Are you dumping your CHK Chesapeake stock yet?

It’s all bad news for CHK on the NYSE. No wonder they are bullying communities.

Is Chesapeake Ripe for Icahn-ization? (CHK, LGF, BX, DYN)

Chesapeake has lost about two-thirds of its value since mid-2008. What was once a $67/share stock now trades at around $22/share.

The article says that an increase in natural gas prices is not likely.

The Big Gas Mafia is trying everything possible to increase demand for the gas glut we have. Natural gas powered vehicles and exporting LNG to China are all in the works. They must find a way to create demand because they simply can’t make any money at current prices. It costs way to much to frack.

The issue is can Chesapeake, or any other natural gas producer, make a profit while gas prices remain below $5/thousand cubic feet.

The answer is no.

Deborah Rogers lined the whole Shale Game out for us in her presentation, Shale Gas or Shell Game, at EARTHWORKS’ Oil and Gas Accountability Project’s 2010 People’s Oil and Gas Summit. (The picture on the first slide shows Chesapeake being a “Good Neighbor.”)

From Slide 9 of her presentation:

• “We’re on the verge of an unconventional oil revolution” – Aubrey McClendon
• Same Capital Intensiveness – currently up to 20 times more so than conventional oil
• Same water wastage, toxic emissions, environmental degradation
• Carbon intensive, least efficient

It looks like everyone else is finally catching up to Rogers because today Platts asked:

Can oil save Chesapeake?

I do not have access to the entire article because a Platt’s subscription cost thousands of dollars but below is the teaser.

The US shale gas boom has the hallmarks of a technology bubble: firms need continual re-capitalization but their gas output is not demonstrably profitable. Value is instead based on reserves and technology.

The switch from gas to oil suggests shale gas can survive only through cross-subsidization not on its own merit. Perpetual expansion cannot forever disguise a serious problem with the bottom line.

Shale gas has been an extraordinary success in the United States, changing the country’s gas balance from one of growing importer to potential exporter.

It has reversed the decline in US proved natural gas reserves and boosted production to such an extent that storage is close to capacity and prices have dropped significantly.

The claims made by the shale gas industry are that they have discovered sufficient gas reserves to supply the US with cheap natural gas for the next 100 years. [this is completely unproven and overblown] Not only that, but they have now claimed that they can produce shale gas at prices below $1/MMBtu. [Oh bullshit! There is no fracking way this is true.]

The US success story has not gone unnoticed around the world and major integrated oil and gas companies have spent billions buying into US shale reserves and accessing the relevant drilling technology. [Yeah, let’s just go ahead and frack the whole world up.]

The mere possibility that what has happened in the US could be replicated in other parts of the world has changed perceptions of the future gas market and thus investments in all types of gas technologies from natural gas powered vehicles to Floating LNG. [Yeah, imagine! You can destroy trillions of gallons of water, ruin soil and foul the air. What a great plan.]

The full-length version of this article is available in this week’s Energy Economist. Read more here

Platts also notes that since the company’s founding in 1992, Chesapeake “has reported a cumulative net income of minus $368 million”

Grand Prairie neighbors should keep all this in mind tomorrow at the Chesapeake Energy hosted “Town Hall” meeting where they will try to turn you against your neighbors.