Look at it this way, the fourth quarter just reported was terrible and they are now finished with the first two months of the first quarter and it is going to be worse than the last quarter. The share price has tumbled since the last report in just two days, I imagine it will happen again with more of the same after March quarter.
Another two points down after the march quarter and it is time to load up assuming they get rid of that $12 billion debt. The interest on $12 billion in debt is about 3/4 of a billion dollars every 12 months. That hurts after a while.
Actually, they have said anything in recent months about paying down debt and they announced no shares purchased. I guess they assume that the shares are not good value or they would have announced that they have acquired a certain number of shares. Ask yourself, why should anyone buy shares if the company does not see the value in the shares. If they see better value somewhere else that is what should be acquired.
Not sure what "The Event" means. CHK could receive a buyout offer from any of the ten major multinationals especially when its shares are low, but I would expect that a foreign buyer would not go after CHK, just 10-20% of its land holdings so as not to get a political storm going on a sale of a company to a foreign company.
The real unpredictable of course is a regime change in Saudi Arabia. If you can have a regime change in Iraq, Syria, Libya, etc., anything is possible. But I would not expect that as long as the regime in Saudi Arabia gives free education, free medical care, free housing.
What I would not be surprised to see is a terrorist attack similar to September 11th. But one where Middle East terrorists take out a major pipeline or energy complex by flying a plane into it or blowing it up. The Saudi's ship a tremendous amount of oil all over the world and if you damaged the port facility with a bomb and took out the supply for a year or two to repair it I could imagine oil tripling over night. The terrorists in the MIddle East are getting stronger all the time and wealthier all the time. If they get the LIbya oil fields then anything is possible. Being a short in energy works during times of over-supply until something happens.
The weak members of OPEC may force a cut in production in 90 days and if the members agree to cut one million barrels per day that event would change market prices for energy and energy stocks. Not saying that will happen but Venezuela, Nigeria and others are hurting with these energy prices.
True, but it could go lower still as funds, ETF and investors move out of CHK and allocate energy holdings to EOG and others. Remember, we are already two months through the first quarter of 2015 and I expect CHK will report another lousy quarter at March 31.
I would have expected them to say we will not drill and sell oil and
gas at these prices as we have enough production that we are selling
at low prices.
Even if you drill wells and do not complete them, do not sell the stuff
since everyone knows that first year production is usually double
what you get the following year from the same well. Why give away
oil at $50 and gas at sub-$3 when you can wait 12-24 months and
sell it for 50% more.
I'm disappointed and already own too much of this to buy more at
these low prices, especially when management sounds out of touch.
I spoke with the president of another oil and gas company where I
have a large position and he told me this week they dropped the
number of rigs from 20 down to 2 that are drilling. Now that is what
I like to hear but nothing from CHK management.
CEQP incentives should make it the better growth engine of the two but as I read quarterly reports from all the MLPs and GPs I am looking for execution and growth and so far I have not seen that here. Management has to make decisions where they spend their cash flow and who they want to service and who they will expend capex on that payoff in growth.
The energy sector is going to be problematic for the next 12-24 months. The midstream providers have held their own and both CMLP and CEQP have not held their own in this difficult time. There appears to a lack of confidence in the execution of management, choices of management and when analysts, investors and funds cut back on positions in a name you see what happens and that is case here, prices crater and buyers buy for the perceived higher yield. Yes, I keep coming back to the name and reading the quarterly reports and viewing presentations, but the bottom line with this name is execution and performance.
When energy prices correct as they will it will lift all boats but 2014 and 2015 have hurt this name and I am afraid it gets worse before it gets better. Why risk riding this down another point or two during 2015 when there is so much uncertainty.
People are buying both names every day as they look cheap and where has that benefited investors over the last year or even in the last 30 days? What makes it turn around and not go lower another 10% or even 20% if the first quarter shows more deterioration?
CEQP is cheaper to buy and each dollar appreciation has a greater equity return kicker so if one had to buy one name they should take the lower distribution for the appreciation and incentive rights but I see no reason to buy until they show they can grow cash flow and distributions.
lack of investor confidence by those that buy equities based on distribution yield. There is a reason this midstream has lost 50% of its value over the last year while most other midstream investments are up significantly. When you take the distribution of most other midstream performers at 5% yield and add the typical 10% appreciation per year in the equity price you come up with a total return of 15% per year to 20% per year return depending on which name you are looking at . Looking at this investment you come up with nothing like that return. Also, most other midstream equities have good growth in revenue, cash flow and distribution growth. This equity is not seeing that in fact the opposite.
Canadian oil sands are bringing prices of $35-45 for the black heavy oil and today in the press the news is that oil sands production is going to rise 4% plus over 2014 production. This will further drive down prices of all oil in North America.
Why do you think the dividend has been cut to 2% on an annual basis. Even Exxon has a higher dividend than Canadian Oil Sands.
Suggest owners look at the latest press releases on oil sands production and prices and how much more production is coming on line in 2015 and how it is not possible to cut back on production.
NO, not really, the 5% distribution midstream investments with
10% appreciation per year are just better investments than CMLP
and this is being reflected by lack of investor interest and lack of
investor demand which drives down equity price.
Take a look at the price of every midstream energy company as ask yourself
why this one is the worst performer of the group. It is about management,
who your customers are, where your plants are, where your pipes run.
The market, analysts, investors, performance and management dictate
what happens to an equity. There is a reason this midstream has lost half
its value this last 12 months and 90% of the other midstream operators
have seen their values climb over the last 12 months.
Distributions of 10% when made up of both cash flow and return of
capital reduce your basis each year so there is a price to pay for the
10% distribution here. When the equity value of a KMI or ETP goes up
every year, year after year, that equity appreciation does not get taxed
in the same bracket. It is better to be in an MLP that has a 5%
distribution per year and 10% appreciation per year than something
You are correct. If they have more non-performing loans each quarter they have to keep writing down the book value. As book value declines and further possible cuts in dividends will lower equity price. This is pretty dangerous
It makes no sense for XOM to want to buy a producer that has some of the highest production
costs per barrel of oil in the world. There are plenty of producers in North America that have
much lower costs of production: Whiting, Hess, SWE, among others in a stock for stock purchase.
Why would XOM go after the most polluting, dirty oil production operation in North America with
no pipeline system to take current production to markets to get the best prices for the oil.
You need to read some articles on the worst air pollution locations around North America energy producers.
stated in their news release that they expect negative cash flow for 2015 of around
1/4 of a billion dollars forcing them to take on more debt by drawing on their line of
credit. I would rather see them cut the dividend ASAP and restore the dividend in
2016 or 2017 when oil prices are much higher. Debt has been climbing quarter by
quarter and cash flow has been declining quarter by quarter and looks like it will
continue to drop with each quarterly report in 2015.
Prognosis for the decline in drilling for 2015 is back where it was five years ago. Five years ago
shares were at $30, so why is NOV not headed to $30 again as they report inferior results for
each quarter during this year? Quarterly results are going to lousy each 90 days.
I looked at the latest drilling results. Not good. Why drill into ground that is denser than other places on earth. Management said the drilling equipment (specifically the drill bits) were taking a beating.
I believe this goes lower during the first and second quarter of 2015. Without the hype of a newsletter these shares would have had much less investor interest.
Yes, but you did not remember that a month ago the board of CHK approved the purchase of $1B in shares. A 939000 share purchase is only around $20 million by the buyer. CHK would have to buy around 1 million shares a day for two months to buy in the amount approved by the board.
CEO of BP oil spoke last night on Bloomberg and he sees $50 oil for next three years as there is too much production. He said Russia and Middle East has actually increased production in recent months and their are major amounts of oil in storage and on ships. Also he said efficiencies in the U.S. have kept production higher and we would see more production in U.S. in 2015 than 2014 for the first six months of the year. This CEO was brought in to clean up BP.
My concern is that Iran makes a deal on its nuclear program and the Western countries remove sanctions which means that Iran adds 1 million more barrels to world oil supplies per day. This factor and Russia's need for currency could up production 1-2 million barrels per day.
Russian is run and owned by a group of crooks-thugs. Better to invest in some other country rather than one where the richest man in the country is a politician named Putin and everyone gives him a cut or he takes away their toys (company) and throws them in prison.
I purchased 4,000 units of BBEP last week at $5.50. Yes, they are up big time since
then. Today, six of my energy holdings jumped $1-2 each. The only holding that did
not move significantly was Linn Energy which was disappointing.
Linn's problem is three-fold: too much debt and not addressed by management,
CFO sold half his units this month and price of gas is near $2.50 and oil is $50, way