Chesapeake Energy Corp (CHK)

[dwms07]

King, do you think Exon or BP would get regulator approval?

The deal would make either one of them the biggest gas producer in the US. Here's a chart that shows production quarterly. (link)

My best guess right now is GE Oil and Gas. But I really don't know.

Management has secured most of the puttable debt so I don't think a hostile takeover would succeed or even be tried. This was a big problem up until 4-5 months ago. Reducing puttable debt was why they were willing to do some deals that didn't look too good.

They sold 70,000 acres in Haynesville and plan to sell another 50,000 acres. They did this because (a) production from their current wells was slowing, and (b) they will save a lot of interest by retiring debt.

The real value of Haynesville is that it is closest to the export terminals. That's why Chesapeake still holds 250,000 acres of the best drilling prospects. Their plan is to drill 15,000+-foot laterals with the idea of increasing their overall production by 13% in 2017. In other words, they hope to get 13% more from 40% less acreage.

Chesapeake discovered the Haynesville play. They know 10 times more about the drilling targets in the area than anyone!

Their target now is another $2 to $3 billion in asset sales while at the same time increasing production by better drilling and better selection of drilling targets. Chesapeake has the best geophysics technology in the world! They know how and where to drill!