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Chesapeake Energy Corporation Message Board

  • c_bandit_8 c_bandit_8 Jan 29, 2013 11:23 PM Flag

    I don't know if Aubrey's departure will trigger short covering

    CHK still has a lot of debt and very little operating profit. They are still dealing with too much NG production and the excess that built up during the warm winter last year - which is not going to be totally worked off this year. Converting to liquids requires huge amounts of cash - and is the reason their debt load has actually gone up even though they have sold about $12B in assets. I'm not short the stock, but I can see the short's perspective. CHK is not a healthy company and I'm not sure it is that much healthier without Aubrey.

    The longs are holding the stock for better days - more consumption of NG in vehicles and the payoff from the conversion to an oil and liquids play. Maybe they also suspect that CHK is a takeover target. So maybe this is the reason for the pop in the stock price. Without Aubrey it would seem to me to be a simpler proposition to sell the company - but unless this happens fairly quickly CHK is still a hobbled company because of the current unfavorable operating environment.

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