Chesapeake Granite Wash – Seriously, This Junk Is Worth $11 Per Share?

By Daniel R Moore:

I finally gathered the most recent data reported by the Chesapeake Granite Wash Trust (NYSE:CHKR) to perform a quarterly financial review. Honestly I did not find any surprising new information within the financial statements. The Trust still deserves a junk rating at best, and the bad news has been public for over a year. The issues facing the Trust are best summarized in these statements found buried in the notes of the most recent 10-Q:

“
[T]he Trust experienced reduced production volumes throughout 2013 and 2014, largely due to higher-than-expected pressure depletion within the AMI.”

To emphasize the implications of this severe point the accountants go on to say:

“Low levels of future production will continue to reduce the Trust’s revenues and distributable income available to unit holders and will likely result in continued distributions to common unit holders at or below the subordination threshold.”

Maybe the drilling operator,

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