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Chesapeake Energy Corporation Message Board

  • manunited1919 manunited1919 Nov 28, 2013 12:21 PM Flag

    Sensitivity to Natural Gas Prices - please help

    Happy Thanksgiving to all!!!

    Does someone have an idea how much CHK would be worth if Natural Gas prices were to be in a range of $4.50 to $5.00?

    I remember comments from last year about each 0.10 increase in Nat Gas prices representing an extra $100 million to CHK - is my memory correct here?

    Also, there were substantial writedowns of reserves last year, because as NG prices were so low the reserves were no longer recoverable. If NG price increases, would they then again bring those reserves back into their books? How often do they evaluate this and make changes to reserves based on potential for being economically recoverable?

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    • IF $4.5 IS THE LOW END AND 5-5.5 THE HIGH END $ 35- $40 IN 2014

    • Yes, my memory serves me well!
      From Nov 2, 2012 earnings call, McClendon states "To highlight just how much we will benefit from strengthening natural gas markets, I’d like to remind you that in 2013, every $0.10 per mcf change in natural gas prices roughly translates into $100 million of additional EBITDA."

      • 1 Reply to manunited1919
      • All is not so rosy... They have to keep a lid on dry gas production..Aubrey "We are a major cause of the glut." Then they talked about lowering production..It lasted 2 months and Aubrey came back with we are not going to take it on the chin when no one else followed... The price dropped to 2.90... Granted production is down 10% for CHK as of the last CC,but I can't help thinking about the infrastructure that just came on line in the Utica with more to come... Seems Cabot is pumping itself as a leader for single wells in the Marcellus and being right near the main line can do so ,no infrastructure needed and investors want them to pump away... All in all the Utica infrastructure just started to come on line and hedging will be a big part for at least 2 years....If CHK holds back they sit on the gold ...Sooner or later those Cabot wells go into decline and they spend more money on rejuvenating the wells...

    • Just like any business..It would depend on when they sold it.. Being that we just started winter it should play a big role for the next earnings call add to that taking advantage of hedges for 2014's gas and it looks like it could have a run a month before earnings....

 
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