I recently listened to the last quarterly conference call and CEO Aubrey laid out exactly what he believes CHK properties are worth.
1) Marcellus - $15 bil
2) Haynesville/Bossier - $15bil
3) Barnett - $7bil
4) Fayetteville - $5bil
5) Eagleford - $4bil
6) Conventional assets - $8bil
7) Midstream/Drilling Rigs - $6bil
8) Drilling carries - $3bil
9) 12 early stage oil plays - $5bil
Total assets $68bil
Less debt $12bil
Net assets $56bil
Total shares 758mil
Value per share $73.88
Share price $21
Aubrey is a salesman, that is to be sure. And you have to figure in some income taxes on these values as the acreage for most of it was acquired at prices that are fractions of what it is selling for now. But you can arrive at much of the values he lays out by looking at recent transactions.
I think it would be hard to argue that the net asset value of the company is not significantly higher than the current share price.
The problem is, what is going to force the stock market to recognize this if we don't get a nice run in natural gas prices ?
Aubrey lost most of the shares that he held in 2008 so he is not going to ever be motivated to sell the company and try and realize value for shareholders.
The plan management has is to reduce debt by about $3bil to achieve an investment grade rating. They believe this will help the market to focus on the asset value instead of worry about the debt. The problem is that we have heard this song and dance before from Aubrey and company and they did not follow through on it.
I'm going to keep watching. As I've mentioned before, if I thought an upturn in natural gas was coming this would be my first choice.
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