CHK has lost over 17 billion dollars in last 6 Quarters: Bloomberg

(Bloomberg) -- The long wait may finally be over.

Since the great crash of oil in mid-2014, more than $100 billion has been raised by buyout firms and distressed-debt funds eager to scoop up energy assets on the cheap. But as the months rolled by, few opportunities cropped up as cash-starved drillers limped along with the help of their bankers.

Not any more. What started out as a trickle has now turned into something much more, with Blackstone Group LP, Apollo Global Management LLC and WL Ross & Co. all jumping in this year to buy a grab bag of assets at discounted prices. Precise numbers are hard to come by, but in conversations with investors, bankers and analysts across the industry, there’s little doubt that private equity firms are ramping up their investments in everything from undrilled and developed oil and gas acreage to troubled loans.

“We’ve gone very aggressively into the market” after holding back for most of last year, said Shaia Hosseinzadeh, who oversees energy-focused distressed-debt investing at WL Ross, the namesake firm of billionaire dealmaker Wilbur Ross. “You’ll see more deals in the second half.”

Deals are picking up for a few key reasons. Oil prices are no longer in a free fall, but at $40 a barrel, they’re still well below the $60 to $80 levels many drillers need to break even. Wall Street has started to turn away the weakest borrowers after extending more than $2 trillion in loans and commitments during the boom. And with the cash crunch causing a surge in bankruptcies this year, many firms are looking to unload assets to stay afloat.

Much of the action is unfolding in distressed debt, where buyers have targeted loans and bonds with an eye on seizing ownership in bankruptcy or restructuring.

Billionaire Leon Black’s Apollo, WL Ross and EIG Global Energy Partners have snapped up more than half of the $1.6 billion in unsecured debt of Permian Resources, an oil and gas producer started in 2014 by the late Aubrey McClendon, people familiar with the matter have said.

McClendon set up Permian Resources with backing from Houston-based private equity shop Energy & Minerals Group. The explorer has leaseholds to 85,000 net acres in the Permian Basin of west Texas, one of the most prolific oil and gas fields in the country. While the company has top-flight assets and bought itself time by selling some, its debt load is unsustainable and is on track to default within a year, said Carin Dehne-Kiley, an analyst at S&P Global Ratings.

Representatives for all the firms declined to comment.

Banks, for their part, are finally getting serious about cutting off the energy industry’s weakest borrowers and selling loans -- after more than two years of foot-dragging. In the first half of 2016, the eight biggest U.S. banks reduced loans and loan commitments by 6.3 percent after stepping up the percentage they lopped off their books last quarter, according to data compiled by Bloomberg from the lenders’ filings and other disclosures.

As of June 30, they had lent or committed to lend $2.19 trillion, including some derivatives positions, compared to $2.34 trillion at the end of 2015, filings show. Bank of America Corp. reduced its exposure last quarter by a record 7 percent to $40.5 billion. Morgan Stanley has slashed its lending to the energy industry by 22 percent -- the most among the group -- since it ballooned to a peak in the third quarter of 2015.

Much of what’s left is souring. At Wells Fargo & Co., energy loans that are considered “non-accruals,” or those that aren’t expected to be fully repaid, have soared to $2.55 billion from just $35 million less than two years ago.

Representatives at the banks declined to comment.

Many troubled firms are tapped out anyway. At least a dozen oil and gas producers had used more than 90 percent of their credit lines at the end of the first quarter, according to Bloomberg Intelligence. Half of those are effectively overdrawn after their bank credit lines were cut.

While executives at Wells Fargo and other banks have met with buyout firms to unload their energy loans in recent months, according to people familiar with the matter, some private equity players are also snapping up assets directly from operators that are short on cash. In July, Blackstone paid about $500 million for acreage in the Permian. This month, it expects to wrap a deal to buy a partly developed oil field in the North Sea.

The firm, which didn’t make a single investment for 15 months after it raised a $4.5 billion fund in early 2015 for energy assets, has spent $1.8 billion between the fund and its main buyout pool on oil and gas plays this year.

“One thing we’re focused on is to provide capital to complete large, oil-field development projects,” said David Foley, the head of energy investing at Blackstone, which manages $356 billion. “In many cases, it is possible to buy in at a significant discount to replacement cost.” He didn’t identify the sellers.

Some buyout firms like EIG are helping financially sound companies bankroll purchases of ailing rivals. In February, the firm agreed to invest as much as $500 million by buying preferred shares from a unit of Rice Energy Inc., a natural gas explorer in the Appalachian Basin, to back Rice’s acquisition program and expansion.

“We want to finance the big guys with preferred so they have liquidity to go on the attack,” EIG President Bill Sonneborn said at a conference in May.

That suggests dealmaking may accelerate. This year, $36 billion of acquisitions involving U.S. oil and gas companies have been announced -- ahead of last year’s pace but behind 2014. And while some producers have sold equity, Anadarko Petroleum Corp., Devon Energy Corp. and others are also boosting efforts to unload assets and raise cash. Devon, which sold off less than $200 million of assets in 2015, announced $3.2 billion in sales this year.

On Wednesday, Chesapeake Energy Corp., which has suffered more than $17 billion in losses over the past six quarters, announced it will give away its Barnett Shale holdings to an operator backed by First Reserve Corp., an energy-focused private equity firm.

“The thawing is underway,” said James Row, the chief executive officer of The Oil & Gas Asset Clearinghouse, which brokers oil and gas deals.

Even as the market heats up, there are still plenty of risks -- a lesson that was driven home painfully last year.

After oil prices briefly rebounded in the first half of 2015 and flirted with $60 levels, Blackstone’s GSO credit unit, KKR & Co. and Oaktree Capital, as well as mutual-fund manager Franklin Resources Inc., among others, spent billions of dollars on cash-strapped explorers betting the industry would recover.

It proved to be too early. Many of the investments soured as oil descended into the mid-$20s. At least 90 producers, including SandRidge Energy Inc., Linn Energy LLC and Breitburn Energy Partners LP, filed for bankruptcy since the start of 2015, according to law firm Haynes and Boone LLP.

And while oil is up more than 60 percent from its low in February, prices have once again retreated and sunk back into a bear market this month. This year, bankruptcies are being filed at double the pace in 2015.

“There’s a long list of companies that are going to disappear,” said EIG’s Sonneborn. “You’ve got to be very, very careful investing in this space.”

The recent flurry of dealmaking has left fewer bargains as well. Outside the Permian, where operators can profit from $40-a-barrel oil, the supply of top-grade acreage is spotty. And traders see oil prices stuck below $60 -- a key level many producers need to boost drilling and profits -- until at least 2020.

“I don’t think you’ll see a tidal wave of deals, not good deals anyway,” said Blackstone’s Foley. “Firms raised too much money. They may get it invested over six years, but not in the next few.”

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Crooked liars with an agenda.....CHK is about to blast off

Halcon Resources (NYSE:HK) says it received notice from the NYSE that its market cap had fallen below the continued listing standard after falling below $50M over a 30-day trading period.

HK says it expects to regain compliance with the NYSE's minimum market cap requirement and the minimum share price requirement upon successful consummation of its current restructuring plan.

HK has 45 days to submit a plan to regain compliance.

Micky mouse operation

  • Stone Energy (SGY -1.2%) says it is negotiating to sell its Appalachian assets in a bid to address its liquidity and capital structure deal that could fetch $350 million.
  • The potential buyer - which Bloomberg estimates could pay ~$350M - is not related to the group of noteholders now in debt restructuring talks with the company, although it could receive $150M of the sale proceeds; other proceeds would pay down bank debt and provide working capital, according to the 8-K filing.
  • SGY has said it is analyzing various strategic alternatives to cut debt, including a prepackaged bankruptcy, amid the plunge in oil and gas prices that has led to eight straight quarterly losses for the company.

OK, so CHK lost some money.  What is the big deal?  Is my heart supposed to bleed for CHK?  It's not as if they lost their own money.  Too much of the money they lost came straight out of the hides of their royalty owners!  

you crack me up frank...you really do.

wj

Always happy to be of service, Jim.

But don't look for many more of my entertaining (or whatever) posts here.  Just learned me and some of the other boys, regulars here posting on many topics, are being censored!  Some of our posts are now being shifted by the management over to a board nobody reads called "Opinion Based Posts".  Hell, everything I post here reflects my opinion.  I think that goes for most of us.

So good to hear from you, and best to you, even though this could be end of the line.  I do not cotton to censorship.  Maybe it is time to go home.  Yeah, you know, Jim, it could be time to go home.

Good riddance. ....AMF

Mike being the unique individual he is:

For others who, like myself, are unfamiliar with what is for Mike everyday parlance, I looked that up.

A = adios

M = mother

F = f***er

Mike Hunt is at present listed by the site administrator as one of the top contributors to this website.  Feel free to draw your own conclusions.  I've already drawn mine.

Mike, it is truly a blessing not to be you!  Please keep on with your high class posting here.  You are clearly appreciated and highly sought after by the management.  Y'all richly deserve one another.

I've wondered about that myself.

The guy gets away with murder.

Frank & Paul,

      I figured I had been moved to some electronic back alley as well. The truth doesn't sell papers anymore.

Our Greed Based society demands that you pay out if you want to be heard. This is another Pay to Play scheme.

I've been wanting to start my own website.

I'll flash it on this website when I go on line.

The word about these Out Of Towner's taking advantage of everyone moves slowly. Good thing there are laws that can remove some of the damages, with a Statute of Limitations of 3 to 6 year or longer based when the theft was discovered. If the theft is still in progress the SoLs hasn't started yet.

I'm betting Chesapeake has taken 3 Billion in well products per Quarter from Ohio Free Of Charge over the last 6 Quarters. That more than offsets Chesapeake's losses.

They probably put negative signs in front of their gains and turned this into a loss.

Tell me they don't move positive and negative signs when it suits them.

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