Value Midcaps & Large Caps

[cliffvb]

CHK. I'm liking this large nat gas producer particularly with a long winter ahead of us. Earnings are booming with the run up in natural gas prices. Its current market cap is $10.7 billion while the estimated after tax net value of reserves discounted at 10% annually (PV10) is $7.6 billion. However that is based on a NG price of only $5.65. Each 10c increase in NG prices adds $215 million to PV10 reserves value. Next years 10K will likely show a double in current reserve values. While I don't expect the current $12-14 NG price to continue indefinitely, I think long term prices will stay well above $8.

Also note that the CEO has made numerous 100,000 share purchases on the open market over the last 6 months including at prices above current levels. In a recent conference he stated that he believes CHK is a $50 stock selling for $30.