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Old 04-26-2012, 12:48 PM
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Default What's up with Chesapeake Energy?

Their stock is going down, their CEO has some questionable financial deals, etc....

But they have been a good company in the past, are they headed the direction of Enron? I bought Enron on the way down thinking, it's Enron once they get past these lawsuits/investigations they'll come rocketing back...I couldn't give my stock away in the end. Hate to buy Chesapeake if they are headed down that path. But if not might be a very good oportunity.
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Old 04-26-2012, 08:42 PM
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Their stock is going down, their CEO has some questionable financial deals, etc....

But they have been a good company in the past, are they headed the direction of Enron? I bought Enron on the way down thinking, it's Enron once they get past these lawsuits/investigations they'll come rocketing back...I couldn't give my stock away in the end. Hate to buy Chesapeake if they are headed down that path. But if not might be a very good oportunity.
Wish I could help, but I have sworn off the stock market. I invest in real estate. And gamble in Vegas. Get much more bang for my buck that way.
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Old 04-27-2012, 03:45 AM
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Originally Posted by TOK2000 View Post
Their stock is going down, their CEO has some questionable financial deals, etc....

But they have been a good company in the past, are they headed the direction of Enron? I bought Enron on the way down thinking, it's Enron once they get past these lawsuits/investigations they'll come rocketing back...I couldn't give my stock away in the end. Hate to buy Chesapeake if they are headed down that path. But if not might be a very good oportunity.
As I understand them, they are pretty much a pure natural gas play and natural gas is in the crapper. There are a number of projects on the books that would increase demand for the stuff and if and when they are built the prices should recover. That would be the point to look at buying folks like Chesapeak again. IMO.
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Old 04-28-2012, 01:52 PM
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As I understand them, they are pretty much a pure natural gas play and natural gas is in the crapper. There are a number of projects on the books that would increase demand for the stuff and if and when they are built the prices should recover. That would be the point to look at buying folks like Chesapeak again. IMO.
I know Aubrey on a business level and he may have to take the fall for this now that the publicity surrounding the "Well Investment Program" has spread. CHK has been doing business like old time wildcatters and ignoring analysts requests for more transparency for a number of years. When natgas recovers, CHK will be in the catbird seat. We just need to increase the demand from the industrial sector down to the consumer. There is more to the Aubrey story and it benefits him. If it all comes out in the right manner, he may still be leading the ship when prices start their uptick.
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Old 04-28-2012, 02:06 PM
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I know Aubrey on a business level and he may have to take the fall for this now that the publicity surrounding the "Well Investment Program" has spread. CHK has been doing business like old time wildcatters and ignoring analysts requests for more transparency for a number of years. When natgas recovers, CHK will be in the catbird seat. We just need to increase the demand from the industrial sector down to the consumer. There is more to the Aubrey story and it benefits him. If it all comes out in the right manner, he may still be leading the ship when prices start their uptick.
There's such a glut of natural gas with more wells being drilled every day. Why do you think prices will rise until supply drops off?
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Old 04-29-2012, 09:08 AM
scout3dave scout3dave is offline
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Here's an opinion piece in the weekend WSJ. FYI

http://online.wsj.com/article/SB1000...pinion_LEADTop
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Old 04-29-2012, 05:12 PM
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There's such a glut of natural gas with more wells being drilled every day. Why do you think prices will rise until supply drops off?
I don't think prices will rise until we start exporting natural gas to China and India over the next few years. These E&P companies will be producing natural gas in the Eagleford at costs well above the selling price of the commodity only because they spent way too much on the leases. The Piloncillo got $10K per acre from Shell...or, $1 Billion in lease bonus. The only E&P Companies that can afford to be in these plays are the public companies or they really big independents and they are getting bought out pretty regularly. These are the companies that also cannot afford to lose a lease and take the impairment hit on the balance sheet. They basically have to drill and try to string things out waiting on the public sector to convert more mass transport to CNG and hoping the President and Congress will recognize that incentives are needed to convert consumer vehicles. GE has a mobile product that can serve as a filling station for CNG. They are working daily on better methods. All of this will come to a head over the next few years and the glut will reduce and we will be more independent of foreign oil and keep a lot more dollars here at home all while reducing the cost of fuel for the consumer by around half.

The shale plays on the horizon will be in areas where the mineral owners aren't as familiar with mineral leases and the E&P Companies should be more cautious with the terms of the leases. In South Texas, it wasn't the first rodeo for many ranchers. As the play drew more interest, not only did the bonuses grow, but the continuous drilling provisions were in about every lease. If the E&P Companies can sign a 3 year paid up lease without any drilling provisions (90 days from execution and within 90 days of the first well drilled), they can hold on to these valuable properties while the infrastructure and export facilities are in the works. Let's see how smart they are though. The ultra deep plays by MMR and Energy XXI could bring massive reserves of gas into play outside of the shale plays. The good news about these wells is that they take about a year to drill and then they take about another year for the engineers to figure out how to commercially produce it.

I hope it gets here sooner than later. In the meantime, there are still plenty of oily and wet areas in the Eagleford that will be drilled first. Check out the prices being paid for the Mississippian Shale play and see if they aren't more reasonable than the Barnett, Haynesville, and Eagleford. This will be a good indicator of how much production should increase. Wells in the shale plays have shown pretty steep declines curves if that is any consolation.

Last edited by DuvalCountyHorn; 04-29-2012 at 05:18 PM.
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Old 04-29-2012, 07:05 PM
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Duval, I went hunting several times as a kid out in Tilden. Sure wish we had bought some land (and the mineral rights), although even 30 years both would have been relatively expensive.

I have friends who have had family hunting leases going back 30 years and they are losing them due to all the drilling. How hard is it to get leases these days?

Man, Piloncillo needs to pave a longer runway (currently at 5,000 x 60 feet) if they want to get a real jet in there. ;-) A billion $$$ means one hell of a jet.
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Old 04-29-2012, 07:17 PM
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Great hunting on the Piloncillo. Wonder if my buddy will get to keep his lease.
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Old 04-30-2012, 08:38 AM
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I don't know the Harrisons personally, but I hear there are only two heirs to that ranch CCTXFAN and Golf. Talk about the lucky sperm club! I do know many ranchers who no longer are leasing their properties for hunting. More and more small acreage high fenced ranches are in the making with the owners raising their own "pets" if you will. I haven't heard anything golf about the Piloncillo leases, but I bet he will get to keep it. That's a lot of land for a ranch manager to try to manage a herd by himself...killing 500 does per year would seem too much like work!

I had some cousins selling land adjacent to mine in 1990 for $250 per acre. I had just started working at E&Y and not only was counting beans, but I was making them too. The same land came back up for sale a couple of years ago and now that I can afford the $250 per acre, it sold for $1,450 per acre for unimproved South Texas brush land. One of these days my earnings might catch up to the price of land...one of these days.

I think with a billion dollar lease bonus, you should automatically get a G5...so they better be upgrading that strip!

Good to talk to you boys again. I hope all has been well. High School sports has been consuming me for the last few years. My son is a soph now and about to start playoffs in baseball which means a trip to the Valley...too bad we can't go across anymore.
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Old 04-30-2012, 08:43 AM
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Good to talk to you boys again. I hope all has been well. High School sports has been consuming me for the last few years. My son is a soph now and about to start playoffs in baseball which means a trip to the Valley...too bad we can't go across anymore.
Sure you can; you can even go for free if you carry this package from the Attorney General over.

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Old 04-30-2012, 12:48 PM
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Sure you can; you can even go for free if you carry this package from the Attorney General over.

Thanks, but I like my head! If I made it through that delivery, I'm sure I wouldn't have a hard time procuring a return load!
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