Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (26134)	2/23/2007 11:42:04 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78715

regarding CHK the PV valuation is based on 5.65$ NYMEX price. At this price the PV10 value of CHK reserves is 10B$ after tax. i do not care what they state in their presentation, this is what is is, their CFO and CEO has signed the 10K. They are stating in their earnings release that 0.1$ NG price differential is equivalent to 350M$ (I assume pre tax). So if we concur that NG now is 2$ higher than it was on 12/31) than we can 7B$ pre tax to the NPV which is at most 5B$ post tax. So if we add those 5B$ to the 10B$(12/31) NPV plus other assets 2.8B$ I arrive at 17.8B$ which is still substantially less than 22.8B$ EV value. Regarding spending 2.4B$ and selling for 7.75B$ - this again is managements math and does not match the cash flow statement and the balance sheet. CHK has embedded cost of 2.5$$/mcfe in the ground, that is their historical finding cost, mow you need to add production cost (0.81$/mcfe) and mnay other expense that add up to about 2.15$/mcfe. So it means that they have a total cost of 4.65$/mcfe. Anyways, i do not want to go into too much detail but my point is that you need to cross check what management says with what's going on with the balance sheet and the income statement. For me at least the verdict is that the numbers don't add up, that why i don't own CHK.