An Exploration Of Chesapeake Energy - Suitable For Risk Capital?

Introduction: When searching for and researching speculative equities, I look for shares that have value characteristics and that are off long-term prior highs but with recent upward price momentum. Then I want to see insider accumulation of the shares and a catalyst for possible strong upside price action, which could be the existence of a high short interest in the shares. These of course apply to favored turnaround situations.

This article reviews Chesapeake Energy (CHK) in that context.

Due to the upward move in energy prices the last couple of months, I have found this to have been a good trading vehicle; currently I am at a minimal position in this equity.

Background: Chesapeake is a U.S.-based land oil and gas producer with a natural gas focus. It is now a turnaround story. CHK was founded by a bit of an empire-builder, Aubrey McClendon. Mr. McClendon was forced out of the company recently under a cloud. CHK now has an unpaid chairman and a geologist CEO; both are industry veterans. Management now pledges to engage in investor-friendly actions. these include deleveraging the balance sheet primarily via asset sales, and more generally seeking to improve total returns for shareholders in the here and now rather than seeking to shoot for a more risky longer-term large success. The company is attempting to improve its operating efficiency and to decrease its dependence on natural gas and move more to oil and natural gas liquids production.

Seeking Alpha has published several articles on CHK over the past few months that happen to have relatively little overlap, and that collectively provide good fundamental information. I would say they have more of a bullish than bearish tinge. Multiple sources of information are available about the company, of course.

The reason I wrote this piece now and with the focus it has is to supplement the other recent Seeking Alpha articles. Also, given that I have mixed feelings about the stock, perhaps it could be useful for current or potential CHK shareholders to review the thoughts of this experienced trader. Note that I have no geologic expertise, and ultimately much of this company's value derives from technical factors.

In fact, Chesapeake has so many producing and non-producing properties that absent an expert review of its proprietary data, even an outside industry expert might have difficulty in fully understanding the profit-and-loss potential of these properties in aggregate. This is especially so given the unknown future prices of the commodities Chesapeake produces, and how the asset sale program will fare.

Conceptually, CHK can be considered for now as a proxy for the U.S. price of dry (conventional) natural gas, though as stated its focus has begun to change.

Let's start with some charts.

Technical chart factors for CHK: For a controversial company that has received a great deal of negative publicity for several years running, the long-term chart is strong, though exceedingly choppy. Even though the shares have come way down off their peaks and trade below a 1996 spike high, CHK ultimately shows a bottom-left to top-right chart (all charts are semi-log and are from Yahoo! Finance unless otherwise noted):

The annual compound price appreciation since the company went public in 1993 has been just over 15% per year. This is well above the performance of the average stock. So even though CHK's focus, U.S. land production of natural gas, has entered a pricing depression in recent years, and despite the company's high debt load and issues regarding Mr. McClendon, investors who committed to these shares when they came public and passively held have done well.

The one, two and five year charts (shown in that order below) are consistent with those of a turnaround situation. CHK may be making "the turn".

The stock has gone up over the past year, so a buyer now is not trying to catch a falling knife. The stock is also close to breaking out of a multi-month triple top. Might it be safer to wait to see if it can do so? So it would seem.

The 2-year chart shows that CHK has lagged a rising market, which puts it in the "possible catch-up" category. Not bad, especially given the pricing problems in natural gas over the same time frame.

The final, 5-year chart shows that CHK has been holding lateral support. It also shows that its post-Lehman low held on a test last year. This is similar to the action of other truly depressed stocks of troubled companies such as Bank of America (BAC), which got hammered in late 2011 back to $5, just above its spike low of 2009, then has been a strong performer.

CHK looks good in relation to its various moving averages, but it's unclear what that means in a strong bull market. I'll stop there and not engage in a discussion of short-term technical factors.

In summary, I am intrigued by CHK's basic chart pattern at every time frame shown. However, it has not truly "broken out".

Technicals for natural gas: CHK's value is heavily related to the current and expected future price for U.S. production of natural gas, which of course is unknown. The price charts for natural gas over one year, and for more than five years, shown below, show why CHK's chart looks as it does:

From FINVIZ, natural gas has had a strong one-year performance, perhaps beginning a rebound from a weak 5-year show.

Natural gas looks on the charts like a washed-out commodity. It made a marginally lower low last year compared with its 2009 low, and it hasn't broken upward resistance yet, but its underlying fundamentals are good. (In fact, they are so good that this point may fall into the category of a "known known" and therefore may be of no incremental value to an investor.)

With West Texas Intermediate oil (WTI) recently trading near $110/barrel, the energy content of natural gas makes it a bargain versus crude. Of course, natural gas burns more cleanly than crude, so it's preferred on that standpoint. Natural gas is much more expensive in most of the rest of the developed world than in the U.S. Thus there should either be declining prices "over there" or rising prices here, but only over time. Indeed, given its debt load, one of the key questions about CHK is whether it can shed debt rapidly enough to have the requisite staying power.

A secondary long-term positive may be the fact of large write-offs that several oil majors have taken on U.S. natural gas reserves. They say they need much higher prices to make developing their resources worthwhile. Because the companies were likely not insane when they acquired these properties, in time their purchases may prove to have been sensible. When, however, this may occur is another story. The U.S. Energy Information Administration has a chart and table of the multi-decade price trend in this commodity. Currently, it is up about 7X from its 1976 level. If one ignores several major upward spikes, the long-term price trend has been gently upward over these 37 years.

Can the fracking revolution keep the price around current levels year after year after year? We will have to wait and see.

Sponsorship and insider trading: This looks to be a material positive for CHK. Insiders have bought nice amounts of this stock around current prices, most notably a large purchase by Chairman Dunham, but he's far from the only one.

Very smart, activist value investors have accumulated CHK stock, and I hope they have not turned to sellers, or begin to sell, now that I have gone long with them:

As of March 31, Carl Icahn owned nearly 9% of CHK shares, and another well respected activist institution, Southeastern Asset Management, owned 13.4% of CHK's shares.

Despite the above, CHK is a heavily-shorted stock.

Most short-sellers do their homework. But, these same stocks have tended this year to have been especially strong performers lately, specifically due to short-covering. CHK is not a stock for the weak-kneed.

General fundamentals: CHK's book value as of 3/31/13 consisted of $15.7 B of tangible assets minus liabilities, with no intangible or goodwill assets on the balance sheet. As of Friday, July 19, CHK closed at $22.58 and a market value of $14.6 B. The stock is trading around 15X consensus earnings estimates for 2013 and 11X estimates for 2014. It also has been paying a $0.35/share dividend on an annual basis. It may be questioned as to why this debt-heavy company is paying any dividend; perhaps it's to allow more institutions to hold the shares.

There's much more to this company than the above fundamentals. My view is that they likely are "in" the share price, that the investment bottom line on CHK is that it's a speculation other than to pros such as insiders and the Carl Icahns of the world.

Risks: Significant and possibly existential risks exist here. The company has announced a major program to continue to raise cash to pay down debt by selling off certain of its properties. This may or may not come to fruition; failure in this regard could have serious repercussions to shareholders. Even if management meets its deleveraging objectives this year, the company will continue to have lots of debt. (The amount cannot be known until this year's asset sales are completed.) In any case, it is hostage to energy prices over the long haul. It may not survive in current form without major shareholder dilution or forced asset sales (or worse) to see the next major rebound in natural gas prices- if one ever occurs. Or, it may survive but simply find that it is not able to generate sufficient profits to justify today's market value.

All the other risks that occur with investing in any stock apply fully to this volatile equity.

Summary: Chesapeake Energy has several catalysts that might lead to strong upward price action, including a high level of short interest and possible upside volatility in natural gas pricing. The insider buying, new corporate leadership, and "smart money" stock accumulation that have occurred represent important investment considerations. So is the promise from the company's new leadership to put total returns to shareholders as their guiding light.

However, numerous and serious risks abound for this company and its shareholders, both regarding its heavy debt load and the profitability of its businesses even if it successfully sheds a lot of debt. I am long a small amount of this stock specifically to seek alpha within the setting of a conservative investment posture, and may sell the rest of my holdings or add more at any time, given that this neutral review of the company should not move the stock at all.

Overall, I find CHK to be an interesting high-risk stock that could be suitable for a buy-and-hold investor as well as for an active trader.

Disclosure: I am long CHK. 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. Not investment advice; I am not an investment adviser. (More...)

Source: http://seekingalpha.com/article/1563632-an-exploration-of-chesapeake-energy-suitable-for-risk-capital?source=feed

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When bar fights get mean, bystanders intervene

Public release date: 23-Jul-2013
[ | E-mail | Share ]

Contact: Matthew Swayne
mls29@psu.edu
814-865-9481
Penn State

People are more likely to try to break up a bar fight when they believe the conflict is too violent, or has the potential to become more violent, according to an international team of researchers.

Bystanders break up about a third of the fights that occur in bars and are most likely to intervene in conflicts between males, said Michael Parks, who recently earned his doctorate in sociology at Penn State.

These bystanders used nonaggressive interventions to break up about 65 percent of the fights between two aggressive males. Most bystander interventions were classified as nonviolent interventions, which included verbally stopping the fight, or separating the fighters, according to the researchers.

Parks said the threat of severe violence between males may be a cue for bystanders to intervene.

"Male-to-male aggression between two actors is usually considered by third parties to be the most severe, the type of incident that can lead to severe violence," said Parks.

Fights between males also receive the highest amount of aggressive interventions, when people enter the conflicts themselves as fighters, according to the researchers, who report their findings in the current issue of Aggressive Behavior.

The researchers said that incidents that pitted males against females, which was the most common type of aggression in the study, also received the lowest amount of intervention, with only 17 percent of those incidents broken up by third parties.

Despite the abhorrence that most people have for violence between men and women, the researchers theorized that bystanders may not intervene because they do not believe the encounter will escalate to severe violence, said Parks, who worked with Wayne Osgood and Richard Felson, both professors of criminology and sociology, Penn State; Samantha Wells, assistant professor of epidemiology and biostatistics, University of Ontario, and Kathryn Graham, associate professor of clinical public health, University of Toronto.

"It seems a little upsetting that people didn't intervene in incidents that involved a man harassing a women, but the results showed that this was indeed the case," said Parks. "Our data showed that this type of violence had the lowest level of severity, so one explanation for the lack of intervention in these incidents is that third parties perceived that the events won't escalate into higher levels of violence, something that does not have the potential to be dangerous or an emergency."

Third parties were also more likely to intervene when the fighters appeared to be more intoxicated, said Parks.

Social psychologists in the 1960s theorized that bystanders avoided intervention for a number of reasons, such as a person not acting because he or she believes someone else with intervene, according to Parks. The phenomenon is usually referred to as the bystander effect, he said.

"These results support recent research showing that the bystander effect may not be as dramatic or as strong as once thought in emergencies or dangerous situations," said Parks.

The researchers examined data from 860 relevant incidents from the 1,057 incidents of violence recorded in a 2004 survey of bar violence in Toronto. For the survey, 148 trained observers collected data over 1,334 nights at 118 Toronto bars with a capacity of more than 300 people. Each observer was screened for observational skills and had 25 hours of training to classify violence that included practice sessions in bars.

###

The National Institute of Alcohol Abuse and Alcoholism supported this work.

---

[ | E-mail | Share ]

?

AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.

Public release date: 23-Jul-2013
[ | E-mail | Share ]

Contact: Matthew Swayne
mls29@psu.edu
814-865-9481
Penn State

People are more likely to try to break up a bar fight when they believe the conflict is too violent, or has the potential to become more violent, according to an international team of researchers.

Bystanders break up about a third of the fights that occur in bars and are most likely to intervene in conflicts between males, said Michael Parks, who recently earned his doctorate in sociology at Penn State.

These bystanders used nonaggressive interventions to break up about 65 percent of the fights between two aggressive males. Most bystander interventions were classified as nonviolent interventions, which included verbally stopping the fight, or separating the fighters, according to the researchers.

Parks said the threat of severe violence between males may be a cue for bystanders to intervene.

"Male-to-male aggression between two actors is usually considered by third parties to be the most severe, the type of incident that can lead to severe violence," said Parks.

Fights between males also receive the highest amount of aggressive interventions, when people enter the conflicts themselves as fighters, according to the researchers, who report their findings in the current issue of Aggressive Behavior.

The researchers said that incidents that pitted males against females, which was the most common type of aggression in the study, also received the lowest amount of intervention, with only 17 percent of those incidents broken up by third parties.

Despite the abhorrence that most people have for violence between men and women, the researchers theorized that bystanders may not intervene because they do not believe the encounter will escalate to severe violence, said Parks, who worked with Wayne Osgood and Richard Felson, both professors of criminology and sociology, Penn State; Samantha Wells, assistant professor of epidemiology and biostatistics, University of Ontario, and Kathryn Graham, associate professor of clinical public health, University of Toronto.

"It seems a little upsetting that people didn't intervene in incidents that involved a man harassing a women, but the results showed that this was indeed the case," said Parks. "Our data showed that this type of violence had the lowest level of severity, so one explanation for the lack of intervention in these incidents is that third parties perceived that the events won't escalate into higher levels of violence, something that does not have the potential to be dangerous or an emergency."

Third parties were also more likely to intervene when the fighters appeared to be more intoxicated, said Parks.

Social psychologists in the 1960s theorized that bystanders avoided intervention for a number of reasons, such as a person not acting because he or she believes someone else with intervene, according to Parks. The phenomenon is usually referred to as the bystander effect, he said.

"These results support recent research showing that the bystander effect may not be as dramatic or as strong as once thought in emergencies or dangerous situations," said Parks.

The researchers examined data from 860 relevant incidents from the 1,057 incidents of violence recorded in a 2004 survey of bar violence in Toronto. For the survey, 148 trained observers collected data over 1,334 nights at 118 Toronto bars with a capacity of more than 300 people. Each observer was screened for observational skills and had 25 hours of training to classify violence that included practice sessions in bars.

###

The National Institute of Alcohol Abuse and Alcoholism supported this work.

---

[ | E-mail | Share ]

?

AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.

Source: http://www.eurekalert.org/pub_releases/2013-07/ps-wbf072313.php

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Street Fighter II: Best of Church Edition

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Source: knowyourmeme.com --- Monday, July 22, 2013
Brazilian videomaker Maur?cio Pinguim brings this highly entertaining video compilation of Christian faith healers trying to beat the demons out of their followers, Street Fighter style. ...

Source: http://knowyourmeme.com/videos/70017-fail

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2006 Ford F-450 F450 DIESEL 4x4 SERVICE BOX - $15,999

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Type your address in the From input box for turn-by-turn directions!

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Source: http://www.carpages.ca/used-cars/ontario/concord/2006-ford-f-450-1284932/

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Incremental and Radical Improvements That Lead to Success ...

[unable to retrieve full-text content]Incremental and Radical Improvements That Lead to Success? July 21, 2013. action, attitude, behavior, Belief, ... Kaizen can be applied in fitness, self-help, education, relationships and so forth. Going further, the word Kaikaku was created in ...

Source: http://bobchoat.com/2013/07/21/incremental-and-radical-improvements-that-lead-to-success/

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'Monkey: Journey To the West' Connects With Chinese-Americans First, Indie Rockers Second

There?s a new show in town, and it?s trying to bring the indie kids to Lincoln Center. And Chinese Americans. And, by default, Chinese-Americans who love indie music, meaning yours truly. I?m the first to admit when I?m part of a target demographic (see: Portlandia, Bushmills), so I made the trek uptown to see Chen Shi-Zheng?s opera Monkey: Journey To The West.

The production, part of this month?s Lincoln Center Festival, sees Chen recruiting Gorillaz main men Damon Albarn and Jamie Hewlett to reinvent the classic Chinese folk tale of a monkey tasked with helping a monk recover lost Buddhist scriptures. No matter if you?re unfamiliar with the story--as I was--Lincoln Center promises an audiovisual extravaganza with something for everyone.

There is one hitch. At face value, billed as the Gorillaz opera, Monkey: Journey To The West looks suspiciously like white British people?s latest conquest of another culture. But what?s actually served up is another story entirely.

Oddball pop?s cartoon dream team may be the marquee name, but Gorillaz actually feature less heavily than the musically-inclined crowd might anticipate. In fact, I found myself wishing for more of Hewlett?s work--the first half of the performance features animated video interstitials between scenes, and their notable absence later on makes for some uneven transitions and pacing.

And while Albarn, first of Blur fame, injects some glitchy electronica into the soundtrack, the majority of the arrangements come across as sounding quite traditional. With an all-Chinese cast and a script penned by Chen completely in Mandarin, it?s ultimately the director?s world--he?s just invited Albarn and Hewlett along for the ride.

And what a ride it is. Clocking in at about 100 minutes, acrobats, martial artists, contortionists, plate spinners, and one plucky wire-walker all show what they?re made of. While performers may make the occasional quaver, they?re necessary to remind the audience that they?re well-trained humans rather than an army of robots.

Monkey: Journey To The West is also being touted as fun for the whole family, and while some children?s attention spans may not hold up, the opera seems like a safe bet for any parents who want to expose their kids to spectacular gymnastic feats and basic Buddhist principles. Trying to appeal to everyone is a challenge, but Chen appears to have made it work--the audience on the night I went was diverse in terms of both race and age. But between the indie rockers and the Chinese-Americans, it?s the former that won?t be getting quite what was expected.

[Photo:?Stephanie Berger, More by Katie Chow; Follow Katie on Twitter]

Source: http://www.blackbookmag.com/music/monkey-journey-to-the-west-connects-with-chinese-americans-first-indie-rockers-second-1.63738

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Crews try to reach body of climber who fell to death on Colorado mountain

Corbis file

At least seven other deaths have occurred on Capitol Peak in White River National Forest near Aspen, Colo.

By M. Alex Johnson, Staff Writer, NBC News

Rescue crews were working Sunday to recover the body of a mountain climber who apparently fell to his death on Colorado's notorious Capitol Peak, authorities said.

The man's body was located Saturday afternoon about 12,300 feet up the north face of the 14,130-foot peak in the Elk Mountains west of Aspen, the Pitkin County Sheriff's Office said in a statement emailed to NBC News. But access to the scene by foot is impossible, it said, and a helicopter crew was dispatched Sunday.

---

The man wasn't identified pending notification of his family, but The Aspen Daily News reported that he was a resident of Vail who was in his mid-30s.

The man's climbing partners said he split off from their group Friday night and tried to climb down the north face of the peak rather than attempt a descent via the dangerous Knife Edge, a narrow, jagged 150-foot section along the main route. After waiting for him at their camp, they reported him overdue.?

Two rescue crews totaling 14 searchers went looking for him Saturday, the sheriff's office said in its statement.

"From what I understand, they never discussed him going another route. He just decided to do it himself," Sheriff's Deputy Marcin Debski told The Aspen Times. "We're all assuming that he thought the way he took was an easier route."

Capitol Peak is considered the most treacherous of Colorado's "fourteeners" ? dozens of 14,000-foot high mountains rated for technical difficulty by mountaineering organizations. It's rated "very dangerous" by most mountaineering reference guides.

At least seven other climbers have died on the mountain's face since 1957, according to figures compiled by the American Alpine Club.

In Washington state, a 28-year-old hiker also died Saturday in a fall on Mount Olympus in Olympic National Park, The Peninsula Daily News of Port Angeles reported.

The man, Richard Grey Liston, 28, of Portland, Ore., was climbing with a companion near the top the mountain when he fell to an area of rocks and glacier below, a park spokeswoman told the newspaper. His body was retrieved by a helicopter Saturday night, she said.

Watch the top videos on NBCNews.com

Source: http://feeds.nbcnews.com/c/35002/f/663306/s/2ef79669/l/0Lusnews0Bnbcnews0N0C0Inews0C20A130C0A70C210C195996420Ecrews0Etry0Eto0Ereach0Ebody0Eof0Eclimber0Ewho0Efell0Eto0Edeath0Eon0Ecolorado0Emountain0Dlite/story01.htm

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