Chesapeake Energy Corp (CHK)

[dwms07]

CHK Daytrades on Oil Prices!

In my opinion, this is the reason CHK is way oversold right now! Said differently, CHK is $10-$12 natgas producer now traded for $7.50 by oil daytraders! THIS IS TERRIBLY WRONG! But but does create a STRONG BUY for the smart investor willing to wait ~6 to ~12 months!

Here's why I say the above!

Chesapeake was second-largest producer of natural gas and the 11th largest oil and NGL producer in the US over the last year. Natural gas made up ~72% of its total hydrocarbon production, crude 17%, and natural gas liquids make up 11%. Natgas and natgas liquids made up 83% of total production. Oil makes up 17%.

CHK should trade on natgas prices, not oil!

The company’s average realized price for natural gas in 3Q15 was ~$1.14/mmBtu, and ~$1.01/mmBtu in 2Q15. Natgas is now trading for $3.57/mmBtu. I do not know CHK's realized price. My best estimate is that they will realize 100% more for natgas.

It is just a matter of time until traders show a lot more respect for the new Chesapeake Energy!