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27-04-2016, 04:51 PM
Hi,
The impairment is massive and has wiped off much of the book equity. Impairment is only "real" and helps fairly reflect the recoverable value of the oil reserves. However, thats if the company wishes to dispose of the oil reserves wholesale. Since chk has improved their liquidity position and not likely to face the likelihood of default in near term, its not so relevant to review the results with this impairment in mind. Point is that the company (with improved solvency) has more likelihood of waiting out this period of low crude prices and be able to capitalise and realise the oil reserves at higher market prices.
Taking mere debt to (book) equity is quite misleading, because one will end up having a worrying figure that has accounted for impairment. Just another view on this.
Currently vested.
The impairment is massive and has wiped off much of the book equity. Impairment is only "real" and helps fairly reflect the recoverable value of the oil reserves. However, thats if the company wishes to dispose of the oil reserves wholesale. Since chk has improved their liquidity position and not likely to face the likelihood of default in near term, its not so relevant to review the results with this impairment in mind. Point is that the company (with improved solvency) has more likelihood of waiting out this period of low crude prices and be able to capitalise and realise the oil reserves at higher market prices.
Taking mere debt to (book) equity is quite misleading, because one will end up having a worrying figure that has accounted for impairment. Just another view on this.
Currently vested.
The thing I am scared most is not nightmares or market crashes..... Its my greed that I fear the most.
When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.
The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.
When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.
The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.