Terry........poster child for horrible management. Ran up debt to stockpile properties that could only be drilled at peak prices. Then, didn't put hedges in place for downside price protection.
Ton..........In the last year I've traded / held numerous drillers up and down the quality and size spectrum. Have had some good trades, some bad, and mostly losses on issues held for any extended period of time. Strangely, one of this year's best winners was EOX with several good trades early this year.
Anyway, looking at CHK. I was interested in it (again) and did in depth research a few days ago. Looked mostly at their Q 3 report from Nov. 5th. Was stunned to see that they were only realizing about $1.01 per MCF from natgas sales, and that's with hedge gains realized. The number was something like 75 cents before hedge gains realized.
The NGLs number was almost ridiculous, down in the sub $2.00 per barrel area. The market must be flooded with NGLs at this time. Oil, being a small % of production (something like 17%), didn't realize good pricing either.
Anyhow, I decided to stay away from it and ALL other "distressed" drillers. My main energy play is now two CEFs that hold MLPs (siblings FEI and FPL). They are also badly beaten up.
KEY POINT*******If energy prices don't recover soon, and substantially, many more drillers will be in big trouble. I have a whole list of them I'm watching like CHK, SD, HK, EOX, SFY, NOG, and a few others. Some are now passing on interest payments and trying to restructure debt as CHK and HK are currently doing.
CHK and some of the others will probably survive (especially CHK and NOG).......but many of the others will fail unless the bond holders are will to take partial losses and bend over backwords to help these companies survive.
Just my thoughts................Kel
Barron's story under the KMI heading. Crux of the story is that KMI has said they want to maintain their tenuous investment grade rating with Moody's. They ARE considering 2016 CAPEX needs and may cut the dist so they don't have to issue equity or add to their debt ratios.
Analyst says this all implies a possible 40% cut in the dist. Latest payout was .51 so a 40% cut would drop it to the .30 area..........giving a 5.5% yield on an approx $18 price.
Not holding any KMI directly, but do have some in MLP-CEFs like FEI that I hold.
Yeah, we came down from that run up near the $6.00 level. Some think scrips are OK, others not satisfied. Appears that no one thinks they're doing great. Seems like the "Market" is giving KERX a pass for the time being.
Maybe something cooking with an EU partner.
Kel..........a PATIENT holder
Increased production = increased losses. Can't make it up with volume boost.
Competition from beaten up groups like MLPs, M-Reits, CEFs, and to a lesser extent Utilities that have declined. The MLP - CEF that I hold, FEI, now yields over 10%. Not long ago it was a 7% yielder. BDCs might not be the best high yield game in town any longer.
Have looked long and hard at both. NOG much better at this time. Cash flow to debt ratio much better for NOG. NOG will be a survivor. CHK might be too, but it is so heavily weighed down by $10 Billion + of debt and another $3 billion of preferred stock.
NOG almost 90% oil. CHK about 30% oil.
Fantastic post, Thank You. A question.........Would this type of activity encourage a larger Pharma that may have the ability to circumvent all these limitations, make a buyout offer for KERX? Break more of A's value loose, so to speak.
I looked long and hard for that info several months ago. Couldn't find an exact answer. Quit looking as I noly hold it in my IRA anyway.
Also some natural decay involved with the 3 X ETNs. I tried to figure it out once. I think the decay was in the area of 2% per month.
This was when they were involved in New Zealand. Not sure what happened to that project. Anyway, I bought it on 2-1-99 @ $5.81. .....sold it on 10-18-2000 @ $37.81. Still have the transaction slips. Was in my IRA account. Anyone else remember TRUE_TRUTH from that time area? A great and knowledgable poster.
Sold my KMI around $24, cost was about $26. Moved all MLP funds to FEI and FPL......sibling CEFs that hold MLPs and write calls on 35% of their portfolios. They offer monthly distributions (10% area yields) and trade below NAVs.
I sold in the high $23s (cost was about $26) and moved to FEI, a CEF that holds MLPs, with KMI as a top holding. FEI trades at a discount to NAV (NAV symbol XFEIX) , pays monthly (no K-1), and provides diversification within the MLP group.
Now has the banks over a barrel. When you owe enough money, you are the one calling all the shots. The banks know that if SFY declared bankruptcy they'd get pennies on the $$ at an SFY properties fire sale. May do one of those debt swaps like LINE did. Eliminate 1/2 of their debt in certain tiers, stretch out the maturity dates, but pay higher interest rates on the reduced amounts.
Banks will do almost anything to prevent the small producer bankruptcy cycle from turning intro a snowball rolling downhill. Companies like Swift are desperate, but so are the lenders.
Kel.............just an observer and former SFY holder
And the other preferred is paying not with cash, but with additional shares. Basically, it is dilution....in dribs and drabs.
I agree that preferred stock is actually debt. Strange how it is always carried on the balance sheet as "equity," and not the debt it really is.
Just bought some (small amount) at $8.61. Suspension of the common dist is a big positive for this preferred and the survival of the company.