T. BOONE PICKENS- THE UNITED STATES SHOULD STOP PURCHASING MID EAST OIL!!!!!
T. Boone Pickens build a case for the United States to stop purchasing oil from our enemys in the mid-east.
https://www.facebook.com/Pickensplan/?fref=nf
It is hard to understand why the political climate does not understand the power of the United States
that now has the ability to produce our own energy needs. Stopping fracking when our national debt is about to bury this country is tanamount to political suicide and cutting our own national throat.
Something is so wrong with this picture that the only conclusion I can come to is that someone is being paid lots of money to make sure that this country does not understand the power of our own resource.
This is so amazing that it defies belief - this country is going broke- we pay huge amounts of money to purchase energy from our own enemies that we do not need to purchase.....!!! We could change the whole balance of power and the administration and political hacks want to ban fracking?????
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Replies to This Discussion
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Permalink Reply by Paul Butler on -
Another epic non-response.
How much money did the companies you've identified make in 2015?
They are businesses. They exist to make money. Do you understand that?
Too bad you didn't take any accounting when studying Japanese.
The banks maintained the credit lines because they had to. They have too much to lose.
CHK has been cash flow negative since 1999, with the exception of a year or two. The other companies you named are low rent, section 8, copycat versions of CHK.
The shale companies lost over 2 trillion in market value just in 2015.
I know what that tells me. I went to business school.
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Permalink Reply by Paul Butler on
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I forgot to mention that the "brains" behind the whole mess, Aubrey, just drove his Tahoe, 90 miles an hour, into a concrete bridge overpass foundation.
Aubrey had a wife and children. I don't think he would have gone out like that unless he had much to fear.
What did Aubrey know that you don't seem to understand?
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Permalink Reply by Thomas Malcolm Pendergast on
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Please not that the following was written by someone with no positions, zero positions in the companies mentioned in the article:
Chesapeake Energy Scores Big Win To Avoid Bankruptcy
Apr. 12, 2016Summary
Chesapeake Energy reported a rare success on Monday.
The oil and natural gas company agreed with its lenders to amend its credit facility.
The amendments are hugely beneficial for the struggling natural gas producer.
Monday was a good day for Chesapeake Energy Corp. (NYSE:CHK) and its shareholders. The beleaguered oil and natural gas company, which continues to fight for its survival in light of a brutal energy price crises, made an uplifting statement regarding its credit facility on Monday that sent shares through the roof.
So, what happened?
Chesapeake Energy, under pressure not only to reduce debt, but also to maintain access to credit, successfully negotiated an amendment to its secured revolving credit facility agreement that is hugely beneficial to the company. Lenders regularly determine the borrowing base of oil and natural gas companies in order to make sure that borrowers are in a position to repay their debts. Obviously, this is in both parties' interests.
The amendment negotiated here benefits both the lender side and Chesapeake Energy, and clears the way for the natural gas company to turn its attention to asset sales and other measures to stabilize its balance sheet.
According to Chesapeake Energy's statement from Monday, the company has pledged additional collateral, but in turn got its borrowing base reaffirmed at $4.0 billion. Further, Chesapeake Energy's date for the next borrowing base redetermination will be delayed from October 2016 to June 2017, which is a valuable lender concession.
But that wasn't all: Chesapeake Energy further gained relief with respect to its senior secured leverage and interest coverage ratios, which goes a long way in supporting the company's restructuring efforts, and preventing Chesapeake to breach covenants of its lending agreements.
The amendment provides temporary covenant relief, with the facility's senior secured leverage ratio suspended until September 2017, then reverting to 3.5x through December 2017 and decreasing to 3.0x thereafter. In addition, the amendment reduces the interest coverage ratio to 0.65x from 1.1x through March 2017, after which it will increase to 0.70x through June 2017, then reverting to 1.2x in September 2017 and to 1.25x thereafter. During the period in which the existing maintenance covenants are suspended, Chesapeake has agreed to maintain a minimum liquidity amount of $500 million at all times, increasing to $750 million if its collateral coverage ratio falls below 1.1x, tested as of December 31, 2016.
What does this mean for Chesapeake Energy, and its remaining shareholders?
The credit facility amendment, in particular the suspension and temporary reductions in leverage and interest coverage ratios, significantly reduce the odds of a near-term bankruptcy. Further, the amended agreement demonstrates that Chesapeake Energy continues to have crucial lender support, which has a lot of value in a market that prices oil and natural companies as if they are about to go out of business. Though I think that Chesapeake Energy remains vulnerable to a bankruptcy of Linn Energy, LLC (NASDAQ:LINE), the credit facility amendment has improved the company's survival chances significantly.
Your Takeaway
Chesapeake Energy's shares climbed ~20 percent on Monday on the back of the announced credit facility amendment. Chesapeake Energy pledged more collateral, that's true, but got its borrowing base reaffirmed in turn, which is a big win for the natural gas company. The agreement is hugely beneficial to Chesapeake Energy, which still needs to repair its balance sheet and, ideally, sell assets fast in order to ride this downturn out. In any case, Monday was a good day for shareholders.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (31)
Love it! I saw the move to $3s as a buy signal. Summer NG should move up and CHK along with it. Nothing more pleasing than shorts feeling the pressure and continuously claiming a BK that flies in the face of banking actions to date.Achilles Research,
Good article but can't understand your opinion that CHK needs to sell some assets quickly as a means to clean up their balance sheet. The line of credit gives them the breathing room and the ability to sell some assets when its beneficial and not in desperation.I agree it was a "good day for disenchanted shareholders." A short position in CHK is VERY unwise at this juncture.Hmmm well 730 am. Crude prices holding steady up a modest .32 to $40.74, NG up .04 to $1.95, DOW futures look strong indicating an open up 50 points, a few positive articles just released around 700 am....http://bit.ly/25WXX1xhttp://seekingalpha.co...35% or around 199 million shares are held short. Will need to cover. Pre market CHK already up 3.5% .... Up .18 to 4.68 already. If CHK announces anything of an asset sale or whatever may explode today! Fasten your seat belt!Not a big Citi fan - but they did upgrade CHK this morning.12 Apr 2016Yes, a very good day. IMO the path of least resistance is up -- and if the energy markets continue to be more constructive this could be a fantastic year for CHK. Nice article, but WTH is the Linn reference? Very strange and not additive to the article. It would be like writing about Google and saying that Pets.com went bankrupt --- very silly.sknyaze
12 Apr 201619 year old here sold all my boring T shares and took a risk got in at 4.95 at the open this is awesome time to make money, lets goooooo12 Apr 2016The big win amounts to one last chance to deliver. They either deliver or the creditors will own it all.12 Apr 2016Bought back in February at $1.90, sold at $4.05. Rebought at an average price of $4.49 now. I of course wish I just held on it the first time, but ah well, this works too!12 Apr 2016I shorted 100k @ 5.92 that's nearly 50% up in 2 days!!! overbought12 Apr 2016Since the Amended Credit Facility includes collateral value tests, wouldn't it be wise for a writer or buyer to attempt a valuation that assesses the required ratios? E.G. if the Haynesville acreage requires more than $5 natgas pricing to pay off, what is the value that banks will likely assign to that collateral?12 Apr 201612 Apr 2016the shares will go to 2$ back because the terrible management12 Apr 2016,CHK on the move! It's not too late for you, Mr. Short. Hahaha...
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Permalink Reply by Paul Butler on
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When you are going to be executed tomorrow, a stay of one day may be considered good news by some, but not to me.
Why don't you post the Financial Statements of the companies you are touting? That would be the 2015 Income Statement, Balance Sheet and Statement of Change in Financial Position. You must have them, even if you can't read them. Only a fraud would post as you have without having seen the foregoing. I don't care if you are Teddy's brother.
Look Tombo, to paraphrase the infamous words of the Sex Pistols, never mind the bollocks--how much money did they make?
The clowns on Seeking Alpha are uniformly wrong. They have been declaring a recovery just around the corner since the stock was in the 20's.
CHK lost 40 million a day in 2015. Talk about that Tombo.
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Permalink Reply by Craig Cooper on
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Paul,
Please fill us in on just what, specifically, it is about the O&G industry that you dislike.
A completely new segment of the industry has been created in less than a decade and it is undergoing growing pains. It isn't widget-making. Progress & improvement takes a bit of time; but it is occurring. What do you suppose things would be like with $200 oil and $10 NG?
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Permalink Reply by Paul Butler on
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Off the top of my head, this is what chapped my ---:
Land grabbing;
Claim jumping;
Year after year spending more than generated;
Loading up on debt;
Acquiring acreage they have no reasonable expectation of drilling;
Failure to have a plan in place to deal with the current situation (businesses are supposed to be prepared for the future, come what be. If you need excuses or to point to competitors failures, you no longer qualify as a respectable business);
Paying too much for debt;
Incurring too more debt when they knew the jig was up;
Too much speculation/white knuckle gambling;
Abusing Royalty holders;
Reneging on deals;
Stiffing and cramming down creditors;
Dishonesty with landowners and the public in general;
Cutting corners;
Using unqualified people who are the cheapest cause they have to get the bankers their pound of flesh;
Hoodwinking gullible Banks and Bankers;
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Permalink Reply by Paul Butler on
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I meant to say too much white knuckle gambling with other peoples money.
The collapse was predictable, but it wasn't vectored for. Someone needs to answer for that besides the investors.
Everyone should note that the Saudis told the shalies, starting in the late 1990's, don't even try it. In the free market--you can't compete. It will be like the Christians and the Lions.
The Saudis have been predicting the collapse for at least 15 years.
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Permalink Reply by bo boboski on
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The real reasons for the price of oil, The "market share", The oil glut,etc.etc. is soooo far above our heads that we don't even have a clue of whats goin on!. IMHO. So why even try to decipher it? Just sit back and watch,it's all we can do anyway.
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Paul,
Thanks for the reply. FWIW, I've worked in the industry for 40+years, part associated with ME, and I don't believe shale as a potential reservoir was on anyone's screen, let alone the Saudis, during the 90s. The 'shale-as-a-reservoir' era really didn't begin until ~2008.
I don't deny that there were / are a (very) few unscrupulous members of the industry, but that's true of all industries and it isn't a good reason, IMO, to denigrate or resort to broad, sweeping generalizations of all of us.
Again, you're entitled to your opinion, but would you really want to have gone through and be currently in a $200 oil & $10 natural gas environment?
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Hi Joseph! I'm trying my best to answer your questions but I'm losing confidence in my ability to communicate clearly.
The reason all of the refineries on the Gulf coast (except Marathon's Garyville plant which was the last major refinery built in the States) converted to running heavy crude was because of the critical shortage in the U.S.A. of light, sweet crude such as West Texas Intermediate and the plentiful abundance of heavy, sour crudes outside of America. That was the situation 35 years ago.
The Gulf coast refinery area is the largest concentration of refining capacity in the world. It still is. The decision 35 years ago to install cokers throughout that complex was crucial to the survival of the entire industry. Cokers represent 30% of the total cost of a single refinery. Yet, they enable the refiner to process a cheap and plentiful feedstock, heavy, sour crude, into substantially more fractions besides just gasoline, diesel, jet fuel, bunker fuel, fuel oil, liquid petroleum gas and olefins but also naphtha for petrochemical feedstocks and fertilizers, olefins for lubricants and coke for anodes used in steelmaking and aluminum smelting. In other words, there were far more markets for your products.
You probably are not going to walk away from such a heavy investment. If you did decide to go back to the original light, sweet refinery design, you'd commit yourself to marketing far fewer products and you'd have to completely remove the coker infrastructure. In a high-commodity price environment, you might recover your costs in five years. In a low-price environment like now, you're looking at more like ten years.
It all comes down to economics, return on investments and internal rates of return. From these standpoints, it makes a lot more sense to import heavy, sour crudes that we already have the installed capacity for, unmatched anywhere else in the world, and giving us a huge competitive advantage since other countries (except for Canada) do not have that ability. We don't have the heavy crude though. They do. We have the light sweet. They don't and they need it. And they'll pay more for a barrel of American light sweet than we pay for their heavy sour crude. Even for our best friends, the Canadians, we pay them from $10 to $12 less per barrel of Canadian crude than they pay for West Texas Intermediate. Is that fair? Well, apparently they think so since they've been buying it from us at those prices for decades. Same with our Japanese and European friends.
You ask "Why buy foreign oil, spending money and funding various hostile or potentially hostile authoritarian states when these monies could (should) be better spent modifying / building new refineries designed to use our own 'light sweet' crude (since we Don't have to in the 1at place) ? ?" I hope I've answered the part of that question that doesn't include your embedded clause ". . . funding various hostile or potentially hostile authoritarian states . . . " For that, I offer the following explanation:
According to the EIA, as of January 2016, the top six countries that we import crude from are:
1. Canada 3,446,000 bbls of heavy crude per day bound for Ohio and the Gulf
2. Saudi Arabia 1,054,000 bbls of heavy crude per day bound for the Gulf
3. Venezuela 650,000 bbls of heavy crude per day bound for the Gulf (mostly Citgo refineries)
4. Mexico 630,000 bbls of Aztec medium and heavy crude per day bound for the Gulf
5. Colombia 463,000 bbls of heavy crude per day bound for the Gulf
6. Ecuador 334,000 bbls of heavy crude per day bound for the Gulf
The only countries in this list that I consider hostile to American interests are Venezuela and Ecuador. I expect that you along with a lot of other people consider Saudi Arabia an American enemy. I definitely do not and I am confident that all major American oil companies agree with me including ExxonMobil, Chevron, ConocoPhillips as well as BP, Shell, Total, Eni, Noble, Delek and Novatek.
Did I leave anything unanswered there? Or did I open a can of worms?
Next "Then there's the whole 'why are't we converting to and using more natural gas for a transportation fuel ? ?' question that isn't addressed." Oh there's a lot going on here, Joseph! In Ohio we now have at least 100 CNG/LNG refueling stations. Columbus operates all city buses and many other city vehicles on CNG. Rumpke and Waste Management continue to roll out more LNG-powered trucks. PepsiCo/FritoLay delivery trucks now run on CNG or propane. Ford F-150s are now available with natural gas engines. Range Resources, two years ago placed the largest fleet order for natgas-fueled trucks. It was so big that no single Big Three automaker could fill it so they divided it up among Ford, Ram and Chevy/GMC! Interlake Steamships is converting its entire fleet to nat gas. Seattle's ferries all now run on nat gas.
To make all of these things happen takes a combination of corporate and political leadership. What we are seeing today is not what we saw five years ago. It's not the status quo. And it is a lot better.
I hope I still don't come across as a snake-oil salesman.
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Permalink Reply by Joseph-Ohio on
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Sometimes folks don't see eye to eye / agree.
We've got a few places like that happening in our dialogue here.
When we have our own $ used against us in hot war evaluations in place during peacetime change and especially do considering what's at stake and the demeanor / philosophy / conduct of the adversaries / enemies to one another.
Building refineries to win our oil wars makes great sense to me.
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Permalink Reply by george m vietze on
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Thank you for your information Thomas. It sheds light on the complexities of the energy industry.
I, for one, appreciate the information. As a landowner of mineral rights who is not in the energy industry
insight into information you write about is valuable, I only hope that our political system has advisors that will maximize our economy with the potential our country has toward energy independance.
Please keep posting, your experience is very valuable to those of us that do not know very much about the industry and are eager to learn.
Thank you.
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