Expand Energy (Formerly Chesapeake)

[ou48A]

CHK and other operators are being killed by low natural gas prices.

It would behoove anyone interested in the economic success of CHK & OKC & Oklahoma to actively promote the increased use of NG so that its price might rise. Supporting legislation that would increase the use of CNG / LNG fuel for transportation is probably the single biggest and best thing we could see done to increases prices.

[Pete]

I know it's a bigger issue, but in the short term this mild winter has not helped natgas prices.


McClendon and CHK seem to be used to operating on the edge and always seem to come out smelling like a rose. Hope that streak continues.

[MDot]

My heart just fell into my gut...

[ou48A]

I very much hope for the success of CHK but as someone who lived the 1980’s oil bust in a hard way, CHK has always reminded me so much of so many of the companies who failed during the bust.

CKH seems to operate so much on the edge so much of the time that it’s hard for me to trust their long team viability. I hope I’m wrong! Analysts have compared CHK to the way a hedge fund operates.

Also... I have found it interesting to compare the management style of CHK & Aubrey McClendon a Duke graduate to CLR & Harold Hamm a high School graduate.

[ou48A]

Besides higher NG prices the Utica crude oil shale play is probably CHK’S best hope to turn things around.

[fromdust]

well, theres the evidence, but again, they are a big client of ours. when i am on a frac job for them, they by far have the most stringent policies that ive seen.

This is strange timing, right after your post.


From Bloomberg/BusinessWeek (also at Fox Business, Reuters, L.A. Times and many others) today:

Chesapeake Energy Fined $565,000 for Pennsylvania Violations

Feb. 9 (Bloomberg) -- Chesapeake Energy Corp., the biggest leaseholder in Pennsylvania’s Marcellus Shale, was fined $565,000 by state officials for environmental violations, including an April incident in which hydraulic fracturing fluids entered a local creek.

<->

Chesapeake, based in Oklahoma City, was fined for three separate violations in 2010 and 2011, the Pennsylvania Department of Environmental Protection said in a statement today. Chesapeake has rights to drill on 1.78 million acres in Pennsylvania’s Marcellus, according to Bloomberg Industries.

<->

Chesapeake was fined $1.09 million last May for environmental violations related to its drilling in Pennsylvania.
http://www.businessweek.com/news/201...iolations.html

And this....more from just today...

Study Focuses on Marcellus Shale Environmental Violations

(February 9, 2012) A report by the PennEnvironment Research and Policy Center shows that, over the past four years, gas operators accumulated 3,355 violations of environmental laws. [PDF] The study was compiled using information from the Pennsylvania Department of Environmental Protection (DEP).

Erika Staaf, clean water advocate with PennEnvironment, claims more than 70 percent of the violations were possibly a direct threat to the environment.

“Over the last four years, Marcellus Shale gas drillers have demonstrated a track record of pollution that has contaminated our water. It has destroyed public lands. It’s threatened public health,” said Staaf. “And absent of strong state safeguards for air, water, and land, this pattern of pollution is set to continue.”

Staaf said the top five companies for total violations were Cabot Oil and Gas Corp with 412, Chesapeake Energy Corp. (393), Chief Oil and Gas, LLC (313), Talisman Energy USA, Inc. (303) and East Resources, Inc. (170)
http://www.essentialpublicradio.org/...olations-10154

Just passing along the news, folks.

[metro]

Oh no, not a half million dollar fine for a multi BILLION dollar company.

[ou48A]

I have got to wonder if CHK goes the stock dilution route again?
Any ideas on this ?

[Pete]

I think the bigger issue is how they plan to fund their on-going cash requirements. Selling off assets or at least portions of them doesn't resolve perpetual budgetary issues. In fact, in the longer term it great decreases future revenue streams.

They can only sell off so much but at some point they have to generate revenue that covers the cost of their operations.

If natgas prices don't come up significantly, I'm not sure how they are going to do this.

[MikeOKC]

A Fox Business News (TV) analyst said yesterday that one person is responsible for CHK's problems right now - its CEO, Aubrey McClendon.

I hope the day never comes when I have to say to those who have scoffed at me for so long, "I told you so." (Though a case could be made that I've been proved right about the (mal)administration of Chesapeake already.) The success of CHK is absolutely crucial to Oklahoma City. The answer? A free and independent board of directors that can look at the executive team, the debt, assets, priorities, etc. Right now, the board looks out for one thing: the well-being of AKM. That has to change - and fast.

[fromdust]

agree with you mikeokc. crucial to okc and to other companies that service them. my company would take a big hit, albeit a local hit, if something were to happen to them.

[BoulderSooner]

if natgas prices stay in the <2.50 range for the mid/long term chk is in big trouble no matter whom the CEO is

[Pete]

Meanwhile, oil prices remain near all-time highs and Devon is setting earnings records.

[OKCTalker]

Meanwhile, oil prices remain near all-time highs and Devon is setting earnings records.

DEV $4.7 billion in earnings for 2011. Holy cow!

[ou48A]

This would keep natural gas prices very low, for a very long time and it would be very bad news for companies like CHK

http://rigzone.com/news/article.asp?a_id=115173&hmpn=1

[blangtang]

not a good sign when this guy on Bubblevision starts digging into your company

http://video.cnbc.com/gallery/?video=3000073735

[kevinpate]

Well, only for the CEO's profit is not fair. The company does send out quite a bit of funds into the community and the state at large for beneficial projects.
If it were a pure CEO pocket focus, such things wouldn't happen, or would certainly happen less.

I learned this morning, as one example, Chesapeake provided the local BSA council with a 500,000 grant to accomplish a new dining hall at Slippery Falls Scout Ranch, the council's primary older youth camp, located north of Tishomingo. Compared to other projects, this is a small, but much needed, project. Dang decent of them in my book.

[Teo9969]

Well, Chesapeake reports 4th Q and 2011 earnings today...

[Bellaboo]

Well MikeOKC,

I'll have to hand it to you. My son was in town over the weekend, visiting some of his old high school buddies. One works for CHK as a landman and he told him that they got an email stating there would more than likely be cutbacks. This young man has since been out interviewing.

[ou48A]

This is a significant development IMO for CHK and for the move to move to use more CNG for transportation.

Click to read more
http://www.bizjournals.com/pittsburg...html?ana=yfcpc

Chesapeake Energy Corp. and 3M will be designing and manufacturing a compressed natural gas tank that will be used in CNG vehicles in the future.

….. right now the most expensive part of a CNG vehicle is the gas tank.

The new technology developed by 3M is up to 20 percent lighter, carries up to 20 percent more and will be less expensive…..

[OKCTalker]

The CHK whisper number is $0.59 EPS, and the stock has been trending up all week. Won't they release their earnings after markets close today?

[catch22]

Yes most businesses always report earnings after markets close. Whether that be profit or loss reports. Just so news has time to filter through the market so trades won't happen out of reflex or emotion. Good news will make a market eager to buy the next day, bad news will have time to settle and have a nights sleep to think about selling -- and hopefully not sell.

[MikeOKC]

CHK earnings report is out...CHK report from their press release is here:
http://www.marketwatch.com/story/che...ear-2012-02-21

Independent analysis is going on furiously as we speak. A lot to wade through and consider.

[MikeOKC]

A quick bottom line for those just wanting this:
Q4 EPS 58c, consensus 59c
Q4 revenue $2.73B, consensus $3.05B

The revenues would normally be a real shocker, but with prices down...it was expected. This is bad though. Of course, why are prices down? Oversupply. Period. And by doing what Aubrey has been screaming for the last year we need to do more of (until recently of course). Some warned of this very thing and they were right. A victim of your own successes and a lesson of poor corporate management and a CEO who is more PR cheerleader than chief executive.

[MikeOKC]

Wall Street Cheat Sheet pretty much lays out the basics of the report here:
http://wallstcheatsheet.com/earnings...e-growth.html/

Looking Forward:

Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 56 cents a share to 44 cents over the last ninety days. The average estimate for the fiscal year is $2.81 per share, up from $2.80 seven days ago.

--
My opinion: None of this is good for CHK. Though, it could have been worse and I was expecting worse. So, in that respect, for me, there's a silver lining.