Chesapeake Energy Corporation (NYSE: CHK) is engaged in the acquisition, exploration, and development of properties for the production of natural gas and crude oil. The firm is the second-largest independent producer and third-largest overall producer of natural gas in the United States. Company properties are located in the US midcontinent region, along the Gulf Coast, in the Permian Basin, and in the Ark-La-Tex region. It owns interests in nearly 39,000 producing wells and has nearly eleven trillion cubic feet equivalent of proved reserves.
Chesapeake pleased investors last week, when it announced that it had formed a joint venture with Goodrich Petroleum (NYSE: GDP) that would give it working interests in deep strata of the Haynesville Shale of East Texas and Louisiana. The move is expected to make Chesapeake the largest U.S. natural-gas producer, pushing it past BP (NYSE: BP) and Anadarko Petroleum (NYSE: APC).
TheStreet.com's Jim Cramer says these stocks rise because they're doubly blessed. Integrateds fall because they aren't.
So many people have been puzzled why the major integrateds have not moved with the last $30 rally in oil's spot price. The answer?
They can't take advantage of it.
They either didn't believe, and therefore didn't drill, or they have been so in the crosshairs of sovereign lunacy that they haven't been able to. They didn't have the rigs or they judged that the rigs were so expensive that, like 1980, they would look like dopes when oil came back to $40-$50, where many thought it would. (Go back and check even last year's research for price targets, most of which were from the oil companies' themselves.)
Or maybe it didn't matter anyway. So many of the contracts these companies have signed with governments around the world are either being abrogated or just outright confiscated that you have to ask yourself "Who can invest under those scenarios?" Exxon (NYSE: XOM) (Cramer's Take) in Venezuela. Shell (NYSE: RDS.A) (Cramer's Take) and now BP (NYSE: BP) (Cramer's Take) in Russia. You can't continually invest billions and then write it off because the contracts you wrote don't mean anything.
The stock market is in turmoil today and the reasons can be found elsewhere (including in some peoples' imaginations). But if you are a bottom line investor, then here is where you should be looking. Food and energy exploration are the places to be.
Things can change rapidly, but as of right now food related stocks like Bunge Ltd. (NYSE: BG), the largest company involved with soy based products, and Potash Corp. of Saskatchewan (NYSE: POT), the largest fertilizer company, are up.
In the exploration sector, Anadarko Petroleum (NYSE: APC), the oil, gas and exploration company, Loews Corporation (NYSE: LTR), which is the majority shareholder in Diamond Offshore Drilling and is separating from its tobacco interests, and Precision Drilling TR (NYSE: PDS), the Canadian contract driller that is expanding into the lower 48 states, are all up.
All five stocks have out performed the market this year and that trend does not seem to be in jeopardy yet.
I will update this post with final results after the market close to see how the story ends.
UPDATE: four of the five closed in positive territory when all the major indices were in the red.
APC finished down to $77.69,-0.54 (-0.69%)
BG finished up to $122.40, +0.47 (+0.39%)
LTR finished up to $48.95, +0.45 (+0.93%)
PDS finished up to $26.95, +0.49 (+1.85%)
POT finished up to $223.10 +2.54 (+1.15%)
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of APC and PDS.
TheStreet.com's Jim Cramer says as crude goes higher, it makes more and more sense to go for other energy options.
Every day that oil goes up, there is a new set of technologies that had formerly been priced out of the market that comes back to life. Let's take wind. Wind, in itself, just seems so stupid. It needs, well, wind. Much of our country doesn't have enough wind to make this economic. There are only certain regions that can really benefit.
But when oil is at $130, SO WHAT! The parts of the country that have a lot of wind are nuts not to do wind. Wind, when properly integrated into the grid, costs 4 cents a kilowatt. The issue has been shortage of everything that goes into a windmill, because nobody in the chain thought it was worthwhile to mass-produce them. So even though the cost is low, no companies felt it was worth it because the market seemed so niche.
In other words, it was the wind supply chain that was the problem, because we only thought in terms of gigantic plants that created energy. But with nuclear not an option -- never will be in this country, if you ask me -- natural gas falling out of favor post-Katrina as being unreliable, and coal simply intolerable because of the climate problems, wind has become the most natural fuel of all.
Today was a very gloomy day in the stock market with Oil reaching new highs and everything else losing -- almost. Among the few winners, and I mean very few, Apple Inc. (NASDAQ: AAPL), oil, and specialty steel were up. I went through my watch list and found this very short list of winners:
TheStreet.com's Jim Cramer says lots of companies now thrive with crude up here.
Oil's not a tax on everything -- it's a tax on the consumer. That's what I come down to when I see the charts this weekend and ponder what's happening in so much of industrial America.
Company after company that I examine -- the new techs, as I call them -- actually benefit from higher oil prices. Or they can pass them on with ease, because of the worldwide demand being so strong.
Take all of the companies involved with making a Boeing (NYSE: BA) (Cramer's Take): Boeing itself, Alcoa (NYSE: AA) (Cramer's Take), Honeywell (NYSE: HON) (Cramer's Take) and Precision Castparts (NYSE: PCP) (Cramer's Take) being good examples. Each of these is necessary because the new Dreamliner burns lots less fuel, and with fuel the biggest airline cost, it stands to reason that higher energy prices make the plane more desirable even at a higher price point.
Do stock market analysts take creative writing or are they the ultimate bandwagon guys? The lame information provided by stock market analysts keep providing more fodder for my rants. Last Friday -- Lehman raised Anadarko Petroleum (NYSE: APC) to Overweight from Equal Weight citing relative valuation and strong U.S. gas exposure....well duh!
I have ranted and raved about the poor performance of most analysts for almost the entire time I have been writing for BloggingStocks but the wonders never cease. The stock is at a 52 week high and now they take notice. I don't have their "training" yet I was pushing APC at $40, its low. It closed at $78.15 near its all time high and now Lehman makes the call. To quote a 90 year old Wall Streeter when asked to share what he had learned from his 70 years in the market "Nobody knows nuttin". The following is the two year chart for APC.
The Motley Fool ranted in a similar vain when they discussed a study by Patrick Cusatis and J. Randall Woolridge of Pennsylvania State University that studied 20 years' worth of published earnings estimates made by Wall Street industry analysts. They discovered that analysts were consistently overly optimitsic and that practically speaking, you should ratchet them down to the tune of around 40%; or you'll be sorry.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of APC.
MOST NOTEWORTHY: Fiserv, Arbitron and Anadarko Petroleum were today's noteworthy upgrades:
JMP Securities upgraded Fiserv (NASDAQ: FISV) to Outperform from Market Perform citing a reversal of the Bank of America in-house risk, potential re-branding initiatives, and relative pricing stability.
Bear upgraded Arbitron (NYSE: ARB) to Outperform from Peer Perform citing PPM earnings growth potential, strong industry position, defensive nature of shares, and it views the company as an acquisition target.
Lehman raised Anadarko Petroleum (NYSE: APC) to Overweight from Equal Weight citing relative valuation and strong U.S. gas exposure.
OTHER UPGRADES:
Goldman added Wal-Mart (NYSE: WMT) to its Conviction Buy List.
During Thursday's trading, Anadarko Petroleum (NYSE: APC) hit an all-time high of $78.75 and closed at $77.62. Anadarko was one of my first recommendations after I started writing for BloggingStocks, and is nearing 100% appreciation from the $40 price tag it had when we acquired it.
The 10-year chart below indicates the strong long-term performance of Anadarko, rising about 500% and paying dividends to boot. I cannot say the stock is a bargain at recent highs, but I can emphatically state that this company belongs on your watch list.
After yesterday's closing bell Anadarko Petroleum (NYSE: APC) reported strong earnings. Excluding nonrecurring items, Anadarko's earnings totaled $1.44 per share for the quarter. On average, analysts were expecting just $1.22 per share. When compared with last year, Anadarko's quarterly profit per share surged more than 40%.
Day one of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Management Advisory Committees meeting: Purdue Pharma's NDA for Oxycontin.
Anadarko Petroleum (NYSE:APC) to report Q1 earnings; conference call Tuesday at 10:00am.
Tuesday, May 6
Day two of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Mgmt Advisory Committees meeting: Cephalon's (NASDAQ:CEPH) sNDA for Fentora.
Molson Coors (NYSE:TAP) to report Q1 earnings; conference call at 12:00pm.
TheStreet.com's Jim Cramer says it's not a strong-dollar sell -- the story here is still too good.
Why did natural gas go down last week? What was that? Inventories were down. The commodity price was up. The fuel itself is green. It is better than ethanol and it is being used to fuel an increasing numbers of cars and trucks.
The whole move down had to have been triggered by something, right? Yeah, how about the fact that the stocks were up a lot and were due for some profit-taking.
Recall that the real "reason" they went down is that the dollar "got strong," and that was supposed to trigger commodity deflation; natural gas is a commodity and is therefore going to go down. (Barron's made this very case this weekend, oblivious to the facts, but loving the theory.)
This kind of thinking is just so stupid that it shows you can get chance after chance after chance to own the fuel that can take care of the nation if we just let it. Of course, the stocks began to come back later in the week as threats of supply cut-offs of crude -- they came true this weekend -- made natural gas declines virtually impossible, despite the "sense" that it peaked. So the money has came back and I believe will continue to come back.
engaged in the acquisition, exploration, and development of properties for the production of natural gas and crude oil. The firm is the second-largest independent producer and third-largest overall producer of natural gas in the United States. Company properties are located in the US midcontinent region, along the Gulf Coast, in the Permian Basin, and in the Ark-La-Tex region. It owns interests in nearly 39,000 producing wells and has nearly eleven trillion cubic feet equivalent of proved reserves.
The stock market is in turmoil today and the reasons can be found elsewhere (including in some peoples' imaginations). But if you are a bottom line investor, then here is where you should be looking. Food and energy exploration are the places to be.
Today was a very gloomy day in the stock market with Oil reaching new highs and everything else losing -- almost. Among the few winners, and I mean very few,.gif){kind=logo}
Apple shares rise on report Steve Jobs is free of cancer
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