CHKs Hedge Position

To protect its cash flows against lower commodity prices, Chesapeake Energy has hedged 74% of its projected 2016 natural gas production volumes, 71% of its projected 2016 oil production volumes, and 32% of its projected 2016 natural gas liquids production volumes.

As of 10/25/2017, for Speculative accounts only, I’m bullish on the out of the money 1/20/2017 $7 calls selling for $0.47.

Spreadsheet with ratio analysis of the top 5 publicly traded natural gas producers available with subscription.

Freezewatch Tuesday Night

Overnight, temperatures will be chilly dropping into the 30s with sub-freezing temperatures likely north and west of the city.

As mentioned, Freeze watches have been issued, but also frost advisories could be issued sometime on Tuesday for coastal sections as a result of the near freezing temperatures. Despite the sunshine, temperatures on Wednesday will only climb to around 50.

The next system comes in late Thursday into Friday morning giving some rain across the region. Temperatures more or less will be in the 50s at this time.

Morris, Hunterdon, Middlesex, Monmouth, Ocean, Fairfield, New Haven, Passaic, Bergen, Essex, Union, Putnam, Rockland, Westchester.

 

U.S. Natural Gas Futures Slide to 5-Week Low on Warm Midwest

Tumbling gas futures reflect traders’ concern that another no-show winter will leave a glut of the fuel in storage, weighing on prices next year. While declining production from shale basins and record demand from power plants has helped to narrow a supply surplus, stockpiles remain above normal.

Gas futures for November delivery fell 10.6 cents, or 3.5 percent, to $2.887 per million British thermal units at 10:20 a.m. on the New York Mercantile Exchange. Prices earlier dropped to $2.852, the lowest since Sept. 15. Futures capped the biggest one-week drop since February last week, according to Bloomberg.

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Japan pushes LNG Consumption

Japan, the world’s biggest importer of liquefied natural gas (LNG), is drawing up plans to get trucks and ships to use the fuel, partly to help cut carbon emissions but also to diversify energy sources in the freight sector for security reasons.

Gas has taken on added importance since the 2011 Fukushima disaster led to the shutdown of Japan’s nuclear power sector. It now accounts for more than 40 percent of electricity generation and LNG imports hit a record high of 89 million tonnes in the year to March.

Brokerage Houses Raise CHK Price Targets

Merrill Lynch raised its rating on the stock from Underperform to Neutral and raised its price target on the stock from $6 to $10.

Barclays analysts saw things differently: “We remain Underweight [on Chesapeake] shares due to high financial leverage and continued negative free cash flow outlook.” Barclays’ price target is $4, with an upside case of $15 per share and a downside case of $1 per share.

Other ratings and price target changes include:

  • Deutsche Bank maintained a Hold rating and raised its price target from $6 to $9.
  • Nomura raised its rating from Reduce to Neutral and its price target from $4 to $7.50.
  • UBS raised its price target from $4.25 to $6, with a Sell rating on the stock.

Shell Among New LNG Sellers for Asia Hub

Singapore, which is vying to become a regional center for the trading of liquefied natural gas in Asia, picked Royal Dutch Shell Plc (NYSE: RDS-A) and Pavilion Gas Pte Ltd. as its next suppliers of the fuel.

The companies will have exclusive rights to sell 1 million metric tons of LNG annually for up to 3 years, with imports beginning in 2017, the city-state’s Energy Market Authority said in a statement.

Colder Weather Impending

Colder weather impending, even a frost freeze warning for the Northeast corridor for Wednesday night.

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