Tuesday, November 17, 2015

Rolling Back to 2002 Prices: "Chesapeake Energy: It’s the Debt Load, Silly" (CHK)

New 52 week low today and the lowest since Q3, 2002: six bucks even.
It's always the debt load when things get to this point.
From Barron's Stocks to Watch:
Chesapeake Energy (CHK) has tumbled more than 4% after Sterne Agee CRT’s Tim Rezvan cut its rating to Neutral from Buy. He explains why: 
Downgrade CHK shares to Neutral from Buy, remove $13 PT. Our June upgrade thesis did not play out as expected, with deteriorating gas prices swamping positive deleveraging moves. Chesapeake has a long liquidity runway, but it may erode as commodity prices impact reserve bookings. Positive capital structure catalysts may unfold soon, following several seen to date in ’15, but they may be insufficient to address long-term leverage concerns. Chesapeake’s fortunes improve greatly in a $3+/mcf gas world, but the macro backdrop has changed and that world is unlikely in the near-term. Monday night’s news that $394 million of convertible bonds were put to the company will refocus attention on the need to address the capital structure… 
Second-Lien Loan May Come Soon; May Not Be Dramatic Equity Value Creation Tool… Chesapeake has capacity to issue $2 billion of second-lien debt by April 2016 under its newly secured $4 billion credit facility. Last week’s second-lien issuance by California Resources (CRC)) sets a template for this event. A $2 billion loan could fund the retirement of: 1) $394 million of convertible debt put to the company on Monday, 2) $500 million of senior notes due March 2016, and 3) $384 million of Euro-denominated senior unsecured debt due January 2017....MORE

Natural Gas: "Chesapeake remains in a downtrend: Technician" (CHK)
Where would we be without technicians?The stock is down 7.42% today, $7.05 last.The company is a potential bankruptcy.The story is at Yahoo Finance.Short, staccato sentences may be a sign of dementia.* 
Aug. 14
Oppenheimer's Fadel Gheit Does The Kübler-Ross Model of Grief Schtick For Oil Investors
Aug. 11
The Dim Outlook For Chesapeake Energy (CHK)
Aug. 4
It's Been A Tough Year For Carl Icahn (IEP; AAPL; CHK)
July 28
Natural Gas: As Buyout Talks Swirl Around Chesapeake Carl Icahn Prays Its Not A Takeunder (CHK)

See also:
 "It’s Happening: Debt Is Tearing up the Fracking Revolution"
"Saudi Arabia’s Oil-Price War Is With Stupid Money"