CHK just did a major bond offering to refinance maturing debt and replace higher cost debt. The reduction in interest rates on $3 billion of new financing is almost 4% lower than the cost of previous debt financing. This will lower interest costs by $100 million per year. Also, starting in 18 months Cheniere will start to export natural gas and each year thereafter other companies will have export facilities coming on line. This will end the domestic market pricing for natural gas.
In addition, each year CHK has more NGL wells and oil wells drilled than the previous year, so they are moving to higher revenues on the liquids each year.
Finally, they are going to spin-off the oil service companies and the debt related to those assets, so the amount of debt will decline.
As cash flows increase from less interest expense and higher cash flow from liquids they will be able to pay the debt down.
This management team is one year into a three year make-over and the result each year should be a higher stock price.
it is not a buying opportunity as the net value of the reserves is being diluted each year by issuing 10% more equity through the drip. This is the same situation as Argent. In addition, Libya is going to bring more oil production to the world market in 2014 and so is U.S. drilling by CHK, DVN, APA and COP.
Issuing 10% more equity each year as this has been doing without increasing reserves by a greater amount is just a poor investment that rewards the insiders that brought this thing public. Ask yourself how much the insiders have purchased for their own account and then you will can ask yourself why they do not think it is a buying opportunity.
Show a little intelligence. This is not $3 billion in more debt, it is refinancing existing debt with debt costing 3-4% less. On $3 billion of debt that saves $100 million a year in interest.
A spin-off does not bring any cash to CHK. The shares in the service companies are delivered to shareholders (spin-off). CHK receives nothing but the new public company assumes the debt associated with the assets so the CHK debt shrinks but so does the carrying value of the assets.
More will be gained by CHK from the $3 billion in new debt that is replacing old debt. CHK is lowering its cost of debt on this 3 billion by around 4% per year. That is $120 million a year saved in interest costs which over the term could save around 1 billion in interest.
your comments could be interpreted to imply that Carl Icahn the biggest shareholder in CHK does not know what he is doing by investing a billion dollars in CHK as you imply that shareholders are going to see the market value decline by more than 50%.
Do you really think the CEO,CFO and other management of PETEF knows anything about this company they acquired??? Get real, a great technology management works 6-7 days a week eating up tech. KeeK is being run by the same people that have had it in Canada for its entire history rather than locating the company in Canada. Why do you think the Keek management let their company be acquired by an oil company and its management. An oil company that was going down the tubes. Two bad managements getting together, what is that a recipe for.
If you think PETEF management is smart why did they fail in their last business venture. OK the stock did not go to zero but it declined 90% + from the IPO.
You asked me do I think about what I say? Ask yourself that question. You have concluded that Keek and Petef had good management. OK. Think about how you are responding to my analysis and dig a little deeper. Did Keek have any interest from any major investors in silicon valley??? No, the let themselves be acquired by a Canadian penny oil and gas stock/company that was dying.
If Keek any good management it would have moved to Silicon Valley during the entire development phase and if they had something the angel investors of all major start-ups in Silicon Valley would have invested in them and nurtured them along. That did not happen. Ask yourself why.
this management is not smart enough to move to silicon valley, they think
Canada is the technology place to be to get noticed and grow the business
Not necessarily a monopoly. How many large companies deliver tv into homes showing the same program options. The answer will surprise you. A monopoly is when 2 become 1 provider only.
Perhaps in rural areas where 1% of the U.S. population lives tv delivery could become a
monopoly if DTV-DISH is one company but not in the case of the 99% of the country that lives in cities and towns.
One way to avoid the harm of a monopoly is to offer the customer the lowest rate for the same number of offerings available from the competition anywhere in the U.S.
why load up on a company that paid almost $200 million to buy the general partner. What did they get for this money? I see it as a dilution of the retail investor without contributing any growth.
Basically the retail investor is giving away a large chunk of the company without getting anything in return. That is my take on the situation and does not justify buying more.
In addition I believe ARP acquired the general partner and agreed to issue them $200 million of units for their interest. (Basically turning a large piece of the company over to them for what? Nothing).
QRE bought the GP for almost 20% of the equity in the company, close to $200 million dollars. In what businesses does the management get almost 20% of the company for doing nothing. The production has been bought and paid for by the investors.
You hit the nail on the head.
Canada for tech, give me a break.
The technology company gets taken over by an oil and gas promoter.
A CEO with any brains would move the 15 employees to Silicon Valley
and rent office space there.
Technology is usually about relationships and being close to all the
big boys. There are a hundred companies like this with a handful of
employees and no money backing them. Only about 10% survive.
This is like buying a race horse. How many race horses hit the big
money, one out of a thousand if you are lucky.
KEEK has been unable to attract any angel investors with big bucks
like the guys in the Silicon Valley that nurture and back companies
and eventually take them public for big bucks. KEEK went in search
of a failed oil and gas company that was itself poorly financed and that
is all they could find. These guys are not the right guys to hit it big.
Those companies are in California and have private venture capital
money from the big names and big investors from the founders of
Amazon, Google, Microsoft, Facebook, etc.
KEEK is getting money from a failed oil and gas operation, give me a
the businesses you are suggesting for a Dish or DTV are currently controlled by behemoths, absolute monster companies that are much much bigger than the two satellite companies.
In my opinion it is expensive to compete in the social media area and those companies do not make a great deal of money. Take a look at the earnings per share of DTV and you will see that they make more money than the social media stocks. True, the social media stocks are on a tear and the prices are just crazy.
DTV is moving into new revenue sources: political campaign advertising which is an event every two years with big bucks being spent. They are also developing a home security service which will bring in monthly revenue when it is perfected and released nationally. Finally, they are trying to offer a low end product such as a Netflix or Hulu as management has indicated that they are in development on a similar type product. Yes, we are looking at the current DTV which has been the same company for a decade without major new initiatives as they expanded the system internationally and that takes a great deal of cash. The next 5 years should see the roll out of all the new products and a 10 year period of new revenue sources to add to the pay tv model.
The company is predicting $8 a share in earnings by the end of 2016. So I assume if the new initiatives are successful that the new products will eventually drive earnings that earnings will climb to $9 a share and $10 share when we get 5 years down stream. (not to mention that South America and Mexico part of the company will be much much bigger in 5 years.) What will the share price be with $10 of earnings is the question. Depends if the P/E is 15 or at the P/E of 20 times. Most entertainment providers are closer to P/Es of 20 than 15.
This stock has been falling because people do not want to own a social media company that was previously an oil and gas company. Different types of investors. Also KEEK has around 16 million in cash and the market value is actually 54 million if you take the 350 million shares and value those shares at the current selling price. So the shares are probably fairly valued unless they keep adding millions of users.
The question for me if when does the money run out? It looks to me that they have enough cash to keep the operation running for another year and then they need another cash infusion.
It would be nice if there was monthly press releases on the growth of users. Hope that will come. This will either crash and burn as most social media have done or it will be one of the few lucky ones.
It seems to me that most of the successful companies are located in silicon valley area. Canada is really a stretch.
Today DTV announced a billion dollar note refinancing.
The term of the new debt is 10 years at 4.45% interest.
The fixed rate debt is very favorable and actually very
cheap money. It shows the strength of the company.
For those of us that have held from the GMH days I
believe we will see the same kind of performance over
the next 10 years. I expect the days of purchasing their
own shares will end in 2014 or 2015 and from that time
on what will they do with all the cash flow? A rhetorical
question. I assume they will start to retire debt in 2016
by a billion dollars per year and pay a dividend of a
billion dollars per year. Once they go into that mode I
see the shares continuing to climb. Remember South America
will be a pretty mature operation by 2016 with significant
cash flows and 3 million more customers than today.
Best to all longs. This is going much much higher.
if the insiders are unloading the retail investor is wise to unload, this is
going lower. The quarter is going to be over in two weeks and I suspect
the distribution is going to exceed the cash flow again.
They just announced a loss for the quarter of $5 million and last quarter they had the same $5 million loss.
This is getting to be routine. Most investors should expect a negative surprise if they are unable to to break this trend. At the rate they are going the loss over 4 quarters will equal $20 million.
The purchase by Kinder is really not that much considering his net worth. He could have
made a bigger statement by buying that much every month or every quarter.
how will EPB pay for any drop downs from KMI? They will issue more equity and at low prices which is a real negative. When they issue equity the equity usually falls.
What happens if EPB deteriorates further?
I purchased this company when it was known as General Motors H shares.
It does not need to go after low end users. It is developing home monitor
security which is currently being tested. A year from now that will probably
be ready to go national and international. That should be big.
During the next election cycle DTV and Dish are combining to offer political
advertising to both companies' subscribers. Election years every two and
four years offer another major source of revenue not currently in the company
These two intiatives are not the only new products that will be forthcoming.
DTV has indicated that it is looking at offereing a Netflix or Hulu type product.
The future growth of these offerings and the growth in South America are all
major opportunties to increase cash flow and bottom line in 2015 and later