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Strategies & Market Trends : Contrarian Investing
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To: pcyhuang who wrote (4049)12/5/2014 9:48:46 PM
From: pcyhuang   of 4080
 
An Update on CHK

CHK is near long term support. Its price has crashed with oil prices but it has too much inherent value with more than 12 million net acres of development properties (as of December 31, 2013). These are generally in the leading unconventional oil and gas development fields. CHK's stock could keep going down in sympathy with the overall oil market; but it has reached a good buy point from a value standpoint. Investors can start to average in. In time CHK's stock price should be significantly greater than it currently is. Plus CHK pays approximately a 1.78% annual dividend, which is nothing to sneeze at given two year US Treasury Note yields of 0.55%. I like CHK here; but investors should be prepared to stay in it for the long term.As a side point management is continuing to make cost improvements. For instance, recently CHK has been drilling cross unit laterals in the Haynesville shale. CHK spends about $500,000 per lateral drilled; and it gains about $2 million in NPV for every well for which it can drill a cross unit lateral. This is a new technical advance that is increasing EUR's; and it is highly fiscally sound. This is just one example of the advances CHK's management is making. The good management is another reason investors should have faith in the company

Source: Seekingalpha.com.
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