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Earn a little interest?
Money markets are only paying about 0.75% per year, or 0.0625% per month.
SDOC is deferring paying $21.7 million of interest for one month, so they will earn $21.7 million x 0.0625% in that month; or $13,562.50.
It is a 'smart move' to cause everyone to question their financial solvency in order to earn an extra $13K?
Louis J. Desy Jr.
Plenty of cash?
SDOC has plenty of cash, but they just don't want to pay anyone what they are owed because they have too much cash to do anything like that?
I know that when I have 'too much cash' I always drag out paying the people I owe money to.
If you were one of the bond holders that just got stiffed on the interest payment, would you be saying, 'Thats ok, you [SDOC] can keep the money you were supposed to pay me and do whatever you want' OR would telling them '*U, PAY ME!'
If anyone here is a bond holder in the series that got stiffed today, I would be interested in hearing your thoughts on the matter.
Louis J. Desy Jr.
The muppets are piling into SDOC
This is the first time I have ever seen it be a 'positive event' when the company can't pay the interest on its bonds, but thats how muppets think. If SDOC can't pay the interest on the bonds, that are higher in priority, what makes them think that common shares are ever going to get anything?
I hadn't expected the main body of muppets to show up until a DIP financing got announced after the BK filing.
The options are not trading at all, and unfortunately, there are no muppets over there selling put options for cheap. All of the ask prices are almost priced for the stock to be zero or even lower, meaning they refuse to write put options.
Louis J. Desy Jr.
Disclosure: I may buy some put options if someone would sell them.
Actions taken prior to bankruptcy
While the attorney is usually not supported to 'plan it out' for a company, the attorney can most certainly advise the company what will happen if they do X or Y, etc. if asked.
They whole routine of 'drawing down all of the credit lines and not paying anymore for as long as possible' has been done so many times by so many companies; that everyone knows what to do and what is going on.
I am surprised that the banks don't shutoff the credit lines when a company is going down the drain. Even if the credit line is at the top of the asset classes in a coming bankruptcy, why get stuck in the middle of a bankruptcy mess that will take months and maybe years to sort out? Plus the bank runs the risk of DIP financing getting super priority and ahead of them in the classes.
Louis J. Desy jr.
People saying SDOC will not go BK
It is called Confirmation Bias.
https://en.wikipedia.org/wiki/Confirmation_bias
It happens all the time, especially in a stock like SDOC. The people who have bought, especially at higher prices, are tending to discount or discredit any information that does not conform to their already determined belief that the company is going to recover.
Anyone who has been in the market for a while will see this over and over again. It is going to happen here with SDOC.
In spite of the fact that the company has been losing money by the truckloads, and equity is hundreds of millions negative, and oil prices are even lower than the latest 10Q report for period ending 09-30-2015; you are still going to have people saying 'its going to come back'. Over at RSCHQ, there was one poster who still thinks the stock may trade again someday, even after the shares were canceled on the effective date of the reorganization plan and others explained to him that the common shares are dead.
The same thing will happen here with Sandridge.
For the more adventurous and have a high tolerance for risk, you can wait for the BK within 30 days, load up on some shares after the BK crash. Then when the DIP gets announced the muppets will 'pile in' and drive the price up because they think the company is now save. They do not understand that the DIP has superpriority in the classes and that they are even further away from any recovery in the BK. At that point you unload for a big profit, leaving the muppets to wonder what happened months latter when the shares are cancelled. There is nothing you can do for the muppets, even when you carefully explain what is going to happen to the muppets, they just refuse to understand and still 'pile in'. They are like lemmings and can't help themselves. It happened recently over at Arch Coal (ACIIQ) and the price is still near $0.50, after being as low as $0.11!
Louis J. Desy Jr.
Market disagrees? Muppets don't know yet
Give the muppets a little time. I found out from seekingalpha.com alert earlier, it just hit yahoo at 8:57am.
When the muppets figure it out, some of the smarter ones will know that it means BK in 30 days and dump at market.
Louis J. Desy Jr.
Painting with the same brush
All of the oil and gas exploration companies, that went on borrowing and spending sprees are either dying or dead; Sandridge is just another example of borrowing and spending every last penny the could get their hands on when oil prices were at all time highs. They never put anything aside for when oil prices came back down to ride out a downturn.
In partial fairness to companies like Sandridge, I never expected oil to ever get below $40/barrel; and never, ever thought that Saudia Arabia, Russia, Iran and all of the others would have been at 'each other throats' trying to drive the price of oil down. They are trying to bankrupt each other as a form of economic warfare with each other. For Saudi Arabia it also has the nice secondary effect of putting all of the shale producers, like Sandridge, out of business and inflicting massive losses on the lenders making it harder for production to recover when prices do rise again someday.
The fact that as far back as the 10Q report for 09-30-2015 showed stockholders equity negative of over $400 million shows how bad off the company is.
Louis J. Desy Jr.
What the company is really saying, BK in 30 days
I am sure that if you contacted the company right now, they would tell you that they do NOT plan on filing for bankruptcy; but the fact is that once the 30 day grace period on the bond interest runs out, if the company does not file then the bondholders will force an involuntary bankruptcy on the company.
There is no way the bonds are just going to 'go away and forget' about the money they are owed.
The only thing that has been going on is that Sandridge has used the time to reshuffle the order of priority of the classes of liabilities for the impending bankruptcy with the debt exchanges and asset purchases.
Louis J. Desy Jr.
They have the money, but can't/won't spend it
Yes, they have the money, but for whatever reason, they are afraid to spend it or can't spend it.
The simple fact is that they have run out of time. Oil prices are not going to go up in time to save them.
If they can't spend a small amount like $21.7 million to make interest payments, how are they going to continue with drilling or operations?
My answer is that they can't, its all over; the money is gone.
Louis J. Desy Jr.
Sierra Club out to get CHK also
As unbelievable as it seems, apparently the Sierra Club is 'now doing its part' to get CHK drilling halted:
http://www.bloomberg.com/news/articles/2016-02-16/sierra-club-sues-3-energy-companies-over-increased-quake-risk?cmpid=yhoo.headline
Sierra Club sues Chesapeake, Devon Energy over rising quake risks:
http://seekingalpha.com/news/3112006-sierra-club-sues-chesapeake-devon-energy-rising-quake-risks?uprof=45#email_link
As if the company didn't have enough problems already, it is like the company was not going broke fast enough for them.
Louis J. Desy Jr.
Disclosure: I own March 18 2016 $1.00 put options and may buy Jan 2017 or Jan 2018 put options
OPEC members and quotas
I mentioned earlier that unless there were big cuts, like around five million barrels per day, I expected the storage to continue to fill up. The problem is that a cartel like OPEC gives each member of the cartel an incentive to cheat. Now as long as there is not too much cheating, everything is still 'good', because the others that stay within the quotas keep the price up. The problem is when they all go to an OPEC meeting and promise one thing, then return home and start selling everything they can in violation of the quotas they agreed to.
Saudi Arabia got sick of all the cheating that was going on in the mid 1980s, and of nonmember states benefiting from the high prices they helped to create by not producing too much. As punishment, back then they started pumping as much as possible to get everyone 'back in line' with quotas, even the nonmember states.
Saudi Arabia is being a little more vicious this time in that they want to bankrupt companies like CHK and won't stop until they do.
Louis J. Desy Jr.
Sale of Mt. Emmons
The company sold off the project to Mt. Emmons Mining Company (MEM), a subsidiary of Freeport-McMoRan Inc.
Links to SEC documents related to the sales and latest 10Q report are at the bottom of this posting.
USEG ended the quarter 09-30-2015 with equity of $54 million. The sales of the mine caused an impairment (write off) of $22 million, dropping equity to $32 million. Assets were a total of 71 million, less $22 million leaving $49 million. With equity at $32 million, it implies that liabilities would be at $17 million. All of this is before any effect for operations since 09-30-2015.
Operations look like they lost $1.6 million per quarter without the effect of the write off on oil land or depreciation. There were, including February, five months since then, so another $2.6 million was lost, leaving equity of $14.4 million.
I expect oil prices are going to be down the the rest of the year, so another ten months of losses, or $5.2 million, would bring equity to $9.2 million. At the current price of $0.38, the market cap is a little about the expected year end equity of the company.
They should liquidate everything now and pay it out, continuing on is just going to loss everything over the coming months.
Louis J. Desy Jr.
USEG 10Q report for period ending 09-30-2015:
http://ih.advfn.com/p.php?pid=nmona&article=69227037
8K report about $22 million impairment from selling the mine:
http://ih.advfn.com/p.php?pid=nmona&article=70347403
Press release of 02/12/2016 about selling the mine:
http://ih.advfn.com/p.php?pid=nmona&article=70362401
Detailed 8K report about terms of the sale:
http://ih.advfn.com/p.php?pid=nmona&article=70363374
Put options not dropping that much in price
I looked at a number of series of put options, Jul 2016, Jan 2017 and Jan 2018. I had hope that with the run up in price some of the series would have large price drops, but only one had an $0.11/option drop and the rest only moved a few pennies.
The problem is that most of the value in them are the time and not due to being in the money.
Louis J. Desy Jr.
The laughter will turn to tears soon
CHK is up today because the muppets all think the deal means a price cut. They do not understand that the deal is not a cut, it is a freeze at already record levels of production. The news stories were not clear on this point and made it sound like the agreement was a cut in production with the headlines, instead of a freeze with a surplus of 1 million to 2 million barrels per day.
OPEC may freeze at January 2016 record output levels, but Iran is objecting:
https://finance.yahoo.com/news/four-oil-producers-agree-freeze-091449519.html#
OPEC not cutting, freeze at record output
OPEC may freeze at January 2016 record output levels, but Iran is objecting.
https://finance.yahoo.com/news/four-oil-producers-agree-freeze-091449519.html#
Saudi Arabia is the problem
If the problem was only supply and demand, supply would have been cut a long time ago and prices would have risen; and SandRidge Energy, along with a number of other companies, would all be saved.
The problem is that the whole idea with over production by Saudi Arabia, is to ensure that every company like SandRidge Energy goes bankrupt and is ruined. Saudi Arabia will not stop over producing until that happens.
That is where the problem is and why SandRidge is dead in the long term. Saudi Arabia will not stop over production until all of the companies like SandRidge are ruined, bankrupt and dead.
Louis J. Desy Jr.
Too late to short, its under $5/share
It is too late to short. Most brokers will not allow the opening of a short position below $5/share.
Put options will not work either since the lowest strike is $0.50 and the smallest increment for options are $0.01. The time premium would make it impossible to earn anything.
If, by some miracle it gets back to near $0.50/share, then it might be possible to get some put options with a reasonable about of time to go, before they go bankrupt; but I do not expect that to happen.
Louis J. Desy Jr.
DB is starting to blow up and that will take CHK back down
DB is starting to 'blow up' again in Europe, and that will probably take the market, along with CHK, back down again:
http://www.zerohedge.com/news/2016-02-15/no-deutsche-bank-not-fixed
The 'stunt' that DB did last week with buying $5B of bond back appears to have worn off and DB is declining again. People are making a comparison of DB imploding with Lehman Brothers failing in 2008. If that happens, the fallout will destroy CHK.
Louis J. Desy Jr.
Disclosure: I own CHK March 18, 2016 puts, along with DB April 2016 $14 puts and DB July 2016 $10 puts.
Short squeeze very unlikely for CHK
While it is in theory possible for a short squeeze, it is not likely. The stock has been going the wrong way for weeks now. In November 2015 the stock was over $6. In January 2016 the stock was just over $5/share. As late as Feb 5, 2016 the stock was still just over $3/share. Now last Friday the stock closed at $1.59. Anyone short the stock probably has all kinds of profit that would protect them from a short run up in price.
A short, who was really concerned about a 'miracle recovery' could just buy some preferred shares or bonds as a hedge against a recovery of CHK common shares, since those higher classes should go higher than the common shares if the company recovered. The preferred shares have an additional benefit now that there are unpaid dividends that would accumulate.
I do not expect the preferred dividends will be ever be paid and that all classes of bonds, preferred shares and common shares will decline over time. I also expect the preferred shares will get wiped out along with the common shares and some of the more junior classes of bonds in the coming bankruptcy.
The problem is that NG prices are simply too low for anyone to make any money at it. Under more 'normal' conditions, I would have expected prices to rebound as marginal/unprofitable production was taken off line. The problem is two fold. One is that the shale producers have all of this debt to service, so they all keep pumping as much as possible, even if they are losing money on every MCF delivered because they need the cash. The second problem is that Saudi Arabia, Russian and Iran are out to 'get' each other, meaning they are now putting as much gas and oil onto the market to hurt the other side. I think they all want storage to fill up because it will hurt the other side, even if it hurts them also.
I never expected in the past that it would have possible to have supply flood the market, with demand of around 92 million barrels per day. Mid 2000s, when demand was around 86 million barrels per day (one thousand barrels per second), I thought and expected the challenge would be to keep explorations and production rising enough to keep up with demand. I never expected the possibility that it could happen that storage would fill up, and crash the price of oil and gas.
Louis J. Desy Jr.
You'll have to forgive me. I remember when they were separate companies.
Louis J. Desy Jr.
$10B from ExxonMobil? Not in this market
Yes, $10B is nothing to ExxonMobil, but why pay $10 billion to buy CHK when they can wait for the bankruptcy and buy it for under $1 billion?
There have been a number of exploration and production companies that 'blew up' within the past several months; and the assets went for no where near the book value on the balance sheet. as an example, Bloomberg ran an article recently on this.
Some Bankrupt Oil and Gas Drillers Can't Give Their Assets Away:
http://www.bloomberg.com/news/articles/2016-01-20/some-bankrupt-oil-and-gas-drillers-can-t-give-their-assets-away
Some examples from the article:
Short this? At three cents?
Its at three cents. Most brokerage firms will not allow the opening of a short position under $5/share.
Louis J. Desy Jr.
No, CHK is not 'going to rise from the dead'
Even if NG prices skyrockets to $4/MCF, CHK would probably only break even and not make any progress on the debt.
If anything, NG prices may crash along with oil price, once storage for oil fills up. There is a report that UAE is offering free oil in return for being allowed to use storage tanks:
http://www.zerohedge.com/news/2016-02-15/uae-offers-india-free-oil-ease-storage-woes
Since the last report of 09-30-2015, CHK probably lost the remaining stockholders equity and now are sinking deeper and deeper negative.
I can't believe the bank renewed their credit line last year. If I was the loan officer I would have cancelled it. Even though the bank line is secured, why get involved in a bankruptcy filing over assets that can't even cover their cost of production?
The only reason I can see anyone renewing the bank line of credit is that the bank is praying for a miracle and hopes somehow to get out of this mess.
Louis J. Desy Jr.
Sandridge is dead
According to the latest 10Q for 09-30-2015:
http://ih.advfn.com/p.php?pid=nmona&article=69189333
Equity was negative $403 million. Even without the write offs, the company was still losing over $50 million per quarter.
They should just file and get it over with. The only thing they are doing is dragging out the process and putting more money at risk of their vendors.
I even question if they could operate at a profit without any debt they can operate at a profit.
Louis J. Desy Jr.
Storage filling up
The problem is that if storage fills up and is completely full, oil and gas prices will crash. While oil demand is still around 92 million barrels per day, the problem is that there is too much supply and pumping going on. Prices will have to crash since the only way to free up storage space for the existing production is to sell off what there is at any price. While there may be a little increase in demand as people do things like fill up their oil tanks of home heating oil, after a while even those also will be full.
Imagine owning some oil wells and having absolutely no place to put the oil? You would have no choice but to stop pumping since you can't just let it run out onto the ground.
That is the situation that we may be nearing within a matter of weeks unless there are cuts in production, which look unlikely with Iran just starting to come online with exports within the last week or so.
Louis J. Desy Jr.
Storage is filling up
There is a report that UAE is offering free oil in exchange of being allowed to use storage.
http://www.zerohedge.com/news/2016-02-15/uae-offers-india-free-oil-ease-storage-woes
That is how bad the oil storage situation is right now. There is almost no place left to store the stuff.
Louis J. Desy Jr.
Arch Coal says the common shares will be cancelled
Investor FAQ from the company web site:
www.archcoal.com/restructuring/pdfs/FINAL%20ACI%20Agreement%20-%20Chapter%2011%20Investor%20FAQ.pdf
No one is going to buy CHK
No one is going to buy CHK with all that debt. The debt is killing the company. There is no way for the company to turn a profit dragging around $10B+ in debt.
If someone really cared about getting CHK assets, they would buy the most senior of the debt, and wait for the company to go bankrupt. Buying the common shares are nothing more than an option that a miracle happens and gas prices go back up. While it is, in theory possible, that could happen. It is not likely. Here in the Northeast we had a few cold days this last weekend, but most of the rest of the winter was way warmer than normal, and tomorrow, Tuesday, it may be back in the 40s and even get to 50. Winter may be over in a few weeks and storage of oil and gas are near all time highs, there has been discussion of storage room running out within a matter of weeks.
While the company has no 'plans' to file bankruptcy, it may very well still happen in spite of their protests to the contrary. If the Q4 2015 earnings release is a disaster, the company may not be able to go ahead with plans to pay the $500 million in bonds on March 15, 2016 and still have to file bankruptcy.
Even without a bankruptcy filing, I expect the common shares will decline to zero as people begin to realize that the common shares are ownership on a deeply in debt company that is never going to turn a profit and will be dead within a matter of months, if not weeks.
CHK situation is so bad off that even the preferred looks dead, along with some of the junior debt classes.
Anyone lucky enough to have bought the March 2016 bonds for 80, that are now 90 or higher; should sell (i.e. 'take the money and run'). While they might miss out on a payoff at maturity of 10 points, they also do not run the risk that CHK 'plans' to not file bankruptcy are wrong and they end up filings, putting the bonds at risk of a large loss.
Louis J. Desy Jr.
Chesapeake Energy Is Dead
Chesapeake Energy is a dying company and burning cash at an incredible rate. While the company had over $1,759 million in cash as of the quarter ending September 30, 2015, it is not enough to get the company through this bad period of low oil prices, low gas prices and too much debt. (CHK 10Q report for period ending Sept 30, 2015: http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10987640-823-424284&type=sect&TabIndex=2&dcn=0000895126-15-000292&nav=1&src=Yahoo )
The day after the end of that quarter, the company probably redeemed $395 million in contingent convertible bonds. According to an 8K report and press release, (http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=11015660-841-5292&type=sect&TabIndex=2&dcn=0000895126-15-000300&nav=1&src=Yahoo ) , the holders of those bonds had the right, at their option to redeem $1,000 of face value in those bonds for $1,000 in cash.
I can not see anyone passing up the chance to do that since the bonds were probably trading for below that and gave those bond holders a way out of their investment whole, instead of waiting around and hoping that somehow the company survived until gas and oil prices went back up. The company stated in the 8K report that $393 million were redeemed and only $2 million remain outstanding. After paying out the $393 million, the $1,759 million in cash would have been reduced to $1,366 million in cash.
In January 2016, the company stopped paying dividends on its convertible preferred shares. This saves the company $43 million in quarterly dividend payments but does not get the company more cash. (CHK Press release: http://www.chk.com/media/news/press-releases/Chesapeake+Energy+Corporation+Suspends+Quarterly+Preferred+Stock+Dividends+1+22+2016+ )
The next big event coming up is the $500 million in bonds that will mature on March 15, 2016. This is what is going to cause the company to file a Chapter 11 plan on or before that date. There is no reason to pay out $500 million in cash if the company can't or won't pay dividends on the preferred shares of only $43 million.
I expect the company earnings release on February 24, 2016 will show that the company continued to lose money in the fourth quarter 2015 since the company lost money in the prior quarters. I predict that there will be a repeat of the write offs in the range of a four or five billion that occurred in each of the second and third quarters of 2015 since oil and gas prices are just as bad as before. (http://seekingalpha.com/article/3661316-chesapeake-energy-5_4-billion-impairments ) This additional large write off for the 4th quarter of 2015 will probably wipe out what is left of the stockholders equity and ensure that the existing common shares and preferred shares will recover nothing in the impending Chapter 11 bankruptcy.
While the company could, in theory, redeem the bonds at maturity on March 15, 2016 for $500 million, that would leave the company without enough cash to continue operations and do the capital spending that needs to be done. If the company made the $500 million payment, that would take $500 million from the $1,366 million; leaving the company with $866 million in cash at the end of the day on March 15, 2016. That is not enough for the company to make it through 2016 and does not take into account for money that was spent on capital expenditures in Q4 for 2015 and Q1 for 2016.
The other parts of the 'puzzle' are how much cash can we expect the company to lose or burn thorough in the fourth quarter of 2015 plus the first quarter of 2016. The 10Q for 09/30/2015 report shows that cash dropped by $2,349 million for the first nine months in 2015, for an average quarterly burn rate of $783 million per quarter. While there are costs that can be cut and have been cut, most of the use of cash was on 'drilling and completion' costs of $2,696 million; without which revenue would decline at a faster rate as older wells had production drop off. Even without paying to redeem the $500 million in bonds on March 15, 2016, the company probably is almost out of cash now and simply can't pay the bonds with cash on hand. While the company might be allowed to do some sort of a shell game where it draws down on a credit line to pay off the bonds, that just moves the problem from one play to another and gets the company no where. The only long term solution to the problems of Chesapeake Energy is to file Chapter 11 and turn the company over to the bond holders. The preferred and common shares would be wiped out, but they are dead already.
I wrote the prior parts of this article on Friday, just before CHK announced that they 'plan' on making the bond payment. While I do believe they 'plan' on making the bond payment, I do not think they will be able to do it. As I stated prior in this article, that makes no sense. If the company can't or won't pay the $43 million in preferred dividends, then why would the company pay out $500 million?
Even without a bankruptcy filing, I expect the stock will decline as people start to come to the realization that the common and preferred shares are worthless. A company that can not turn a profit, is losing money every quarter, has leases that are expiring, and billions of dollars in write offs for the last few quarters, has no value for common or preferred shares.
Disclosure: I own March 18, 2016 $1.00 put options, and may buy Jan 2017 or Jan 2018 put options.
CHK isn't filing for BK yet
I find it hard to believe that after eliminating dividends on the convertible preferred of $43 million per quarter, that CHK is going to spend $500 million to pay the bonds at maturity.
The borrowing base for the line of credit gets reviewed April 1, 2016; so they might use the line of credit to repay the bonds.
IF this happens, it will be great for the bonds, but does nothing to help the common shares and the common may still continue to decline down to zero.
I expect it is no longer a question of If CHK will file bankruptcy, but a question of when.
Louis J. Desy Jr.
Disclosure: I hold March 18, 2016 $1.00 put options and may buy Jan 2017 or Jan 2018 put options.
Buying back bonds is the wrong course to take
DB is being an idiot to buy back bonds, and the muppets are worse for falling for such a thing.
This does not make any sense.
If a company has assets of 1030, liabilities of 1000 and equity of 30, then it equity/debt is 3%.
If the company uses 3 of assets to buy 3 of liabilities, then assets drop to 1027, liabilities to 997 and equity to 27. The equity/debt is now 2.7% and the company is weaker, not stronger.
This action actually makes it more likely that the bank will fail!
While the muppets are fooled, the professional are not and they are the ones that will pull billions of dollars out of the bank when it starts to fall.
Louis J. Desy Jr.
Disclosure: I own April 15, 2016 $14.00 put options and plan to use the run up to buy some JUL 2016 put options.
Agreement may not matter at this point
Storage space is almost out of room for oil everywhere. Even if they cut production right now, they would have at take at least 1 or 2 million of barrels of production off of the market right now to stop storage from completely filling up within a matter of weeks. At that point, whether anyone likes it or not, or anyone agrees to it or not, they will have to cut production since they will have no where to put the stuff. I expect if storage fills up and production is cut because there is no where to put the oil, you will see stories that misinterpret the production cuts as being 'good', when the real story is that it shows how out of wack supply is with demand;i.e. the only reason production starts to get cut is because everyone is pumping as fast as they can to avoid going bankrupt and now there is no place to store the stuff, causing prices to crash in order to sell it at any price to free up storage.
Even with an agreement in place, OPEC members cheat on quotas all the time, so while the quota amounts say production is balanced with demand, inventories continue to pile up and increase because of cheating.
Unless they agree to cut something like 5 million barrels at once, in order to account for everyone cheating a little, I can't see it making any difference.
The only thing the small run up in oil prices is doing is keeping the stock price up and giving people a chance to buy put options with less of a time premium in the price as most of the retail market mistake this for a turn around.
I am still expecting CHK to not make the March 15, 2016 bond redemption at maturity and file Chapter 11. They just eliminated the preferred dividend and that was under $200 million; why would they redeem $500 million in bonds on March 15, 2016 after taking steps to conserve cash by eliminating the preferred dividend? It is not like things are going to get better before the end of the year.
I am expecting the Feb 24, 2016 presentation to be a disaster, with more write offs.
Louis J. Desy Jr.
Disclosure: I own March 18, 2016 $1.00 put options.
Zero Hedge article
If you look, a bond that is due to mature in about 5 weeks is only trading at 80. It is clear that no one expects the bonds to be paid off at maturity in full or else the bonds would trade near par.
It would be a good investment, if one could be sure that the bonds would pay off on March 15, 2016; but it looks like that is not going to happen.
If I thought the bonds were going to pay off, I would have bought the bonds instead of put options.
Louis J. Desy Jr.
Disclosure: I own CHK March 18, 2016 $1.00 put options.
Cramer bashing
He has some nerve. I am sure he was pushing CHK as a great stock to own all the time.
Can you relate to us some of the things he said about CHK?
Louis J. Desy Jr.
Disclosure: I own March 18, 2016 $1.00 put options
Conference call - That might be the end
The should put the 'final nails in the coffin', especially when people see that equity has gone negative.
Louis J. Desy Jr.
Disclosure: I own March 18, 2016 $1.00 put options.
Its over March 15, 2016 - BK and common wiped out
http://www.zerohedge.com/news/2016-02-10/if-chesapeake-does-not-go-bankrupt-just-over-one-month-could-be-trade-year
There is no logical reason to pay off the bonds, when they mature on March 15, 2016; and they are not going to be able to 'roll over' the bond issue with another bond issue.
I expect the company will file Chapter 11 on or before March 15, 2016; and the common shares will be wiped out since stockholders equity is probably negative already.
Louis J. Desy Jr.
Disclosure: I own March 18, 2016 $1.00 put options.
CHK is dead. It is all over.
CHK is dead. From the Sept 30, 2015 financials, equity was around $4 billion. The company is losing over $4 billion per quarter from all of the write offs. Since then, one quarter has passed plus another month have gone by, so we can expect what little equity has been lost, plus they are probably one billion or more 'in the hole', and sinking by a billion or more every month.
It is all over for the common shares. Bankruptcy will be within a matter of weeks and the common shares wiped out. The longer it is delayed, the worse it will get for the unsecured liabilities.
Louis J. Desy Jr.
Your lucky not getting the bid filled
The order to terminate looks like it was put in after that market closed on Friday, so the shares will not open on Monday and are dead.
Louis J. Desy Jr.
Are there any assets? Why is the 10K so late?
IF the prior filed reports were correct, the only assets that would need to be verified would be cash in the bank, and a few oil rights, that are probably not worth anything right now with oil prices being down so much.
It should only take a few hours for a CPA firm to verify the assets, and then maybe a week, at most, to prepare the 10K report.
There is no excuse for the 10K report being so late. It is now months late plus there have been no 10Q reports since the missing 10K report.
I am starting to wonder if there is 'something wrong' with all of the reports, maybe going back years, and if there are any assets at all; since a problem of that magnitude would explain why the 10K report is so late. i.e. One of the directors discovered the 'problem', forced out the people that where 'in' on the problem, and now have to restate years worth of reports.
Louis J. Desy Jr.
Go ahead, load up!
Well, you just load up and we will talk next week. Make sure you come back here next Friday, on Friday, Feb 5, 2016; after the court order announcing the effective date and the delisting notice from NASDAQ is posted, and then you will see how much the shares are worth.
Louis J. Desy Jr.