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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Think4Yourself who wrote (65403)4/28/2000 8:58:00 AM
From: Telemarker  Read Replies (2) of 95453
 
JQP: Regarding CHK earnings and hedges.

The first quarter numbers (operating earnings of $0.21/$0.15 assuming full dilution and cash flow of $0.47) were achieved with average sales prices of $2.30 and $24.58.

Given the great degree of leverage present, I deem their hedging prudent and once they get past April, 20-35% of natgas production seems quite reasonable. In projecting over $2.00 of cash flow per share for 2000, the $.32 discount to NYMEX price that they assume seems quite conservative. The preferred retirement also a very sweet move. I would, however, have liked to seen a stronger commitment to debt repayment. Maybe the conference call will make me happier in this respect.

I have a couple of mineral leases with CHK in Oklahoma and there's nothing wrong with the gas coming out of those wells. The geography dictates that prices are lower than NYMEX.

With these numbers, CHK is a must own for any believer in the natgas story, IMO. It would seem quite short sighted to be selling CHK shares here as some (well, one) would advise (hope).

Enjoy reading your posts in which you carry the E&P torch. Kind of scary, but I'm in complete agreement with just about all of what you say.

Cheers.
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