.

They’ll still be a huge gas player when no one wants gas. XTO = ExxonMobil and they’re are focused on drilling the Delaware.

They’ll re-emerge a pretty healthy and strong company that keeps drilling their eagle ford and PRB assets.

[pw405]

Talking with friends that still work there, the outlook among employees is pretty grim. They knew that Q3 was going to be bad and the planned rig count drop was announced internally before the street knew. However on earnings day when the "Going Concern" was released, it solicited quite a bit of concern. Some are theorizing that there was a big deal that fell through last minute. One friend claiming the CEO came and talked with a small group a few weeks back where the CEO said they're looking at MORE acquisitions in oil plays - Permian, Bakken, and even more Eagleford. Everybody assumes that they would sell the operations in Haynesville, or any of the 750,000 OK acres, and they even mentioned on Q2 call that their trying to divest some non-core land in PA. Seems selling shale assets at the moment is certainly easier said than done.

[gopokes88]

Going concern could also be a way to drive down bond prices so they can retire the bonds at a significant discount.

The company is in poor enough shape they can reasonably issue a going concern, so it’s not fraudulent either.

It’s also a way to get some leverage for a pre packaged chapter 11

[gopokes88]

Down another 10% today. No stopping this freight train

[Pete]

CHK is laying off people in the field offices today. Not sure of the number.

[gopokes88]

Down another 17% today.

Corporate layoffs as well.

[RedDollar]

Why did CHK gap up today ?

[Anonymous.]

The stock is swarmed with scalpers right now. I would expect random pumping and dumping to continue in this range. Option volatility is pretty wild right now.

[gopokes88]

Why did CHK gap up today ?

The dump yesterday was an NGP share distribution to partners who dumped it. Market it took it as a sign that the crash wasn’t anything material related to the business

[Pete]

This is a great podcast on the rise and fall of Aubrey and Chesapeake; also has some great insights into the modern O&G industry:

https://podcasts.apple.com/us/podcas...r/id1486637630

[RedDollar]

This is a great podcast on the rise and fall of Aubrey and Chesapeake; also has some great insights into the modern O&G industry:

https://podcasts.apple.com/us/podcas...r/id1486637630

I think I'll not waste my time with Yahoo Finance , who most likely, don't know chit from shinola about the oil and gas industry.

[Pete]

I think I'll not waste my time with Yahoo Finance , who most likely, don't know chit from shinola about the oil and gas industry.

Your loss. The main person is Bethany McClean who has written a few books on this topic and is generally brilliant.

[RedDollar]

Your loss. The main person is Bethany McClean who has written a few books on this topic and is generally brilliant.

If she's an oil and gas expert, why is she not in the business ? Why would I need this " journalist " to tell me about McClendon ?

Carl Icahn thought he knew oil and gas better than McClendon.................... and lost his arse.

This " journalist " is about selling books, I trust those people no further than I could throw them.

[HangryHippo]

If she's an oil and gas expert, why is she not in the business ? Why would I need this " journalist " to tell me about McClendon ?

Carl Icahn thought he knew oil and gas better than McClendon.................... and lost his arse.

This " journalist " is about selling books, I trust those people no further than I could throw them.

Holy ****.