First, I am long Lightstream and a lot of shares.
I spoke with both the I.R. and the President of the company.
I suggested to both of them that they buy shares at sub $1 per share.
I suggested they cut drilling and use the funds to buy shares.
The response I received is that they needed to drill to cover debt
payments, capex and overhead.
In essence I see them drilling their reserves and selling them in
the $40's during 2015 which takes twice as much energy out of the ground
for the same dollars as in 2014.
The share price would indicate that they do not survive this and people
are dumping to get whatever they can get.
I am holding as I am down a great deal of money but so is the CEO.
I am sure the CEO is trying to find a buyer even though he is not able to
discuss that with the public. The problem is that this is the worst time
to unload the company. I mentioned to management that any hedge fund
could buy up 10% of the shares for pennies at this time without having to
disclose this and then when filing the holding could buy the company for
a song if no competing bids take place. With the price closing in around
50 cents, the company would be lucky to see $2 bucks a share from a
buyer. You just do not see buyers paying 100% over the market price for
shares in acquisitions. At least I do not recall anyone paying 100% over
market for a purchase.
Sad state of affairs.
Exxon CEO said oil price should be $50-55 for the next two years based upon storage and excess production in the U.S. and OPEC. He said the U.S. is producing 1 million barrels per day that is not needed and the law does not allow it to be exported.
I think this guy has a better handle on the current situation than any of us on this board.
Do you think the three largest shareholders controlling 25% will sell in the 20's. They would not sell near the bottom of oil for the last five years as they are super wealthy and do not need to give away their shares.
China will have 100 million more cars and trucks on the road in 4 years. Price of oil $80-90-100 by then. I am guessing that Boeing, Airbus and the other plane manufacturers have 10% more planes in the air in 5 years than today and demand and production of oil is in equilibrium. What was the average price of oil for the previous four years if you recall: $90-100. Last thing on the big shareholders of CHK, they would be better off selling 5-6-7% of production and land holdings for $5 billion than sell off the entire company. The hot shots that control the stock and board are better off with selling a small piece of the company during the next 12 months and paying off 50% of the debt on the balance sheet at that time.
Comparing the current management, current board and major stockholders of the last
two years with the control person: Chairman, CEO, major shareholder of 1990-2013 is
like comparing apples to oranges. Saying they are the same and predicting the same
is just foolish. The new control of this company dumped a piece of the company for
$5 billion and they certainly can dump another small piece for another $5 billion to
either a foreign company or foreign investor without the politicians going crazy.
Open your imagination a little, there are plenty of investors or sovereign funds:
Singapore, China, India, Saudi Arabia, Shell, Total, Eni, BP, CVX that could spend
$5 billion and take a little chunk of the reserves. It happened in 2014 and expect
it will happen again in 2016. When that transaction takes place and the proceeds
pay off 50% of the debt on the balance sheet these share double within 90 days
of that event as every ETF and mutual fund in the world runs into the shares.
Most people that reach the age of 78-79 have a life expectancy of 85. He is assuming that something material is going to happen in the next 5 years and he wants to see that. There is a great deal going on.
Exports to Mexico via a major pipeline.
Exports by ship to Asia and Europe.
CHK is going to acquire and retire 10% of its shares.
Most likely a lifting of the ban on oil exports.
And while I thought Shell would make a major purchase for $25-30 billion and it would be CHK, it turned out to be a $70 billion acquisition this week, but not CHK. While I am disappointed, I am sure that Archie expects either a purchase of CHK or another sale of 5-6-7% of the assets for $5 billion.
Archie knows one or all of these things are going to happen during the next 5 years and that his $18 per share purchase is going to go up 100% and he wants to enjoy one last ride.
What is very interesting here is the COP just announced that they are unloading development and property around the world and want to concentrate on North American shale. Everyone on this board should realize that CHK has a target on its back and COP could be the next company that takes another piece of it.
If you think management has done a good job over the last five years for the company and shareholders then invest in the company. If you think management has done a lousy job then stay away or if you have shares then dump your shares. It is very simple. Look at shareholder prices, profitability (costs to produce) and make your decision. Don't ask others to think for you or give you a tip, that is dangerous.
Pretty pricey if you ask me. Why would anyone including the new shareholders from this public offering be willing to pay 50% more for the ships than they cost the company? Even with a dividend that pays 10% it will take five years to reach breakeven on the value of the balance sheet. I realize you are buying more than the ships, you are buying a business, but the business is leasing out ships. While only 10% of the fleet might not be earning any income at the present time, that utilization can drop in the future if too many ships come out of the shipyards which appears to be an issue for 2015, 2016, etc.
The people that got in when the shares were $7 during the last year made a smart purchase. I have my doubts about those buying in at the public offering this week. I think being enticed by the yield is dangerous when it comes to shipping and ships especially when the fleet is valued by the market at 50% above the cost of the ships.
My understanding is that ISIS is moving into Libya to compound the uncertainty in the power
vacuum among the militant groups. What companies are going to keep the infrastructure
running in that country with ISIS cutting off the heads of western workers and Christians?
The CEO of Exxon said this week that he sees the price of oil in a $50-55 barrel price range for the next two years. This guy is no idiot he is a brilliant oil and gas production executive. As the hedges of BBEP fall each year this could be a problem but I think the price of BBEP has already baked that in. At $1.00 in distributions BBEP should be able to make that for the next two year and by then I believe the Exxon CEO said he sees $70 a barrel oil which should allow BBEP to increase the distribution and pay down debt. If all of that comes to fruition then BBEP should be able to increase the distribution in 2017, pay down debt and we should see the equity price climb to $10 by end of 2015 and $15 by the end of 2016. So, good distribution and good price appreciation. Now if Saudi Arabia and OPEC would cut production 1 million barrels in June then everything accelerates in terms of prices, but I would not hold my breath on that one.
the Saudi Oil Minister is in Davos, Switzerland and he told the conference of world's billionaires that the prices will start to go back up in a month. I think he knows more than just about anyone on the subject. He obviously feels that the price below $50 per barrel is an overshoot on the down side. Still if oil stays at $50-60 for the next year there is going to be a great deal of hurt.
I think you made a good move. Lenders are owed $1 billion and they do not want to hire lawyers to deal with this in a court so I think they work on giving an extension of time to correct any breach in the loan documents.
Obviously they have not purchased any shares during the last couple of months because they felt this was going to get worse before it gets better and they were right. I have said that the first quarter is going to be miserable for the oil and gas industry which would drive prices of the shares lower and that has been happening each week. Shares should dive further for 9 out of 10 companies in this sector when they report first quarter which is the quarter they announce write-offs based on reserves. Unfortunately they are going to announce the lowest prices for gas and oil and the greatest storage volumes in recent years along with an escalating value of the dollar which all effect oil prices. I previously said this was dropping another $1-2-3 dollars and it is doing exactly that.
CHK is waiting to buy at $12 or $13 per share.
Actually, a stock for stock merger allows BP, Total, CVX and other
multinationals to buy the company, but I do not see the Board and three
largest shareholders doing anything when oil and gas prices are at the low
of the last five years. These guys that control the board are not stupid
and will not sell the company at a bargain and they control 25% of
the shares. They sold off a small piece of the company for $5 billion
and could do the same thing again in 2016 when the market starts
to firm. Guys like Icahn do not sell at the bottom of cycles, they hold
through them. The posters on this board sell at the wrong times but
not Icahn and Buffet or any of the other brilliant investors like them, they
wait as they know what they have and stupidity is not in their DNA..
Do you really think the board and the people that control the board will sell the company during a bottom in energy prices? Those on this thread that think so need to start using the brains they were given. Not going to happen. The rich do not sell at the bottom. I suggest you study the rich investors in the U.S. Start with Buffett and Icahn and if you think they buy high and sell low rather than buy low and sell high you need to go back to school. Sorry, but the stupidity I see on this thread is annoying.
The volume of CHK reflects that the holders (90% institutions) are lowering their exposure to oil and gas equities. Institutional managers do not want to be over-committed to CHK when they have to take a $2-3-4 billion write-down on their balance sheet due to the 50% decline in oil prices and the 30% decline in natural gas prices over the last year.
When that quarterly announcement is made at the first quarter CHK shares will take another hit, they do not want to be in the shares to hold for a $1-2 decline. They do not want to risk that. If that actually happens and I think it will, then you will see institutional buying after that fal, and what has been happening to CHK this month, (a fall from $20 to $15 a share) will go the other way, but this is going to be another tough month. I would not be surprised to see CHK fall another point in the next 30 days and then another point with the write-off. I may be wrong but I have held my position for many years and the shares are not immune to all negative news. I have made no money in this position for seven years, sad but true.
If $20 oil and $2 natural gas is coming why did the Chairman and largest shareholder buy 5 million shares last month. You must think they are idiots. But would idiots have that much net worth. Both guys are self-made by the way, no inherited money. They are wrong or you are wrong. My money says you are.
CHK has been pounded because the vast majority of shares is held by institutions and they just had quarter where they said they spent more than their cash flow. Never ever spend more money than you make and if you do the fund managers tend to reduce exposure and I wold bet that every fund in the U.S. is reducing shares owned in CHK. Also, CHK announced it would produce 3-5% more energy in 2015 than 2014. Also, do not sell more and more inventory at lower and lower prices, stop selling your inventory cheap!!! That will also hurt with investors.
This basically shows that this management is not very effective.
All my other six holdings in energy are hedged as to about 33%-50%
a price target on these shares of 70 cents by TD Securities is just terrible. I imagine lenders will reduce the lines of credit or extract higher rates of interest. Basically all the analysts in the last 30 days are saying they see no hope for these shares. The problem is that this is a Canadian company and in Canada you do not have to file with regulators until you have acquired 10% of the shares. This allows a bottom fisher to acquire 10% of the company at very low prices and then make a very low offer, say $2.50 or $3.00 for the rest of the company. Even if the shareholders and board to not like the price, all the investors that came into the company at under $2 per share will sell as they are short term investors. It is the long term investors that will get killed as these shares go lower every day. I personally own investments on seven other energy companies and five of the seven have gone up in price the last two days, but my two Canadian energy companies have gone down both days.
I suspect the Canadian producers will fall further on bad market days if they are unable to go up in value when other energy stocks are rising.