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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Roebear who wrote (18282)	9/4/2002 5:09:36 PM
From: Frank Pembleton	Read Replies (3) \| Respond to of 36161

Roebear... your opinion does matter ... it matters so much, that I'd like to shoot them down if only you'd give me the chance to do so. <vbg> Regards, Frank P.

To: Roebear who wrote (18282)	9/5/2002 8:31:50 AM
From: Art Bechhoefer	Respond to of 36161

Roebear, as you note, debt levels at CHK are rather high, but my understanding of this debt is that it was issued in order to purchase some fairly good quality properties, mostly gas producing. Chesapeake is based in Oklahoma, and a substantial amount of its shares are held by the Kerr family (the late Senator Kerr). Their hedging operations to an outsider like me appear to be well thought out. Given that they have sold forward 100 percent of their oil production at a fixed price of $27.50 and about 60 percent of their gas production at $4.00, I don't feel that their ability to service the debt is impaired. In fact, knowing where the money's coming from in advance should calm the bankers holding this debt. I also note in one of the earlier replies the falling level of petroleum and gas stocks. If the price of these commodities skyrockets, then Chesapeake will have made a poor decision locking in its future revenues at these levels. However, such a rise in the NEAR future would be devastating to many Republicans up for election in Congress. So I am not expecting any near term shortages. Maybe early next year, but not now, even if there is a war in Iraq. Art