The market has spoken and it wants the reinflation trade to work no matter what surfaces "in 6 months" as reality. Hence, I suppose we have to begin paying attention to the energy complex in much closer fashion - it's first half 2008 all over again. That whole Great Recession thing was just a 9 month blip I guess.
There are an avalanche of earnings this week in the oil and natural gas space - frankly, I don't know how much it matters either in this sector or most sectors. If you are in the right space you can post all the bad news in the world (see US Steel) and you will be taken up with the "rising tide lifts of all boat" trade soon enough. But I'll pretend that fundamentals matter and post some of the data points...
EOG Resources (
NYSE:EOG) was one of our holdings in 2008; this is a good sized ($18B market cap) exploration company that deals with both natural gas and oil, but I consider it more of a natural gas play. Unlike
Chesapeake Energy (
NYSE:CHK) (similar size company) which reported a horrid $5.75 Billion Loss (give that CEO a raise! oh wait, he already was just granted another $100+ million after being washed out on margin calls - highest paid CEO of 2008), EOG actually did quite well. Oh yes to be fair, as long as you EXCLUDE 1x items, Chespeake
did fine too; remember, 1x items don't count in analysis of American companies; even if they are $5 billion 1x items... otherwise we cannot punish management for making bad decisions. And then how would we grant them hundreds of millions in pay?
- Chesapeake Energy reported a huge first-quarter loss Monday on write-downs in the value of its natural gas and oil properties, falling short of Wall Street's bottom-line forecasts by a narrow margin. The company announced that it lost $5.75 billion, or $9.63 a share, in the most recent quarter, compared with a loss of $142 million, or 29 cents a share, a year ago. Revenue rose 24% to just under $2 billion from $1.61 billion a year ago.
Here comes the magic
- Excluding items, the company said it had adjusted net income of $277 million, or 46 cents a share. Analysts were expecting 48 cents on an EPS basis.
Too bad we can't all be judging our net worth and profitability once we exclude the bad things. So you know what to do on the 6% drop in after hours - buy Chesapeake hand over fist immediately.
