Cramer Rates Chesapeake Energy : SELL SELL SELL

Our favorite AVOID gets a celebrity endorsement:

Chesapeake Energy is an oil and natural gas company based in Oklahoma City with positions in the Eagle Ford, Utica, Granite Wash, Cleveland, Tonkawa, Mississippi Lime, and Niobrara unconventional liquids plays.

TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

“We rate CHESAPEAKE ENERGY CORP (CHK) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.”

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 979.8% when compared to the same quarter one year ago, falling from $425.00 million to -$3,739.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHESAPEAKE ENERGY CORP’s return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $423.00 million or 67.23% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm’s growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock’s performance over the last year: it has tumbled by 59.08%, worse than the S&P 500’s performance. Consistent with the plunge in the stock price, the company’s earnings per share are down 1159.25% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock’s sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • CHESAPEAKE ENERGY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CHESAPEAKE ENERGY CORP increased its bottom line by earning $1.83 versus $0.68 in the prior year. For the next year, the market is expecting a contraction of 109.8% in earnings (-$0.18 versus $1.83).
  • You can view the full analysis from the report here: CHK Ratings Report

Offshore your Portfolio http://www.youroffshoremoney.com 

Cramer Says : Sell Apache

 

Apache Corp. (APAGet Report)
Market Cap: $22.3 billion
Sector: Energy/Oil & Gas Explorations & Production
TheStreet Ratings: Sell, D
Beta: 1.48
Year-to-date return: -5.8%

Apache Corporation, an independent energy company, explores, develops, and produces natural gas, crude oil, and natural gas liquids.

TheStreet Ratings said: “We rate APACHE CORP (APA) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.”

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 2070.8% when compared to the same quarter one year ago, falling from $236.00 million to -$4,651.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, APACHE CORP’s return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $650.00 million or 71.65% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm’s growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock’s performance over the last year: it has tumbled by 39.06%, worse than the S&P 500’s performance. Consistent with the plunge in the stock price, the company’s earnings per share are down 749.47% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock’s sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • APACHE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, APACHE CORP swung to a loss, reporting -$13.07 versus $5.95 in the prior year. This year, the market expects an improvement in earnings (-$1.03 versus -$13.07).

Stocks To Avoid : Chesapeake Our Top Avoid In Natural Gas,

occupy wall street cartoon

 

These are this Thursday’s top analyst upgrades, downgrades and initiations.

Check out Seeking Alpha for the unending series of article seeking  to pick the bottom – in natural gas, shipping , drilling and compare that to our consistent  AVOID ratings:

Chesapeake Energy Corp. (NYSE: CHK) was downgraded to Perform from Outperform at Oppenheimer. That means that the firm now has no target to speak of, and the $13.06 closing price compares to a consensus price target of $15.67 and a 52-week range of $12.89 to $29.92. The downgrade was based on growing losses and a cash flow deficit.

Rite Aid Corp. (NYSE: RAD) was started as Outperform with a $10 price target (versus a $8.64 close) at Credit Suisse. The firm believes Rite Aid is one of the more compelling risk-reward profiles in the space and that it has a compelling M&A potential.

Toll Brothers Inc. (NYSE: TOL) was raised to Outperform from Neutral and the target price was raised to $42 from $40 (versus a $36.81 close) at Credit Suisse. The firm believes that investors underappreciate its earnings potential, and the firm raised estimates to reflect the updated City Living pipeline.

Transocean Ltd. (NYSE: RIG) was started as Underweight with a price target of $14 (versus a $19.08 close) at Barclays. Transocean’s consensus price target is $14.17, and the 52-week range is $13.28 to $46.12.

Harley-Davidson Inc. (NYSE: HOG) was downgraded to Neutral from Outperform with a price target cut to $57.00 from $74.00 (versus a $54.69 close) at Wedbush. Harley-Davidson has a consensus price target of $66.00 and a 52-week range of $53.04 to $72.37.

 

Natural Gas Futures Plunge 4% after bearish storage data

© Reuters.  U.S. natural gas prices tumble to 3-week low after supply report

Investing.com – Natural gas futures plunged sharply to hit a three-week low on Thursday, after data showed that U.S. natural gas supplies rose more than expected last week.

On the New York Mercantile Exchange, natural gas for delivery in July tumbled 11.8 cents, or 4.16%, to trade at $2.729 per million British thermal units during U.S. morning hours. Prices were at around $2.790 prior to the release of the supply data.

A day earlier, natural gas prices shed 0.2 cents, or 0.07%, to close at $2.847. Futures were likely to find support at $2.710 per million British thermal units, the low from May 7, and resistance at $2.915, the high from May 27.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended May 22 rose by 112 billion cubic feet, compared to expectations for an increase of 99 billion and following a build of 92 billion cubic feet in the preceding week.

Supplies rose by 113 billion cubic feet in the same week last year, while the five-year average change is an increase of 95 billion cubic feet.

Total U.S. natural gas storage stood at 2.101 trillion cubic feet as of last week. Stocks were 737 billion cubic feet higher than last year at this time and 18 billion cubic feet below the five-year average of 2.119 trillion cubic feet for this time of year.

Meanwhile, weather forecasting models called for slightly warmer than average temperatures across the U.S. over the next ten days, although not yet enough to significantly boost cooling demand.

Spring usually sees the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

Elsewhere on the Nymex, crude oil for delivery in July fell 79 cents, or 1.37%, to trade at $56.72 a barrel, while heating oil for July delivery dropped 0.41% to trade at $1.852 per gallon.

Half of U.S. Fracking Companies Will Be Sold OR Dead This Year

Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford International Plc said.
There could be about 20 companies left that provide hydraulic fracturing services, Rob Fulks, pressure pumping marketing director at Weatherford, said in an interview Wednesday at the IHS CERAWeek conference in Houston. Demand for fracking, a production method that along with horizontal drilling spurred a boom in U.S. oil and natural gas output, has declined as customers leave wells uncompleted because of low prices.
There were 61 fracking service providers in the U.S., the world’s largest market, at the start of last year. Consolidation among bigger players began with Halliburton Co. announcing plans to buy Baker Hughes Inc. in November for $34.6 billion and C&J Energy Services Ltd. buying the pressure-pumping business of Nabors Industries Ltd.
Weatherford, which operates the fifth-largest fracking operation in the U.S., has been forced to cut costs “dramatically” in response to customer demand, Fulks said. The company has been able to negotiate price cuts from the mines that supply sand, which is used to prop open cracks in the rocks that allow hydrocarbons to flow.
Oil companies are cutting more than $100 billion in spending globally after prices fell. Frack pricing is expected to fall as much as 35 percent this year, according to PacWest, a unit of IHS Inc.
While many large private-equity firms are looking at fracking companies to buy, the spread between buyer and seller pricing is still too wide for now, Alex Robart, a principal at PacWest, said in an interview at CERAWeek.
Fulks declined to say whether Weatherford is seeking to acquire other fracking companies or their unused equipment.
“We go by and we see yards are locked up and the doors are closed he  said. “It’s not good for equipment to park anything, whether it’s an airplane, a frack pump or a car.”

Oil’s Collapse : Cost North American Investors $390-billion since June

The bear market has wiped out a total of US$393 billion since June — US$353 billion from the shares of 76 companies in the Bloomberg Intelligence North America Exploration & Production index, and almost US$40 billion from high-yield energy bonds, issued by many shale drillers, according to a Bloomberg index.

The bear market has wiped out a total of US$393 billion since June — US$353 billion from the shares of 76 companies in the Bloomberg Intelligence North America Exploration & Production index, and almost US$40 billion from high-yield energy bonds, issued by many shale drillers, according to a Bloomberg index. The exception : Jack A. Bass Managed Accounts

Investors have a message for suffering U.S. oil drillers: We feel your pain- and our services are open to your potential gains.

Investors pumped more than US$1.4 trillion into the oil and gas industry the past five years as oil prices averaged more than US$91 a barrel. The cash infusion helped push U.S. crude production to the highest in more than 30 years, according to data compiled by Bloomberg.

Now that oil prices have fallen below US$45, any euphoria over cheaper energy will be tempered by losses that are starting to show up in investment funds, retirement accounts and bank balance sheets. The bear market has wiped out a total of US$393 billion since June — US$353 billion from the shares of 76 companies in the Bloomberg Intelligence North America Exploration & Production index, and almost US$40 billion from high-yield energy bonds, issued by many shale drillers, according to a Bloomberg index.

“The only thing people are noticing now is that gas prices are dropping,” said Sean Wheeler, the Houston-based co-chairman of the oil and gas industry team for law firm Latham & Watkins LLP. “People haven’t noticed yet that it’s also hitting their portfolios.”

The money flowing into oil and gas companies around the world in the last five years came from a variety of sources. The industry completed US$286 billion in joint ventures, investments and spinoffs, raised US$353 billion in initial public offerings and follow-on share sales, and borrowed US$786 billion in bonds and loans.

50 Cents

The crash caught investors and lenders by surprise. Eight months ago, Houston-based oil producer Energy XXI Ltd. sold US$650 million in bonds. Demand was so high that the company more than doubled the size of the offering, company records show. The debt is now trading for less than 50 cents on the dollar, and the stock has declined 88%.

Energy XXI, which has more than US$3.8 billion in debt, is one of more than 80 oil and gas companies whose bonds have fallen to distressed levels, meaning their yields are more than 10 percentage points above Treasury debt, as investors bet the obligations won’t be repaid, according to data compiled by Bloomberg.

The stocks and bonds of Energy XXI and other struggling energy firms have been bought up by pension funds, insurance companies and savings plans that are the mainstays of Americans’ retirement accounts. Institutional investors had more than US$963 billion tied up in energy stocks as of the end of September, according to Peter Laurelli, a New York-based vice president of research with eVestment, an analytics firm in Marietta, Georgia, that gathers data on about US$22 trillion of institutional strategies.

Bank Lenders

Energy XXI’s second-largest reported shareholder is a group of funds managed by Vanguard Group Inc., the biggest U.S. mutual-fund firm, according to data compiled by Bloomberg. The top reported owner of the bonds Energy XXI issued in May is Franklin Resources Inc. in San Mateo, California, also known as Franklin Templeton Investments, which manages multiple funds that bought Energy XXI’s debt, according to data compiled by Bloomberg.

Energy XXI didn’t return calls and e-mails seeking comment. The company has “plenty of liquidity,” Greg Smith, a spokesman, said in a December interview.

A reckoning may also be in store for Energy XXI’s bank lenders. The company, which drills in the Gulf of Mexico, has tapped US$974 million of a US$1.5 billion credit line extended by a group of banks including Gulfport, Mississippi-based Hancock Holding Co.’s Whitney Bank; Amegy Bank of Texas, a subsidiary of Salt Lake City-based Zions Bancorporation; and Comerica Inc. in Dallas, according to data compiled by Bloomberg. Energy XXI has also borrowed money from banks in the U.K., Australia, Canada, Spain and Japan.

Struggling Drillers

The three U.S. banks are also among the lenders to other struggling drillers. The loans are backed by oil reserves that are worth less at today’s prices than they were when banks last performed scheduled revaluations of the collateral.

Representatives of Amegy, Comerica and Hancock declined to comment on the performance of specific loans. Shares of Zions have declined 15% this month. Comerica is down 9.8%, and Hancock slid 15%.

“This is a big deal for banks in states like Texas where oil is one of the most prominent businesses,” said Brady Gailey, an Atlanta-based analyst at Stifel Financial Corp.’s KBW unit. “There are going to be loan losses and it’s going to hit multiple banks that have exposure to that credit. It will slow economic growth, it could ding real estate values, banks will lose money and their stock will get slammed.”

Regional Lender

One regional lender with energy exposure is Lafayette, Louisiana-based MidSouth Bancorp Inc., with 21% of its US$1.25 billion of lending tied to oil and gas, according to regulatory filings.

Rusty Cloutier, MidSouth’s chief executive officer, said he’s not worried about the oil decline hurting his business because the bank’s portfolio consists of experienced oil and gas companies.

“There will be some players that get hurt, but the real players in the energy market aren’t going anywhere,” Cloutier said. “Companies who are leveraged very highly and got into the business not long ago, those are the ones that are going to get hurt.”

Hundreds of smaller banks in states such as Texas, Colorado, Oklahoma and North Dakota have also plunged into energy lending during the oil boom.

‘Very Concerned’

Gil Barker, the Office of the U.S. Comptroller of the Currency’s top overseer of community banks in states including Texas and Oklahoma, said he has confidence that the smaller lenders were doing what they should, though circumstances might change.

“We’re very concerned about the banks located in these oil-producing areas,” he said. “A prolonged time of low oil prices is really going to cause banks significant problems.”

More people will be affected than realize it, said Michael Shaoul, who helps oversee about US$9 billion as CEO of Marketfield Asset Management LLC in New York. “So much of this has ended up in 401(k)s and in pension funds and in mutual funds, and that’s where the bulk of the pain is going to be felt.”

 Jack A. Bass Managed Accounts

November 2014 – 40 % cash position

Year End Review and Forecast

 

Oil/ Energy

I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.

On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plu

 

ConocoPhillips (NYSE:COP) $ 66.07 -6.72%
Vanguard Natural Resources, LLC (NASDAQ:VNR) $ 23.22 -6.86%
Seadrill Ltd. (SDRL) $ 14.66 -8.32%
Have you avoided this sector – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.

No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email info@jackbassteam.com or

Telephone :  Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Next For Oil: Mergers, Layoffs and ‘Death Spirals’

CNBC

Next for oil: Mergers, layoffs and 'death spirals'
.

Getty Images

The oil industry may be getting pinched by falling prices , but the next year could be a busy and lucrative time for private equity firms and restructuring specialists working in energy.

With crude prices nearly 60 percent off their highs , experts foresee a wave of corporate restructuring and acquisitions playing out over the next 12 to 18 months. Oilfield services companies are set to absorb smaller firms, while exploration and production companies could face a “death spiral” as their access to debt dwindles.

In December, Deutsche Bank analysts projected that U.S. shale producers “could be entering a zone of deep distress” once oil dipped below the $60 to $55 range.

 

“If prices were to stay sustainably below these levels for a few months/quarters, chances of a broad sector restructuring increase materially,” they wrote.

U.S. crude first settled below $60 on Dec. 11 and fell below $55 the following week. U.S.-traded West Texas Intermediate was near $44 on Thursday, while internationally traded Brent crude was close to $49.

“You’re pretty much in the top half of the first inning in the oil and gas sector,” George Koutsonicolis, managing director at SOLIC Capital Advisors, told CNBC. “Definitely, I expect there to be a pretty significant round of restructuring.”

That restructuring will come not just in the form of layoffs and cost cutting, but in capital restructurings in possible bankruptcy court cases, he said.

 

The job cuts have already begun to roll in from big oilfield services companies.

Last week, Baker Hughes (BHI) announced it would lay off 7,000 employees, or about 12 percent of its workforce. The same day, Halliburton (HAL) told investors to expect more reductions on top of a previously announced 1,000 cuts. Earlier in the month, Schlumberger (SLB) said it would shed 9,000 jobs.

BP (London Stock Exchange: BP.-GB)announced in December it would spend $1 billion and shed thousands of positions as part of a restructuring.

SOLIC now has its eye on oilfields services companies with high debt and poor capital structures.

The large oilfield companies are likely to scoop up weaker middle-market players, Koutsonicolis said. They will be on the hunt for firms with overlapping regional operations and back-office functions, two factors that will immediately add to earnings.

The fate of those firms is tied in part to exploration and production companies, for whom they provide infrastructure, specialized equipment, transportation and other services. Cost-cutting and reductions in revenue-generating activities among E&P companies eventually bleed into the oilfields services sector, forcing them to take similar measures.

 

Capital investment in the energy industry has decreased by about 23 percent, according to SOLIC.

Exploration and production companies have largely funded growth by borrowing on the high-yield debt market. The energy sector accounts for 17.4 percent of the high-yield bond market, up from 12 percent in 2002, according to Citi Research.

Now, the value of E&P firms’ primary asset is depleting, so banks are willing to lend them less money, and liquidity is drying up.

 

“Given the situation we’re in, the access to that high-yield debt will be somewhat impeded for some players,” Koutsonicolis said. “It’s kind of a death spiral for some of these firms.”

Exploration and production companies will typically restructure as a last resort, said John-Paul Hanson, head of Houlihan Lokey’s exploration and production practice. Instead, he told CNBC, they will try to weather the low commodity price market through financing and mergers and acquisitions activity.

The companies undergoing restructuring and bankruptcy filings at this point in the cycle lacked liquidity or had balance sheet constraints prior to the decline in commodity prices, he said. Low commodity prices effectively pushed them into restructuring because other solutions-such as tapping senior secured debt or selling assets-were not possible.

Hanson expects an uptick in M&A activity, but said sales of assets such as oilfield rights are more likely than outright buyouts of companies. That is because the value of E&P companies is in the underlying assets, not their corporate entities.

“The difficulty with oil and gas is you’re tied to the underlying commodity. E&P businesses really are just asset businesses,” he said.

 

While some companies may embark on mergers to achieve economies of scale, firms are more likely to sell noncore assets and unproductive oilfield acreage to increase cash flow and alleviate the cost of keeping them on the books. Those assets may find a home with another company that considers them core to their operations.

In the end, however, some oil and gas companies may not have a choice but to restructure, as they find it increasingly difficult to maintain cash flow while the cost of crude remains low, but while land-leasing and corporate expenses persist.

“The longer that we stay in a protracted, depressed price environment, the more likely it is that restructurings will be pervasive,” Hanson said.

 

Now it is up to you to act on this information

Contact Information:

To learn more about asset protection,  offshore company formation and structure your business

interests overseas ( at no cost or obligation)

Email info@jackbassteam.com  OR

jackabass@gmail.com OR

Telephone  Jack direct at 604-858-3202 for a  one  half hour no fee consultation.

10:00 – 4:00 Monday to Friday ( same time zone as Los Angeles).

 

Ten countries are islands famed for having no corporate income tax:

Bahamas, Cayman Islands, British Virgin Islands, and Bermuda – we know more

low or no tax jurisdictions.

The most important thing that you MUST do is seek advice from a qualified

advisor – Jack A. Bass, B.A. LL.B. (someone who understands international

tax jurisdictions and tax law) . Your advisor must understand the benefits

of particular offshore jurisdictions. It is your responsibility to take

action.

In most jurisdictions you can set up your offshore company in as little as

a few weeks. We most often start the process with registering a company

name and sending in the right documentation and supporting documents for

the incorporation and a bank account(s) or merchant account for you and

your business.All of this can be conducted by internet on in rare cases we

will attend in person – for you.

Here are the tax rules we use to eliminate tax on royalty and IP income –

Yes-you Can DIY ( Do IT Yourself ) – by following the IRS Rule Book :

HOW DO APPLE AND STARBUCKS AVOID US TAXES ON ROYALTIES AND IP ?

from http://www.youroffshoremoney.com

(b) Exclusion of United States income

In the case of a controlled foreign corporation, subpart F income does not

include any item of income from sources within the United States which is

effectively connected with the conduct by such corporation of a trade or

business within the United States unless such item is exempt from taxation

(or is subject to a reduced rate of tax) pursuant to a treaty obligation of

the United States. For purposes of this subsection, any exemption (or

reduction) with respect to the tax imposed by section 884 shall not be

taken into account.

(c) Limitation

(1) In general

(A) Subpart F income limited to current earnings and profits

For purposes of subsection (a), the subpart F income of any controlled

foreign corporation for any taxable year shall not exceed the earnings and

profits of such corporation for such taxable year.

HOW DID ROMNEY ACCUMULATE $ 250 MILLION IN THE CAYMANS – what can you do

to repeat his success ? – again quoting from the U.S. Tax Code:

(3) Special rule for determining earnings and profits

For purposes of this subsection, earnings and profits of any controlled

foreign corporation shall be determined without regard to paragraphs (4),

(5), and (6) of section 312 (n). Under regulations, the preceding sentence

shall not apply to the extent it would increase earnings and profits by an

amount which was previously distributed by the controlled foreign

corporation.