Recent Post From AOL...
I don't think there will be any near term news from CHK themselves. A lot of what I would like to see is how the year end reserves stack up compared to the prior year as well as interim reserves numbers released as of Dec 31, 1996. This includes the volumes as well as the PV10 value which will affect the final determination of the writeoff as required by the full cost test. So a lot will not be known for at least 4 to 5 weeks or more until the year end results are released.
I agree with BBond that their seems to be a high correlation of the Seagull -- Wharton Co. news with the CHK stock price. Positive results from the Zeidman 2 well will go a long way to making this area of even greater interest to CHK watchers.
And I noticed in this weekend's Barron' s that short interest remains very high ---- this surprised me. But if any shortsellers have maintained long term positions during the last 18 - 20 months of heavy shorting, thay are likely still in the red even after the big drop. Over 8 milion shares will have to be bought back sooner or later. It would be interesting to see if coverage buying is prompted by continuing news related to Seagull or Coastal and the Zeidman well prior to CHK's year end results.
In the meantime, there is a lot of positive news out there. The Louisiana trend is not "dead" for CHK or anyone else. CHK will continue to drill after taking its hit and will merely do so with a more conservative approach to the costs and risks.
UPR's quarterly results indicated they continue to step up their action there and also indicated they are increasing their rigs operating in the Louisiana trend from 6 at the beginning of the year to 15 at the end of 1997. A very positive indication.
The "Gas Processor's Report" has been following the build-up of infrastructure in the area and had the following comments in their most recent newsletter related to CHK which are excerpted from a much longer article:
"..it is evident that there is plenty of life left in this play. Disappointing wildcats across a 200 mile long band in Louisiana have given producers some well control that allows them to concentrate, going forward, on the most likely areas for successful wells. The focus has zeroed in on the Masters Creek play in Rapides and eastern Vernon parishes....... over to the east near Cheneyville, Chesapeake hit a 10 mmcfd well in March and has another one coming.....Chesapeake Energy made a name for itself among investors, and a huge splash on Wall Street, by finding the sweetest spot in the whole Austin Chalk trend in Texas --- the Navasota River block in Grimes Co. The Navasota wells were consistently huge, many of them are still great producers and Chesapeake is still drilling new locations on their huge acreage block after three years of developing the area. The name of the game in Texas has been to find the sweet spots where the pay is thickest and contains the highest fracture density. Because of the $100's of millions invested just in land in the giant La. Chalk play, producing companies are advancing out the learning curve very rapidly. The key thing they have learned in 1997 is that it's not going to be uniformly good across a 200-mile band of Louisiana........For the legions of of investors and analysts who are wondering how far Chesapeake is going to come back from the recent battering of its stock, we suggest they determine what Chesapeake's land position is in the "bullseye" between Glenmora and Elizabeth, south of Hwy 113."
I guess this could stand a little interpretation ---- the author's point is that he is suggesting the big sweet spot or "bullseye" based on currently available data is the southern part of what is the larger Master's Creek area. In this area, CHK has 150,000 - 200,000 of their Masters Creek acreage. Looking out beyond the author's bullseye into the broader Master's Creek area, CHK has about 300,000 - 350,000 acres and has indicated they believe they have 200 potential drill sites. To continue to have the existing Masters Creek area success rate with future drillsites would be a big positive that could last for several years. Likewise there should be many opportunities to follow behind other players outside M.C. drilling stepouts on the written-off acreage positions. Also on the southern edge of the Chalk
in Allen and Beauregard parishes, the company is shooting 3d targeting deep non-Chalk prospects just like they are shooting 3d for Tuscaloosa prospects in the Baton Rouge area.
FWIW, I think the well near Cheneyville is the Lyles 31 and the other well I don't believe has been yet announced.
Hope this is of interest. |
