Chesapeake Business Practices

[mugofbeer]

Mustang, Please read "The Lost Decade" - an article about CHK's problem for stockholders. It spells it out very clearly why it's always "almost hot" but fails to deliver. You are right - it is all about profit. Right now, CHK at times seems to be run for only Aubrey's profit and not that of shareholders.

The Lost Decade points out financial facts, however, it does not discuss motivation. Our society is becoming far too dependent on immediate gratification. We all want it NOW. Our government is incapable of doing anything beyond the next election and some on this thread care only about what happens now. Chesapeake has taken a lot of grief about instituting a long-term strategy that gives up some short-term gain for long-term investment returns. It's strategy was one of buying up drilling rights for future operations and, perhaps, they overdid it. However, CHK forcast that the price of NG would hold up better than it has. Technological advances resulting in greater production industrywide and lower demand than anticipated has resulted in a glut of gas. Carl Icahn bought into CHK to force them to rid themselves of some of the excess property in favor of better shareholder return and it took them from about $19/sh to over $30. CHK has a long-term plan with long-term goals that have now been adjusted with more focus on oil production. If you look into their profit situation, much of the lag has been wrong hedging practices/wrong bets on the price of gas, not general poor management or long-term planning. You don't get to be the nations biggest producer of NG by being incompetent. No doubt CHK is not Devon, they are two totally different firms managed in totally different ways but long-term, CHK will continue to thrive as long as gas prices hold up.

[MikeOKC]

The Lost Decade points out financial facts, however, it does not discuss motivation. Our society is becoming far too dependent on immediate gratification. We all want it NOW. Our government is incapable of doing anything beyond the next election and some on this thread care only about what happens now. Chesapeake has taken a lot of grief about instituting a long-term strategy that gives up some short-term gain for long-term investment returns. It's strategy was one of buying up drilling rights for future operations and, perhaps, they overdid it. However, CHK forcast that the price of NG would hold up better than it has. Technological advances resulting in greater production industrywide and lower demand than anticipated has resulted in a glut of gas. Carl Icahn bought into CHK to force them to rid themselves of some of the excess property in favor of better shareholder return and it took them from about $19/sh to over $30. CHK has a long-term plan with long-term goals that have now been adjusted with more focus on oil production. If you look into their profit situation, much of the lag has been wrong hedging practices/wrong bets on the price of gas, not general poor management or long-term planning. You don't get to be the nations biggest producer of NG by being incompetent. No doubt CHK is not Devon, they are two totally different firms managed in totally different ways but long-term, CHK will continue to thrive as long as gas prices hold up.

I understand. But CHK themselves have contributed greatly to the short-term excitement by throwing out (some say ridiculous) projections for even the next year.