Chesapeake Energy Corp (CHK)

[LouisDesyjr]

A loss on paper?

Don't you think that if equity ends up being negative one or two billion, that it might to start to become a problem for the common shares?

The assets sold off were bought when prices were a lot higher, and the expectation was that the higher profit would be able to service the debt, now the assets are sold off when prices are much lower.

Now all kinds of assets are being sold off, leaving most of the debt behind, with no signs of the company being able to break even.

There is also a problem with the borrowing base renewal on April 1, 2016. While I didn't like the whole idea of CHK using the credit line to pay off the bonds, I think it is possible that the credit line was not used because CHK does do not expect it to be available after that date.

IF the assets were sold for a profit, then I am wrong; but I do not see how it is possible for assets bought when oil was much higher and borrowed against based on that price, could have possibly sold for a profit.

I still think the company is not making a mistake by not filing for BK and is just dragging things out with the result that many of the people involved are just going to loss all kinds of money.

Right now a liquidation of the company would have a chance of making most stakeholders whole, and maybe even something left for the common shares, assuming CHK can get book value for the assets. Running everything into the ground until all of the equity is gone and sticking losses onto a number of the liabilities classes, in a bankruptcy, is just irrational, and helps no one.

Louis J. Desy Jr.