No one can accurately predict the price of oil. My guess is that the Arab States would llke to put as many USA based oil and gas companies out of business as possible, including CHK. If oil and NG prices decline another 25% from current levels then many companies will be forced to file for bankruptcy protection from creditors. Hope this helps.
I agree. CHK management top priority right now is to try and sell assets, raise cash, and improve the company's balance sheet.
At current oil and natural gas prices CHK is likely losing money. I expect the company's actual cash position is approximately $1.5 billion, about half of the $3 billion you proclaimed. Regardless, CHK is not in a financial position to buyback shares. I expect management is doing what it can now to sell assets and try to reduce the company's massive $10 billion plus debt level. Hope this helps.
The divi cut was evidence that management knows CHK is in a very precarious financial position. If oil and natural gas prices do not soon rise, it is likely that CHK's debt obligations will cause the company to seek bankruptcy protection from creditors. Hope this helps.
CHK has far too much debt (and other liabilities) for a buyer to be interested in assuming same.
More likely oil and gas companies will buy CHK assets from a bankruptcy court liquidation proceeding. This way the buyer receives the asset without the liabilities. Hope this helps.
Forget about Icahn. CHK stock price decline is irrelevant to his investment business. Like DELL and others, Ichan does have a history of some large loss positions.
The credit line is complicated, dependent on many factors. For practical purposes, considering the declining price of oil and natural gas, I doubt CHK has the ability to use any credit line.
If CHK sells assets now (to pay down debt so the company may keeps its doors open), then potential buyers will smell the desperation and expect extremely low pricing. This will result in a kind of double whammy, where CHk receives relatively little for its assets and also gives up the potential for future gains (from those assets).
CHK's other option is to not sell assets now, let operational losses bleed the company's cash reserves, and inevitably file for bankruptcy protection from creditors.
Neither of the above too options is favorable to shareholders, and this is why the CHK stock price declines each day.In all likelihood, the only thing that can save the company is if oil and natural gas prices rise significantly, and soon.
Alcoa's products for these markets, compared to the company's traditional commodity manufacturing operations, generates too small of revenues.
KK talks much about the new lightweight and strong , higher tech, higher margin materials, but he neglects to mention that the market for those products is relatively small. This means significantly less sales volume than Alcoa's traditional commodity volume production business.
Going forward, if Alcoa can pay down its debt and remain in business, I expect it will be as a significantly smaller annual revenues company. In other words, I don't think it is reasonable to expect the new higher price-higher tech-higher margin products to achieve anywhere near Alcoa's current annual top line revenues sales.
Hope this helps.
Alcoa's massive level of debt, combined with a weak price environment for aluminum, brings to question whether the company can continue as an ongoing business. I hope this helps you better understand AA's fundamentals, , and why the share price continues to deteriorate.
No. Due to the lower commodity prices, lenders are no longer lending to the oil and gas industry.
Compared to Alcoa's traditional commodity manufacturing business, AA's new initiatives are in , relatively small volume , niche type market segments. Hope this helps.
Considering oil and natural gas market pricing, it is not possible for CHK (or other industry companies) to predict future top line or bottom line numbers.
It is unlikely that XOM or BHP would want to wreck their own balance sheets by assuming CHK's massive debt. In the current oil industry lending environment, even if they wanted to I doubt XOM or BHP could borrow the money. Remember, declining commodity prices makes lenders (and governments) very nervous and cautious.
That said, in a bankruptcy liquidation sale, XOM, BHP and others would be interested to acquire some current CHK assets.
Icahn would not want the obligation of paying off CHK's debt. If he desired particular CHK assets he would be able to buy same in a bankruptcy liquidation proceeding.
Why would Icahn, or anyone for that matter, want to assume CHK's debt and ongoing liabilities ?
Current market cap is $6 billion. Even if market cap were $3 billion, for example a $4 to $5 stock price, I do not expect a buyer would be willing to assume CHK's debt and other liabilities.
Why not buy desired assets from a bankruptcy liquidation proceeding ?
CHK owes more than $10 billion. That number is massive debt.
Meanwhile, revenues are declining. Too little assets to cover too much debt is a common reason for bankruptcy filing.
If the overall stock market is weak, at year end I expect AA will be trading in the $6 to $7 per share range.
Lower aluminum pricing is the primary negative of this company, and AA's high debt level is also a problem.
Meanwhile, the company's newer initiatives the higher technology metals with better profit margins, may be too small of a market size offering too little sales revenue potential.
If Alcoa can survive it will likely be as a significantly smaller annual revenues company.
CHK does have assets, but based on the respective commodity prices, their worth is declining each day. A declining price environment makes for a market favoring the buyer not the seller. Also, due to falling commodity prices, lending institutions are now reluctant to lend to the oil and gas industry.
Hope this helps you understand the situation.