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Hey Oil Barons.......

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CHK will be allowed to restructure/waiver certain conditions. Either that or swallowed up by a bigger fish that banks will feel comfortable restructuring that debt for. I can't see a company with that much production/holdings going belly up.

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Anyone else getting into CHK? I can’t help myself. I’ve been in and out and never made much money on it but I’m picking up some shares just for shits at this price. 

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8 minutes ago, Johnny Chimpo said:

Anyone else getting into CHK? I can’t help myself. I’ve been in and out and never made much money on it but I’m picking up some shares just for shits at this price. 

I took an absolute bloodbath on it.  I'm done.  

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On 11/6/2019 at 12:54 PM, Eastwood said:

CHK will be allowed to restructure/waiver certain conditions. Either that or swallowed up by a bigger fish that banks will feel comfortable restructuring that debt for. I can't see a company with that much production/holdings going belly up.

You can’t?  Lulz. I’ve told y’all for awhile to sell your CHK stock. 

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Already starting. They are just going to be called asset backed securities rather than VPPs. Pretty much the same thing and will end up having the same result. 2020 is going to be a fucking bloodbath. 
 
https://www.wsj.com/articles/frackers-float-shale-bonds-as-traditional-investors-flee-11571606865
So how does work for smaller companies? The wells are already pledged to secure the borrowing base. Why would the banks let them take wells out of the collateral?

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1 hour ago, Johnny Chimpo said:

Anyone else getting into CHK? I can’t help myself. I’ve been in and out and never made much money on it but I’m picking up some shares just for shits at this price. 

I’m sure you will be fine...

[makes popcorn gif]

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Anyone else getting into CHK? I can’t help myself. I’ve been in and out and never made much money on it but I’m picking up some shares just for shits at this price. 

If you like the oil and gas assets seek out the senior secured bonds and buy those. They likely are trading at a discount. You will own a piece of the company (or a good piece of it) after the restructuring and have the upside. I have no idea if there is a minimum purchase amount. You might get lucky with the stock and time a bump just right but pretty soon the stock will be worthless.

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16 minutes ago, HouTex said:


If you like the oil and gas assets seek out the senior secured bonds and buy those. They likely are trading at a discount. You will own a piece of the company (or a good piece of it) after the restructuring and have the upside. I have no idea if there is a minimum purchase amount. You might get lucky with the stock and time a bump just right but pretty soon the stock will be worthless.

Pretty sure there’s a very good reason those “senior secured” bonds are trading at a discount. They’re primed by RBL debt. 

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Pretty sure there’s a very good reason those “senior secured” bonds are trading at a discount. They’re primed by RBL debt. 

Exactly. And of course both are paid ahead of stockholders. It’s not even clear that the senior notes are in the money. The point is that the stock.is probably worthless or will be soon. But if you like the assets buy a security senior to the stock.

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1 minute ago, HouTex said:


Exactly. And of course both are paid ahead of stockholders. It’s not even clear that the senior notes are in the money. The point is that the stock.is probably worthless or will be soon. But if you like the assets buy a security senior to the stock.

Bank debt might not even get par. Which means any bond holders are gonna be given a big ole shit sandwich to eat. 

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I’ve no idea about the value of the assets behind CHK. I know the stock is shit because they’re mostly gas and they’re overlevered. But they have good Marcellus assets even if they’re a terrible operator. The problem is selling assets in this market. Particularly assets when the whole world knows you’re circling the drain. I’d be concerned the bond holders get left holding a bag of dicks. I wouldn’t touch anything CHK related. 

Edited by Dr. Beeper

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1 hour ago, DCA_HORN said:
On 11/5/2019 at 12:28 PM, Lagunamadre said:
Already starting. They are just going to be called asset backed securities rather than VPPs. Pretty much the same thing and will end up having the same result. 2020 is going to be a fucking bloodbath. 
 
https://www.wsj.com/articles/frackers-float-shale-bonds-as-traditional-investors-flee-11571606865

So how does work for smaller companies? The wells are already pledged to secure the borrowing base. Why would the banks let them take wells out of the collateral?

No clue. I would imagine this could only be done by the operator/non-op owner on unencumbered assets, so perhaps PE backed assets where this might have a better option than traditional debt. I doubt there will be much of an appetite in the investment market for these type of deals, although I do know that some struggling operators are starting to peel off some ORRI on their leasehold to raise capital, which is essentially the same thing. 

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1 hour ago, Lagunamadre said:

No clue. I would imagine this could only be done by the operator/non-op owner on unencumbered assets, so perhaps PE backed assets where this might have a better option than traditional debt. I doubt there will be much of an appetite in the investment market for these type of deals, although I do know that some struggling operators are starting to peel off some ORRI on their leasehold to raise capital, which is essentially the same thing. 

Banks would never release collateral for these bonds and these bonds will never get off the ground in a meaningful way. So your imagination is correct.  

Struggling operators peeling off ORRIs on their leasehold would also be subject to bank liens. And those bank liens extend typically to all properties, even nonproducing leasehold, which should effectively provide no ORRI value to an investor anyway, unless it’s core EFS or Delaware and about to be developed.

The WSJ article was presenting an option only available for producers with unencumbered assets. In other words, producers that aren’t already in deep shit with banks, but can’t get meaningful financing as the market is the worst I’ve ever seen it. Given the state of the capital and debt markets, this bond idea seems preposterous. Harrison Williams (former Albrecht head) was pitching this idea on CNBC the other day. He may have been quoted in the article - I only read the preview. The CNBC anchor softly pressed him for how many deals like this had been done.  He responded that he’d heard of one, in a very vague manner. He came off very poorly, like he was giving meaningless info. 

The bloodbath is coming, and there is no financial engineering escape hatch for many of these groups. This is now 5 years in the making and it’s irrespective of commodity prices so long as the strip doesn’t jump back up to $70 flat by year end. 

Edited by Dr. Beeper

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Natgas has got to come back down sometime.  This volatile shit is giving me an ulcer.  


Well, we’re back down .... not sure how low you want it to go

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Is Harry Perrin in O&G Houston related to our former Athletic Director, Mike?  

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3 hours ago, Johnny Chimpo said:

Hahaha. Fair points. I am just dipping in the pinkey toe, couple hundred shares. There must be one last bounce left 😄

I’ve done the “on the verge of bankruptcy” scratch off lottery several times with a $100 or so worth of shares - none have hit so far.  But I have a lot of tickers that end in ‘Q’ littering my trading account to show for it.

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5 hours ago, Dr. Beeper said:

You can’t?  Lulz. I’ve told y’all for awhile to sell your CHK stock. 

But had I sold it like you said I would have missed out on this great character building opportunity to watch my investment circle the drain.

So there!!!

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I'm inclined to agree.

Now, if I could just get this tourniquet a little bit tighter.

Besides, I gotta a new tip the other day and I'm goin' balls deep -

1*bGLa52zBZfe5dTEq1LU14Q.png

Edited by Cajun

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Is Harry Perrin in O&G Houston related to our former Athletic Director, Mike?  

Yes. Brothers. Harry is a good guy.

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8 hours ago, Cajun said:

But had I sold it like you said I would have missed out on this great character building opportunity to watch my investment circle the drain.

So there!!!

I call it paying tuition. My problem is I keep taking the same expensive class over and over. 

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Quote

Leading Haynesville basin producer Comstock Resources is in discussions to buy the Haynesville assets of Chesapeake Energy in Louisiana, Reuters reported on Wednesday, citing people with knowledge of the talks, a week after Chesapeake warned that it may not be able to service its debt if low prices persist.   

Chesapeake and Comstock Resources of Dallas Cowboys owner Jerry Jones have hammered out a basic structure for the potential deal that could be valued at more than US$1 billion, according to Reuters’ sources. The companies could settle on a deal by the end of this year, the sources said, noting that the talks don’t guarantee that an agreement will be reached.

 

 

Comstock Resources has been amassing assets in Haynesville in recent months, while Chesapeake Energy warned last week that its ability to comply with the covenants under its revolving credit facilities and other indebtedness could impact its ability to continue as a going concern.

In a SEC filing, Chesapeake said that “If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern.” Related: The EIA Is Grossly Overestimating U.S. Shale

Chesapeake also said that it is slashing its 2020 capital expenditure forecast by around 30 percent, and expects to reduce 2020 production and general and administrative expenses by some 10 percent. The company, which helped propel the shale gas revolution in the late 2000s, said it has released its operated rigs and completion crews in the Haynesville Shale for the rest of the year.

After the warning, Chesapeake’s shares tumbled last week and continued to slump through Tuesday, when the stock price dropped to a 25-year-low.

 

 

Commenting on the market volatility, Chesapeake’s CEO Doug Lawler said in a statementon Tuesday:

“We continue to pursue strategic levers to reduce debt, including asset sales, capital markets transactions, and focus on cost discipline.”

Comstock Resources, for its part, became in June the Haynesville Basin leader after buyingprivately held natural gas firm Covey Park Energy in a cash and stock deal valued at US$2.2 billion, including the assumption of Covey Park’s outstanding debt.

When Jerrah Jones comes to pick the meat left on your bones the fat lady is definitely in play.

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3 hours ago, Storm the Field said:

Range Resources closed their Houston office and let a bunch of people go today. The one they inherited when they merged with Memorial back in 2016.

Memorial.  Ha. I’m of the opinion there are never any true mergers. Every “merger” has a pitcher and every one has a catcher. 

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On 11/12/2019 at 7:16 PM, Dr. Beeper said:

Banks would never release collateral for these bonds and these bonds will never get off the ground in a meaningful way. So your imagination is correct.  

Struggling operators peeling off ORRIs on their leasehold would also be subject to bank liens. And those bank liens extend typically to all properties, even nonproducing leasehold, which should effectively provide no ORRI value to an investor anyway, unless it’s core EFS or Delaware and about to be developed.

The WSJ article was presenting an option only available for producers with unencumbered assets. In other words, producers that aren’t already in deep shit with banks, but can’t get meaningful financing as the market is the worst I’ve ever seen it. Given the state of the capital and debt markets, this bond idea seems preposterous. Harrison Williams (former Albrecht head) was pitching this idea on CNBC the other day. He may have been quoted in the article - I only read the preview. The CNBC anchor softly pressed him for how many deals like this had been done.  He responded that he’d heard of one, in a very vague manner. He came off very poorly, like he was giving meaningless info. 

The bloodbath is coming, and there is no financial engineering escape hatch for many of these groups. This is now 5 years in the making and it’s irrespective of commodity prices so long as the strip doesn’t jump back up to $70 flat by year end. 

I agree with all of that. 

We, minerals company, have had at least one struggling operator offer to peel off ORRI in the delaware and they were as mortgaged up as possible, we politely declined, so we didn't even get into the due diligence period where we would have figured out how that would have been possible under their credit credit agreement. 

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2 hours ago, Lagunamadre said:

I agree with all of that. 

We, minerals company, have had at least one struggling operator offer to peel off ORRI in the delaware and they were as mortgaged up as possible, we politely declined, so we didn't even get into the due diligence period where we would have figured out how that would have been possible under their credit credit agreement. 

They seriously could’ve attempted to do it under the banks’ noses and might’ve been successful, but it might’ve cost your firm ultimately in a bankruptcy. I’d be interested to know who it was. 

If you re-engage with them, for whatever reason, I’d ensure their bank(s)/creditor(s) is/are aware of what they’re doing first.  Otherwise it’s a nonstarter for you. 

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11 minutes ago, Dr. Beeper said:

They seriously could’ve attempted to do it under the banks’ noses and might’ve been successful, but it might’ve cost your firm ultimately in a bankruptcy. I’d be interested to know who it was. 

If you re-engage with them, for whatever reason, I’d ensure their bank(s)/creditor(s) is/are aware of what they’re doing first.  Otherwise it’s a nonstarter for you. 

Don't worry, it was a non-starter for us and remains that way. 

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Anybody familiar with what's going on in Guyana with the new found oil? I have to go down there for work but can't get a hotel. They are booked up everywhere b/c of so many oil conferences for the foreseeable future. 

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2 hours ago, Bruh Man said:

Anybody familiar with what's going on in Guyana with the new found oil? I have to go down there for work but can't get a hotel. They are booked up everywhere b/c of so many oil conferences for the foreseeable future. 

Yes. I’ve got an acquaintance who’s hitting me up to do a lot of investing in Guyanese infrastructure projects - like hotels. No thanks. 

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7 hours ago, Bruh Man said:

Anybody familiar with what's going on in Guyana with the new found oil? I have to go down there for work but can't get a hotel. They are booked up everywhere b/c of so many oil conferences for the foreseeable future. 

Reminds me of Pearsall back in 2014 when I ponied up for a dove lease down there.

Ended up sleeping in my Suburban.

Ain't payin' no $279 for a night with Tom Bodet.

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4 hours ago, Dr. Beeper said:

Yes. I’ve got an acquaintance who’s hitting me up to do a lot of investing in Guyanese infrastructure projects - like hotels. No thanks. 

What could go wrong?

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Reminds me of Pearsall back in 2014 when I ponied up for a dove lease down there.
Ended up sleeping in my Suburban.
Ain't payin' no $279 for a night with Tom Bodet.
If you could find one. And more like 400. I remember years ago before the EF really took off staying in one of those type motels. Sign by the sink saying no bird cleaning shocked me at the time. Not surprising in retrospect.

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Yes. I’ve got an acquaintance who’s hitting me up to do a lot of investing in Guyanese infrastructure projects - like hotels. No thanks. 
Sounds like there is demand for hotels though

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6 minutes ago, Updawg said:
5 hours ago, Dr. Beeper said:
Yes. I’ve got an acquaintance who’s hitting me up to do a lot of investing in Guyanese infrastructure projects - like hotels. No thanks. 

Sounds like there is demand for hotels though

Yep. But I don’t have the time or energy to navigate through a South American government. I’d rather respond to Derka’s last post on Rick Barnes. 

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46 minutes ago, Updawg said:
5 hours ago, Dr. Beeper said:
Yes. I’ve got an acquaintance who’s hitting me up to do a lot of investing in Guyanese infrastructure projects - like hotels. No thanks. 

Sounds like there is demand for hotels though

Yeah, there was a demand for hotels in So. Texas too.

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OPEC+ agrees to extend their current cuts for another quarter and take an additional 500K barrels/day off the market. Was pretty well telegraphed over the past few days, so only a modest increase in WTI of about 1.25%. Sitting right above $59 as of this post.

Gonna be interesting to see what happens if prices just continue to hover in the $50-60 range throughout 2020. I was at the PBLA Xmas party out in Midland earlier this week and got a general sense that most companies are in a holding pattern at the moment. Nobody wants to make any big moves while WTI stays stuck in that narrow range.

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