News, Entertainment, Enlightenment
William Lawrence Sr Omnibit 12-7-15
The Japanese built the largest aircraft carrier in World War II. It was the Shinano and she was 290 yards long and displaced 65,800 metric tons. She was launched on on Oct. 8, 1944. She was ready for sea on Nov. 19. She was sunk 10 days later by the submarine USS Archerfish.
By Sen. Scott Wagner: Chesapeake Energy Bankruptcy Predicted With Wolf Tax:
Last Friday, Dec. 4, PennLive.com published a story titled “Severance Tax ‘100 percent guaranteed’ to be in next PA budget, Wolf policy secretary says”.
I have a prediction that Governor Wolf and his policy secretary, John Hanger, might find interesting.
I consider myself to be a fairly qualified and experienced investor – I regularly go on Yahoo Finance and check out financials and news of public companies.
Here is my prediction: I predict that Chesapeake Energy (NYSE Symbol – CHK) will file for bankruptcy protection within the next 12 months.
Here is my reasoning:
#1 Natural gas prices are at historic lows – natural gas companies are not able to cover their fixed costs and cover debt payments at the current price – to simplify this – if gas is selling for $2 per gallon and your fixed costs are $3 per gallon the company is losing $1 per gallon, and as a result the company will burn through massive amounts of cash quickly – in business when you run out of cash – you have a HUGE problem.
I researched Chesapeake’s most recent financials – just in the quarter ending September 30, 2015 – their third quarter revenue was $2.893 billion – after paying ALL expenses they lost $4.695 billion – that means just in the third quarter alone Chesapeake would have burned through $1,802 billion of cash. They cannot continue at this rate. Chesapeake will run out of cash.
#2 Natural gas pricing is not going up for quite some time because the natural gas supply is far GREATER than demand – in addition, there are almost 1100 gas wells in PA that have been drilled, and are capped, and are not producing gas. Almost all of the 1100 wells do not have pipe lines in place to carry the gas to the main transmission line so there is still a lot of infrastructure that needs to be installed. This infrastructure costs money. Gas companies do not have the cash to install these pipe lines at the current low natural gas prices.
#3 Another large issue is that oil and natural gas companies routinely hedge their prices to protect for a price collapse – this is a type of insurance – typically these hedges only go out for two years. In simple terms, many of the natural gas companies had hedges in place when prices were a lot higher that paid them double or triple the current market rate for their gas supply. When prices are as low as they currently are, hedging is not an option.
#4 Chesapeake Energy had a class action lawsuit filed against them last week by Pennsylvania landowners because they are deducting from royalty payments the cost to transport the gas from the wellhead to the main transmission line.
Many landowners receive zero royalty payments after Chesapeake deducts the transport costs, and some land owners have received invoices to back bill for prior years transportation costs.
The class action lawsuit will be settled for cash that Chesapeake is running out of.
#5 If you are familiar with stock market investing there is term called margin. This term means that you can buy a stock for cash and the brokerage house will lend you money to buy more stock – this is called buying stock on margin. SEC rules do not allow a stock to be purchased on margin if it is under $5 per share. Last Thursday at the close of the New York Stock Exchange, Chesapeake stock closed under $5 per share. This means that any investor who used margin or borrowed money to purchase Chesapeake stock had a margin call which is a demand to sell the stock immediately so the loan is repaid. When a stock drops under $5 per share large investors flee. Investors will shy away from Chesapeake because their future does not look good.
This morning as I am writing this ( 10:10 a.m. Dec. 7) Chesapeake stock is trading at $4.17 per share, down almost $.40 since the open of the stock market.
Chesapeake is one of several companies in Pennsylvania that are choking financially because natural gas prices are so low – there may very well be more companies than just Chesapeake Energy that will be forced to file for bankruptcy protection.
So what is my point? It’s this: Governor Wolf ran his campaign for Governor telling everyone that he was going to get $1 billion dollars in severance taxes from the natural gas companies. With current natural gas prices a severance tax would yield $100 million dollars at best.
There is currently an impact fee – tax in place – so the severance tax would cost the gas companies more money, which they do not have.
The reality is that the gas companies will pass any taxes on to consumers – which means YOUR gas bill will go up if there is a severance tax imposed.
Don’t believe me?
Read York Daily Record’s latest article, “Columbia Gas Gets Smaller Rate Hike Than Sought” which talks about the gas company passing on the costs.
And by the way, this morning the price for a barrel of oil dropped under $40 – it is currently at $38.71 at 10:20 a.m..
Oil companies are facing the same challenges as the natural gas industry because the price of oil is at historic lows.
Sen. Wagner represents the 28th District in the Pennsylvania Senate.
Quran Hate Speech. Obama’s Attorney General Loretta Lynch responded to the Dec. 2 Islam-inspired slaughter in San Bernardino, Ca. by making a pledge the very next day to a Muslim lobbying group that she would prosecute anyone who used “anti-Muslim” rhetoric.
“When we talk about the First Amendment we make it clear that actions predicated on violent talk are not American. They are not who we are, they are not what we do, and they will be prosecuted. My message not just to the Muslim community but to all Americans is: we cannot give in to the fear that these backlashes are really based on.”
Violent talk not American? Well, she may have a point. Pamela Geller brilliantly produced some very striking examples of violent talk found in the Quran which can be found here and are reproduced below. This talk is certainly unAmerican in our view.
Will Lynch prosecute? LOL.
And slay them wherever you come upon them, and expel them from where they expelled you; persecution is more grievous than slaying. But fight them not by the Holy Mosque until they should fight you there; then, if they fight you, slay them — such is the recompense of unbelievers, but if they give over, surely Allah is All-forgiving, All-compassionate. Fight them, till there is no persecution and the religion is Allah’s; then if they give over, there shall be no enmity save for evildoers. (Quran 2:191-193)
Men are the managers of the affairs of women for that Allah has preferred in bounty one of them over another, and for that they have expended of their property. Righteous women are therefore obedient, guarding the secret for Allah’s guarding. And those you fear may be rebellious admonish; banish them to their couches, and beat them. (Quran 4:34)
They wish that you should disbelieve as they disbelieve, and then you would be equal; therefore take not to yourselves friends of them, until they emigrate in the way of Allah; then, if they turn their backs, take them, and slay them wherever you find them; take not to yourselves any one of them as friend or helper. (Quran 4:89)
This is the recompense of those who fight against Allah and His Messenger, and hasten about the earth, to do corruption there: they shall be slaughtered, or crucified, or their hands and feet shall alternately be struck off; or they shall be banished from the land. That is a degradation for them in this world; and in the world to come awaits them a mighty chastisement. (Quran 5:33)
When thy Lord was revealing to the angels, ˜I am with you; so confirm the believers. I shall cast into the unbelievers’ hearts terror; so smite above the necks, and smite every finger of them! (Quran 8:12)
Make ready for them whatever force and strings of horses you can, to strike terror in the enemy of Allah and your enemy, and others besides them that you know not; Allah knows them. And whatsoever you expend in the way of Allah shall be repaid you in full; you will not be wronged. (Quran 8:60)
Then, when the sacred months are drawn away, slay the idolaters wherever you find them, and take them, and confine them, and lie in wait for them at every place of ambush. But if they repent, and perform the prayer, and pay the alms, then let them go their way; Allah is All-forgiving, All-compassionate. (Quran 9:5)
Fight those who believe not in Allah and the Last Day and do not forbid what Allah and His Messenger have forbidden — such men as practise not the religion of truth, being of those who have been given the Book — until they pay the tribute out of hand and have been humbled. (Quran 9:29)
Allah has bought from the believers their selves and their possessions against the gift of Paradise; they fight in the way of Allah; they kill, and are killed; that is a promise binding upon Allah in the Torah, and the Gospel, and the Koran; and who fulfils his covenant truer than Allah? So rejoice in the bargain you have made with Him; that is the mighty triumph. (Quran 9:111)
O believers, fight the unbelievers who are near to you; and let them find in you a harshness; and know that Allah is with the godfearing. (Quran 9:123)
When you meet the unbelievers, smite their necks, then, when you have made wide slaughter among them, tie fast the bonds; then set them free, either by grace or ransom, till the war lays down its loads. So it shall be; and if Allah had willed, He would have avenged Himself upon them; but that He may try some of you by means of others. And those who are slain in the way of Allah, He will not send their works astray. (Quran 47:4)