Friday, May 11, 2012 8:31:15 PM
alrighty now...my CHK 10 May $15 puts i bought at .25 are now at 1.54...n-i-c-e....$250 into $1,540.
maybe play the calls next week based on this news...maybe. it closed at 14.81 (-2.37) but was up in A/H 15.35 (+.54)
but now this news broke at 8pm...
Chesapeake Gets New $3 Billion Loan
Reuters
May 11,2012
By Carrick Mollenkamp and Matt Daily
(Reuters) - Chesapeake Energy Corp said it had received a $3 billion loan from Goldman Sachs and Jeffries Group that will give it breathing room to sell assets and close a funding gap this year.
The unsecured loan will be used to repay money borrowed under its existing $4 billion revolving credit facility, Chesapeake said.
"This short-term loan from Goldman and Jefferies provides us with significant additional financial flexibility as we execute our asset sales during the remainder of 2012," Chief Executive Aubrey McClendon said in a statement.
The company, the nation's second largest natural gas producer, said it plans to sell $9.0 billion to $11.5 billion in assets this year.
It expects to close the sales of its Permian Basin property in West Texas and Mississippi Lime joint venture in the third quarter, and said it had "strong interest for prospective buyers" for those two assets.
The new debt facility, which matures in December 2017, was set at an interest rate at about 8.5 percent, and can be repaid at any time this year without penalty at par value, the company said.
"I would imagine that this is a relatively expensive source of financing for Chesapeake to feel compelled to pursue," said Bonnie Baha, portfolio manager at DoubleLine, which oversees $34 billion in assets under management.
"The company appears to be having some material issues with regard to liquidity. In conjunction with the disclosures earlier today, investors in both the debt and equity must be praying that those liquidity issues don't morph into solvency issues."
Earlier on Friday, Chesapeake said it could delay asset sales in order to preserve cash flow needed to comply with requirements of its existing $4 billion corporate credit facility
Chesapeake faces a funding gap that Fitch Ratings estimated at $10 billion this year. To fill the void and trim its debt, the company aims to raise as much as $14 billion through the sale of assets and other deals.
The company said that although asset sales would help its liquidity, selling properties currently producing oil and gas can reduce its cash flow and the value of collateral used to back its debt.
"As a result, we may delay one or more of our currently planned asset monetizations, or select other assets for monetization, in order to maintain our compliance," it said in its quarterly filing to U.S. Securities and Exchange Commission.
Michael Kehs, a spokesman for the company, said the statement in the company's filing did not indicate a change in its efforts to raise money.
"There is no plan to change the asset monetization plan," he said.
Like other natural gas producers, Chesapeake has suffered an prices for the fuel sank to the lowest levels in a decade, shrinking cash flow and raising worries that companies may need to reduce their estimated value of their properties.
"If natural gas prices fall too low, then they may have to take impairment charges. I expect that's the case at some point this year," because of the slide in prices since the end of 2011, said Phil Weiss, an analyst at Argus Research.
Chesapeake has long been one of the industry's most active buyers and sellers of natural gas properties in the United States, but Wall Street analysts have begun to question whether it can keep striking enough deals to satisfy its cash needs.
The gap between cash coming in and cash going out shows "massive internal funding shortfalls," according to an April report by Standard & Poor's.
On Wednesday, Moody's Investors Service changed its outlook for Chesapeake's debt to negative from stable, citing "an even-larger capital spending funding gap for 2012," due both to lower energy prices and higher spending.
Between now and the end of 2013, Chesapeake expects as much as $23.1 billion in costs for outlays such as wells and property, according to the company and analysts.
Chesapeake's stock tumbled nearly 14 percent to close at $14.81 per share, its lowest level since March 2009, and bringing its losses so far this year to 34 percent.
maybe play the calls next week based on this news...maybe. it closed at 14.81 (-2.37) but was up in A/H 15.35 (+.54)
but now this news broke at 8pm...
Chesapeake Gets New $3 Billion Loan
Reuters
May 11,2012
By Carrick Mollenkamp and Matt Daily
(Reuters) - Chesapeake Energy Corp said it had received a $3 billion loan from Goldman Sachs and Jeffries Group that will give it breathing room to sell assets and close a funding gap this year.
The unsecured loan will be used to repay money borrowed under its existing $4 billion revolving credit facility, Chesapeake said.
"This short-term loan from Goldman and Jefferies provides us with significant additional financial flexibility as we execute our asset sales during the remainder of 2012," Chief Executive Aubrey McClendon said in a statement.
The company, the nation's second largest natural gas producer, said it plans to sell $9.0 billion to $11.5 billion in assets this year.
It expects to close the sales of its Permian Basin property in West Texas and Mississippi Lime joint venture in the third quarter, and said it had "strong interest for prospective buyers" for those two assets.
The new debt facility, which matures in December 2017, was set at an interest rate at about 8.5 percent, and can be repaid at any time this year without penalty at par value, the company said.
"I would imagine that this is a relatively expensive source of financing for Chesapeake to feel compelled to pursue," said Bonnie Baha, portfolio manager at DoubleLine, which oversees $34 billion in assets under management.
"The company appears to be having some material issues with regard to liquidity. In conjunction with the disclosures earlier today, investors in both the debt and equity must be praying that those liquidity issues don't morph into solvency issues."
Earlier on Friday, Chesapeake said it could delay asset sales in order to preserve cash flow needed to comply with requirements of its existing $4 billion corporate credit facility
Chesapeake faces a funding gap that Fitch Ratings estimated at $10 billion this year. To fill the void and trim its debt, the company aims to raise as much as $14 billion through the sale of assets and other deals.
The company said that although asset sales would help its liquidity, selling properties currently producing oil and gas can reduce its cash flow and the value of collateral used to back its debt.
"As a result, we may delay one or more of our currently planned asset monetizations, or select other assets for monetization, in order to maintain our compliance," it said in its quarterly filing to U.S. Securities and Exchange Commission.
Michael Kehs, a spokesman for the company, said the statement in the company's filing did not indicate a change in its efforts to raise money.
"There is no plan to change the asset monetization plan," he said.
Like other natural gas producers, Chesapeake has suffered an prices for the fuel sank to the lowest levels in a decade, shrinking cash flow and raising worries that companies may need to reduce their estimated value of their properties.
"If natural gas prices fall too low, then they may have to take impairment charges. I expect that's the case at some point this year," because of the slide in prices since the end of 2011, said Phil Weiss, an analyst at Argus Research.
Chesapeake has long been one of the industry's most active buyers and sellers of natural gas properties in the United States, but Wall Street analysts have begun to question whether it can keep striking enough deals to satisfy its cash needs.
The gap between cash coming in and cash going out shows "massive internal funding shortfalls," according to an April report by Standard & Poor's.
On Wednesday, Moody's Investors Service changed its outlook for Chesapeake's debt to negative from stable, citing "an even-larger capital spending funding gap for 2012," due both to lower energy prices and higher spending.
Between now and the end of 2013, Chesapeake expects as much as $23.1 billion in costs for outlays such as wells and property, according to the company and analysts.
Chesapeake's stock tumbled nearly 14 percent to close at $14.81 per share, its lowest level since March 2009, and bringing its losses so far this year to 34 percent.
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