Chesapeake Energy CorporationNYSE
Chesapeake Energy: What To Expect In 2016
Richard Zeits • 68 Comments
Richard Zeits • 68 Comments
Chesapeake Energy Haunted By A Bad Deal, Bankruptcy Looms?
Daniel R Moore • 169 Comments
Daniel R Moore • 169 Comments
Tue, Oct. 25, 3:57 PM
- RBC Capital is the latest to jump on the Chesapeake Energy (CHK -3.7%) bandwagon, upgrading shares to Sector Perform from Underperform with an $8 price target, raised from $7, reflecting the company's lower cost structure and improved margin outlook over the next few years.
- CHK believes its EBITDA will double by 2018 while increasing liquids contribution to more than 30% of production; RBC thinks the outlook is achievable and competitive with top-tier operators, but debt reduction will require strong asset sale execution.
- The firm sees potential upcoming catalysts including oil growth from Powder River assets, the Mid-Con opportunity, well results from natural gas assets and restructuring of the Eagle ford midstream deal.
- Shares are sharply lower today despite the upgrade, the most recent of several analyst upgrades and stock price target increases.
Mon, Oct. 24, 6:43 PM
- Chesapeake Energy (NYSE:CHK) is OK for investors to include as “part of a higher-beta portfolio" amid an improving long-term outlook for the company, Susquehanna analysts say as they raise their stock price target to $7 from $6.50.
- Although CHK will have a significant cash flow outspend next year, Susquehanna says the long-term outlook provided last week suggests the company is on a path towards cash flow neutrality by mid-2018; the firm's latest model suggests CHK can grow ~10% in 2018 with all-in capex of $2.6B and only a ~$200M outspend.
- The firm expects Increased production combined with lower operating and transportation costs to yield a more than doubling of EBITDA in 2018 vs. the H2 2016 run rate, prompting a drop in net leverage (including working capital deficit) to ~4x from nearly 9x expected exiting this year.
Fri, Oct. 21, 12:23 PM
- Chesapeake Energy (CHK -2.3%) merits upgrades from BofA Merrill Lynch and Nomura and price target hikes from several more analysts following the company's analyst day, which included news of a CHK)+Shares+Rise+to+Session+Highs+Amid+Analyst+Day%3B+Notes+Recent+Record+Frack+in+Haynesville+Shale/12151390.html" target="_blank">record frack in a Louisiana well.
- "CEO Doug Lawler and CFO Dominic Dell’Osso deserve a lot of credit for a substantive repositioning," Nomura says in its upgrade to Neutral, which includes an improved $7.50 price target as it removes its discount tied to future liquidity and funding; BofA's new price target is $10.
- CHK said in a presentation that it set a new record for fracking by pumping more than 25K tons of sand down a Louisiana gas well, a process it called "propageddon,” which improved output from the well by 70% over traditional fracking techniques.
- Additional stock price target hikes come from Jefferies, UBS and Deutsche Bank, with the latter saying, "The asset base has significantly improved its capital efficiency and productivity... that should provide improved visibility in achieving the multi-year targets."
- UBS raises its target to $6 from $4.25 but maintains a Sell rating, believing CHK's disclosed target of reaching free cash flow neutrality in 2018 is too optimistic.
Thu, Oct. 20, 11:33 AM
- Chesapeake Energy's (CHK -2.8%) $1.5B leveraged loan has surged in the secondary market normally reserved for high-yield bonds, aided by a combination of stiff investor protections and rebounding commodity prices, Reuters reports.
- When CHK tapped the loan market this summer, investors were attracted by a rare feature preventing the debt from being called for two years, and then paying big premiums if the debt was repaid.
- Over the past two months, the loan has steadily advanced to a bid of 106.5 on Wednesday in the secondary market, alone among liquid trading loans at such high levels.
- CHK's unique two-year non-call protection is in heavy demand now, as many performing loans are being repriced to cut spreads and make other borrower-friendly adjustments.
Wed, Oct. 19, 4:56 PM
- Joint venture partners Williams Partners (NYSE:WPZ) and Crestwood Equity Partners (NYSE:CEQP) announce an agreement with Chesapeake Energy (NYSE:CHK) to restructure natural gas gathering and processing services in Wyoming’s Powder River Basin.
- The companies say the restructured services will replace the current cost-of-service arrangement and improve economics to support a ramp-up in near-term development and production activity and incentivize long-term development across an expanded area of dedication in the region.
- The restructured terms of service are expected to include minimum annual revenue guarantees that support the transition to a new fixed-fee structure over the next 5-7 years.
Tue, Oct. 18, 2:52 PM
- Chesapeake Energy (CHK +2.9%) will host its first Analyst Day in two years this Thursday, and analysts at Susquehanna raise their price target on the shares to $6.50 from $4.50 ahead of the meeting.
- Susquehanna says Analyst Day likely will highlight progress on two key fronts - that CHK has sufficient and potentially growing inventory depth, and can continue to improve capital efficiency - which, combined with further asset sales, could pave the way for progress towards cash flow neutrality and addressing longer-term maturities.
- The firm thinks productivity improvements could be the highlight of Analyst Day, with Haynesville perhaps receiving the most investor attention given its proximity to the Henry Hub market.
Mon, Oct. 17, 12:28 PM
- Chesapeake Energy (CHK -3.3%) is sharply lower even as Citigroup analysts raise their stock price target to $8 ahead of the company's first analyst day in two years, although they remain concerned about debt levels, particularly if commodity prices retreat.
- Citi believes production is poised to organically increase from this point forward and is underappreciated by the market, projecting CHK will increase production ~5% in 2017, above its current guidance for a 2%-7% decline, driven by strong well performance in the Haynesville and dry gas Utica shale plays.
- Based on accelerating activity following the recent capital restructuring, and thus a lower accrued preferred dividend, and a higher outlook for Utica growth, Citi's 2017 EPS/CFPS estimates are nearly unchanged at $0.68 and $2.33 vs. $0.68 and $2.34 previously.
Thu, Oct. 13, 2:42 PM
- Chesapeake Energy (CHK +1.7%) is higher even as UBS reaffirms its Sell rating on the stock, saying the company’s debt load remains too high.
- UBS says CHK's liquidity position has improved, principal debt has been reduced by more than $1B YTD, and 2017 debt maturities have been cut by two thirds to $658M, but it believes financial leverage remains "far too high," and the company needs to explain at its upcoming analyst day - its first since May 2014 - how it plans to reduce debt by $2B-$3B over the next few years.
- UBS says even assuming CHK can achieve $3B of asset sales in 2017-18, the firm estimates it still would have net debt/EBITDA of greater than 4x at year-end 2018 under its price deck and before volumes associated with a deal.
Thu, Oct. 6, 2:48 PM
- Chesapeake Energy (CHK -1.2%) is reiterated with a Buy rating and $10 price target at Wunderlich, which says CHK is making the right moves to solidify itself in the near term to take advantage of the future.
- Wunderlich believes "if investors look through the noise and focus on the company, there is ample opportunity" in CHK: The debt and convertible debt issuances will help build a war chest for future redemptions and activity, converting preferred stock to common will further simplify the balance sheet, and the company now has plenty of cash with expected from its divestiture plan.
- The firm says it likes the moves CHK has made and, given its discounted trading metrics vs. peers, expects shares to outperform as the company continues to excel operationally and financially.
Wed, Oct. 5, 5:40 PM
- Chesapeake Energy (NYSE:CHK) says it has amassed more than enough cash to pay bondholders through the end of 2018.
- CHK says it has closed its $1.25B private placement of unsecured convertible notes that it can convert to shares in 2019 under certain circumstances, and now has $1B in cash on hand in addition to an undrawn revolving credit line.
- “With the cash proceeds from the convertible note offering, we have taken measures to provide excess liquidity to address the remaining maturities of our debt through 2018, before any incremental proceeds from the potential asset sales that we are currently working,” CEO Doug Lawler says.
- CHK was one of the biggest gainers in today's session, climbing 6.7%, in part thanks to a sharp rise in crude oil futures.
Thu, Sep. 29, 2:03 PM
Thu, Sep. 29, 9:12 AM
- Chesapeake Energy (NYSE:CHK) -4% premarket after announcing a private placement of $850M of convertible debt, with an option for placement of an additional $150M.
- CHK says it plans to use the proceeds for general corporate purposes, including paying down debt and the repayment of credit facilities.
- CHK also confirms it received subpoenas from the U.S. Department of Justice, U.S. Postal Service and certain state authorities seeking information on royalty payment practices.
Wed, Sep. 28, 6:55 PM
- Short sellers appear to be exiting Chesapeake Energy (NYSE:CHK), following Carl Icahn out the door after the activist investor halved his stake in the company last week.
- S3 Partners analyst Matthew Unterman estimates CHK short interest has dropped as much as 20% since Sept. 19, to $600M from $750M, when Icahn disclosed his reduced holding to the market.
- As more shares hit lending pools due to Icahn’s long sales, borrow spot rates have hit YTD lows, in contrast to February, when indicative fees hit as high as 50% when the stock price hit its 52-week low of $1.59, Unterman explains.
- "Investors will be watching closely what Icahn’s next move is, as he may be planning on cutting his stake even further now that he has no board representation. And if he does, shorts sellers will realize additional profits," according to Unterman.
Wed, Sep. 28, 12:08 PM
- With no central clearinghouse for credit default swaps, trades get reported just once a week and the last couple of weeks of data showed action of considerable interest.
- Normal weekly trading volume in CDS for Chesapeake Energy (NYSE:CHK) is about $100M, says a source, but last week someone purchased a full $1B of insurance on Chesapeake. To put that amount in perspective, typically only major countries or the largest financial institutions ever see that sort of trade size.
- This week's data shows trading volume in CHK CDS has returned to normal.
- A bear might say someone who knows something is taking advantage of the recent large decline in premium for Chesapeake CDS to place a very large bet on an imminent default.
- Of course, there's the other side of the trade, and some financial institution (or, more likely a syndicate of them) was happy to sell the insurance. The sale, though, could be for any number of reasons. For one, business at banks is slow, so why not earn some premium. For another, if an institution is already short CHK debt, the sale of CDS helps create income to offset the cost of that short.
Tue, Sep. 27, 9:48 AM
- Chesapeake Energy (CHK -5.6%) discloses the resignation of two board members, including a representative of activist investor Carl Icahn, a week after Icahn cut his holdings in the company by more than half to ~4.5%.
- Vincent Intrieri, who has served as senior managing director of Icahn Capital, had served on CHK's board since 2012, when CHK named four new independent directors, three proposed by then-largest shareholder Southeastern Asset Management and one proposed by Icahn.
- John Lipinski, the other departing director, had served on CHK's board since 2014.
- CHK says the resignations were not the result of any disagreement, but offers no further explanation.
Tue, Sep. 20, 6:48 PM
- Chesapeake Energy (NYSE:CHK) fell 3.7% in today's trade after Carl Icahn cut his stake in the company by more than half and S&P Global Ratings downgraded its credit rating to Selective Default from CC.
- S&P says it views CHK's tender for senior notes due 2020 and 2023 as a distressed transaction because investors received a material discount to par value.
- S&P's Selective Default designation means that it believes a company has "selectively defaulted on a specific issue or class of obligations, but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner."
- After a 90% run-up from June 25 to Sept. 12, when shares closed above $8, CHK has since retreated by 18%.