Chesapeake Energy Corp (CHK)

[ogbull]

heather59, the bad news is already priced in and then some. CHK is oversold by all standards. Some weak shares are running but not too many. We know this is true because volume yesterday was down 10 million shares below 30 day average. Volume means everything to a falling share price. High volume confirms share holder dissatisfaction. Low volume shows just the opposite. Major share holders are holding onto the shares. Most own millions of shares each. They are not crazy. They are inform smart investors.

On top of this, CHK is a day-traders dream stock--they trade it on the price of oil. not gas. This is weird, but this is what is happening. Take the day-trade volume out of yesterday's total and I doubt that were any more than 10 million shares traded by normal investors. So the stock went down anyway. But most serious longs don't give a rat's ass what happens day to day. They are waiting for hot hot hot summer that will become obvious starting in June. link

And don't forget the humidity and the increase in hurricanes hitting the GOM. These are plus factors for NatGas.

For some reason, many on this board ignore volume and bitch about everything else as you are now doing. They also ignore that Chesapeake is the second largest gas producer in the US behind XOM. They can ramp up production in their Marcellus play to 2.8 BILLION CUBIC FEET PER DAY. Their oil is hedged at $47.36 and NatGas is hedged at $2.71.

Management may start producing all out at any time. I believe this is the signal the major share holders are waiting on. They've done the numbers a hundred times. If their calculations were scary, they would be running out as fast as they could and volume would be 100 million per day.

Chesapeake's gross sales can reach the moon and all their problems can be cured within 2-3 months of high productions. Confidence will be restored and CHK will triple. That's why the longs are holding and not selling as evidenced by the low volume.

U.S. gas demand,averaged 64 Bcf/d from April through October of 2015, 2.3 Bcf/d higher than the previous record, set in 2012. This was due to a combination of hotter-than-normal weather and resultant higher gas utilization. 2016 will break 2015's record. EIA's forecast U.S. total natural gas consumption at 76.5 Bcf per day, which is 12.5 Bcf per day higher than 2015.

Here's the bad news for shorts: An exhaustive, county-by-county analysis of the 12 major shale plays in the U.S. (accounting for 89% of current tight oil and 88% of current shale gas production) concludes that both oil and natural gas production will peak this decade and decline to a small fraction of current production by 2040.

Shale plays suffer from high decline rates and declining well quality as the “sweet spots” run out, meaning that ever more wells will have to be drilled just to keep production flat—until even that is no longer achievable. Continued drilling requires massive amounts of capital, which can only be supported by high levels of debt or higher prices.

Rig counts are at 40 year lows. DUC numbers will not be able to carry production higher. Banks are not giving money to producers. Rigs are in poor repair. The drillers could not respond fast enough to meet demand as when you consider falling productions.