/NG/Robert – Well I'd go with CHK as UNG decays too much and it could be a while before they come back. CHIK does $9Bn in business and makes $800M but you can buy the whole company for $2.3Bn, less than 3x earnings.
| Year End 31st Dec | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | TTM | 2018E | 2019E | CAGR / Avg | |
| $m | 12,316 | 19,080 | 23,125 | 12,764 | 7,872 | 9,496 | 9,681 | 9,532 | 9,353 | -5.1% | |
| $m | -1,894 | 1,866 | 3,275 | -18,693 | -4,294 | 1,372 | 975 | ||||
| $m | -769 | 724 | 1,917 | -14,685 | -4,401 | 949 | 693 | 804.1 | 762.7 | ||
| $ | -1.46 | 0.73 | 1.65 | -22.4 | -6.45 | 0.90 | 0.62 | ||||
| $ | 2.17 | 1.39 | 1.93 | -4.18 | -3.55 | 1.06 | 0.64 | 0.86 | 0.56 | -13.4% | |
| % | +1.4 | -36.2 | +38.9 | -39.3 | -19.2 | -34.4 | |||||
| x | 2.45 | 4.04 | 3.04 | 4.63 | |||||||
| x | n/a | n/a | n/a | 0.30 | |||||||
| Profitability | |||||||||||
Unfortunately for them, they began acquiring more oil assets and that's about 40% of their revenues now – so that's been hurting them recently but they just completed a $4Bn acquisition of WRD to get even more oil at what I HOPE was a good bottom call.
As a new trade on CHK, I'd go for:
- Sell 20 2021 $3 puts for $1.10 ($2,200)
- Buy 30 2021 $1 calls for $1.60 ($4,800)
- Sell 30 2021 $3.50 calls for 0.55 ($1,650)
So that's net $950 on the $7,500 spread that's $1.50 ($4,500) in the money to start and not far to go to make the full $6,550 (689%) at $3.50 and the worst case is you own 2,000 shares at about $3.50.
