SeekingAlpha  Jul 9  Comment 
By Zacks Investment Research: Today’s Bear of the Day is a lesson in dividends. Like the big, shiny ones that people gravitate towards without knowing the entire story. It’s a warning to at least slow down and check the water out before...
SeekingAlpha  Jun 12  Comment 
By The Forensic Accountant: Chesapeake Granite Wash Trust (CHKR) is an oil and gas trust with royalties for wells in western Oklahoma. As those familiar with my articles know, I analyze trusts using a bottom-up, engineering-style model that...
SeekingAlpha  Jan 8  Comment 
By Alex Hardman: Summary The Trust has numerous issues that greatly increase the risk that isn't properly compensated for at current prices. The Trust is currently at least 24% overvalued, and possibly more if investors adjust their desired...
SeekingAlpha  Dec 19  Comment 
By Retired Aviator: Last March I wrote my first bullish article on Cheaspeake Granite Wash Trust (CHKR) that argued the shares (units) had been oversold, relative to likely future distributions. The trust had reported that its original estimated...


Chesapeake Granite Wash Trust (NYSE:CHKR) is a trust that was created to own the royalty interest of 69 existing and 118 developed horizontal wells of Chesapeake Energy (CHK). The trust is entitled to 90% of the proceeds from the existing wells and 50% of the proceeds from the developed wells. Proceeds are revenues from the sale of oil and gas minus postproduction costs and taxes. Furthermore, Chesapeake Granite Wash Trust plans to enter into hedging arrangements alongside its affiliates for 37% of the trust's expected revenues.[1]

Business Overview

For the three months ended in September 2011, Chesapeake Granite Wash Trust expects that its properties will produce $27.7M in oil and gas revenues. This will result in $25.4M cash available to be distributed trust unit owners.[2]

New Updates

The company's initial public offering of stock on the NYSE occurred on November 10, 2011. The company offered 20 trust units each for $19. This was at the bottom of the $19-$21 price range. The trust has originally planned to sell 23.4M trust units. The deal raised a total of $380M. The lead mangers of the deal were Morgan Stanley and Raymond James.[3]

Trends & Forces

Uncertain reserves in the developed wells

The trust owns more wells which are developed than existing. These developed wells are not yet drilled and will need to be by the Chesapeake Energy before they are useable. This means that the value of the trust's assets are based heavily on expected size of the reserves. If these figures are incorrect, then the trust may be overvalued. In addition, if Chesapeake Energy fails to effectively drill the wells, then the trust's reserves may not be completely tapped. [4]

  1. CHKR S-1/A 2011 PROSPECTUS SUMAMRY "Summary" p.1-3
  3. Renaissance Capital - IPO Home "Chesapeake Granite Wash Trust prices IPO at $19, at low end of the range" 11 Nov 2011
  4. CHKR S-1/A 2011 PROSPECTUS SUMAMRY "The Development Wells" p.3-4
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