Stocks of refining companies often have volatile price movement. Refiners are out of favor right now because their profit margins are in a significant state of decline.
Most likely CHK will trade for a year or so at .75 cents to $1.25 per share. Management will be motivated to keep the company doors open, so that they may continue receiving a salary. After the time trading at about $1 per share, CHK will likely file for bankruptcy protection from creditors.
The bottom line is that CHK was built to be a successful business at $80 or higher oil, and $4 or higher NG prices. Even if oil prices were to double from here, and trade at a $50 per barrel price, CHK would still be losing a lot of money each Quarter.
All factors considered, $3 per share is a high price for CHK right now. I expect the shares to trade at $1.50 before too long, could be a matter of weeks.
I doubt there will be a split. After another Quarter or two of dismal operating results I expect AA's Board of Director's will fire KK and cancel the absurd plans to split the company.
Nonsense. There are many reasons a bank may justify refusing a previously agreed upon line of credit.
I assure you that no bank is lending CHK, or any other highly leveraged oil industry company, any more money.
For the next year I expect CHK will trade in the .75 to $1.25 per share range. This is common for companies prior to their filing for bankruptcy protection from creditors.
Actually, the pending split is the reason stock holders are selling.
If AA cancelled plans to divide the company, AA stock price would rise.
My guess is that the "bottom" for AA stock price will be somewhere in the $2 to $3 per share price range.
At that price I expect a larger company will be willing to assume AA's debt load and acquire the entire company. For example, should AA trade $2.50 per share a large corporation or institutional investor might offer to pay AA share owners $3.50 to acquire the company. At that point the buyer might be able liquidate AA's assets, pay off its debt, and some out of the deal with a profit.
Here at $7 per share the numbers don't make sense.
I doubt that during 2016 CHK will have to file for bankruptcy protection from creditors.
More likely the company will post enormous operational financial losses, burn cash reserves, have a stock price trade for much of the year in the .75 cents to $1.25 per share price range.
By 2017 the numbers may be such that creditors will force the company to file for bankruptcy protection from creditors.
Precision Cast business lines completely different from AA down stream lines.
"Heavy hitters" like Ross and Elliott management have several complete loss investments each year. They have enough winners to make up for the losses.
There is no market for AA's upstream business, this is why it has little to no value (unless aluminum prices have a significant increase).
AA's downstream business lines do not have the pricing power (profit margin) of PCP's. This is why Buffett liked PCP and not Alcoa.
The "split" will do nothing but increase Alcoa's operating expenses. It is a horrible strategy which I doubt very much will ever materialize.
Again, KK over paid for companies which have little to no chance of enjoying any significant pricing power. He did so to try and sell a "story", so he could keep his job , salary for a few more years.
It's enough already.
Today's 'engineered products" are tomorrow's commodity. There was no sensible reason for AA to pay so much for the "value added" business lines. And there is absolutely no reason to "split the company"..
Klaus Kleinfeld has mismanaged this company to the point where I believe , to reduce the company's massive debt load. Alcoa will need to raise cash by issuing new shares.
Frankly, it is a little hard to believe that AA's board allowed KK to go on his spending spree of recent years. He over paid for a few companies and now shareholders are stuck with a "story stock" that produces declining revenues and operational losses.
Going foward, I think the only way to save the company is terminate KK's employment, cancel his absurd proposal to split the company, raise cash through a stock offering, pay down some debt, and try to hang in until aluminum's pricing dynamics improve.
Considering the company's massive debt obligations, CHK stock price is surprisingly high.
Company's with debt that exceeds assets usually trade at about $1 per share, sometimes for a prolonged period of time, until it becomes clear whether the company will file for bankruptcy protection from creditors, or that it can remain an ongoing enterprise.
Usually $1 per share is the price of highly indebted companies suffering from the threat of having to file for bankruptcy protection from creditors. I do think CHK shares may trade in the .80 to $1.25 per share price range until the company either files BK, or makes it through this difficult time.
CHK must defend many royalty related lawsuits set to finally make it to court during 2016. These have been pending for a couple of years now.
I recommend that you improve your listening and, or, reading comprehension skills. All of CHK management commentary regarding "break even" is specific to particular regions.
Even at $70 oil CHK would not make a profit.
The company needs NG to be at $4, and soon.
To a man with more than $100 million, "throwing away $275K" is like a message board member here losing $1,000. It happens every day.
Lawler knows there is a about a 90% chance of a BK here, but him spending the change from his pocket ($275K) may in the future help him
earn a few million more of a severance package when, if, the company files for bankruptcy protection from creditors. In other words, him spending a few bucks now will (in the long run) help his image, mark him as a "team player".