Chesapeake Energy Corp (CHK)

[ogbull]

Most oil and gas producers are in debt up to their eyeballs. Even the recent rise in oil and gas prices won’t be enough to repair the damage for many energy companies.

SandRidge Energy filed for bankruptcy with $4.1 billion in debt, the fifth energy company to file for bankruptcy in the past week. Since the start of 2015, over 50 oil and gas producers have gone bankrupt, and the situation is dire for hundreds more companies.

Banks have turned off the spigot. Many producers have no money or credit available to start a proper drilling program and ramp up production. Drilling is at a historical low.

Produces will pump all they can to pay the bills, but these wells will soon run dry. There will come a time soon when demand will outstrip production and prices will soar.

This slowdown is not like any slowdown I've ever been though and will not end like other slowdowns.

If the NatGas rig count don't quadruple within the next 2 months, NatGas will hit $4 MMBtu by November 2016 due to a drastic drop in storage and $5 MMBtu by January 2017. Prices have simply stayed too low for too long and producers have cut capex to the bone just to keep the lights on.

Chesapeake will soar because it has a guaranteed $4 billion line of credit to increase production. It can ramp up Marcellus to 2.5 billion cu feet per day in less than 90 days.

I see $10 by January 2017!