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Chesapeake Energy Corporation (CHK)

  • Wed, Feb. 25, 8:18 AM
    • Chesapeake Energy (NYSE:CHK) -4.4% premarket after reporting weaker than expected Q4 earnings and saying it will cut its 2015 spending and rig count in response to lower crude oil prices.
    • CHK says it plans total capital spending of $4B-$4.5B in 2015, 37% lower at the midpoint than the $6.7B spent in 2014, and will operate only 35-45 rigs this year, the lowest number since 2004 and down from an average of 64 rigs in 2014.
    • Even with the cutbacks, CHK forecasts 2015 oil and gas production to grow 3%-5% to 645K-655K boe/day.
    • In Q4, CHK's average production increased 12% Y/Y to 729K boe/day, while revenue rose 11% to $5.05B and driven by 47% revenue growth in its natural gas, oil and natural gas liquid segment; operating expenses fell 4.7% to $4.09B.
  • Wed, Feb. 25, 7:05 AM
    • Chesapeake Energy (NYSE:CHK): Q4 EPS of $0.11 misses by $0.13.
    • Revenue of $5.05B (+11.2% Y/Y) beats by $220M.
    • Shares +0.35% PM.
    • Press Release
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  • Tue, Feb. 24, 5:30 PM
  • Tue, Feb. 17, 11:33 AM
    • Chesapeake Energy (CHK -0.7%) has filed suit alleging that founder and former CEO Aubrey McClendon stole confidential company data during his last months on the job in order to launch his new oil and gas company.
    • CHK claims McClendon asked his assistant to print maps and data about unleased acreage and that McClendon also sent himself blind copies of the same documents at a personal email address during his last months at the company.
    • CHK alleges that the information was used by McClendon and American Energy Partners to acquire drilling rights on land in the Utica Shale formation in four separate transactions.
  • Thu, Feb. 12, 11:33 AM
    • Pennsylvania Gov. Tom Wolf is proposing a new 5% severance tax on natural gas extraction in the state, saying the measure could generate $1B or more.
    • The measure could face some pushback in the state's Republican-controlled legislature, but some kind of fracking tax could pass, as lawmakers from both parties already have proposed taxes from 3.2% to 8%.
    • Like other major natural gas producing states, Pennsylvania already has a severance tax on the value of the gas extracted at the wellhead.
    • Top Marcellus Shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
  • Tue, Feb. 10, 6:47 PM
    • Figuring the debt markets are a bit more rational than the equity markets right now, Wunderlich analysts look to the bond market for some clues about energy investing.
    • The firm finds that where Chesapeake Energy's (NYSE:CHK) debt is trading now as "quite refreshing" given the strong balance sheet the company has built, strengthening its conviction that CHK is a Best idea among oil stocks; others holding up well, it says, are financially strong names such as XEC, CXO, EGN, EOG, GPOR, MTZ, NBL, PTEN, PDCE, PXD and ROSE.
    • In other cases, the debt is providing “equity-like returns” for investors who want to move out of stocks and into bonds, with the firm mentioning AREX, BBG, CWEI and NOG.
  • Tue, Jan. 27, 12:58 PM
    • Marathon Oil (MRO -1.3%), Cobalt International Energy (CIE -0.3%) and RSP Permian (RSPP +0.8%) are downgraded to Neutral from Buy at UBS, as the firm cuts its 2015 Brent/WTI crude forecasts to a respective $52.50/bbl and $49/bbl, and lowers 2016 Brent/WTI crude estimates to $67.50 and $62.50.
    • UBS also is cautious on several energy names with large free cash flow deficits, slowing growth profiles and rich relative valuations: COP, DVN, MUR, UPL, RRC, DNR, MHR.
    • The firm's top Buys are APC, CHK and EOG.
  • Mon, Jan. 26, 5:13 PM
    • Chesapeake Energy (NYSE:CHK) agrees to pay $119M under a preliminary settlement with Oklahoma mineral rights owners who accused the company of improper royalty payments dating back to 2004.
    • Landowners accused CHK of improperly withholding royalty money and charging them for the costs of processing and transporting gas; the class action lawsuit affects more than 11,800 wells in Oklahoma.
    • CHK has faced similar lawsuits in Pennsylvania and other places where it operates.
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  • Fri, Jan. 23, 3:44 PM
    • Chesapeake Energy (CHK +0.3%) is upgraded to Outperform from Neutral with a $24 price target, up from $21, at Credit Suisse, which cites attractive relative valuation, a much improved balance sheet that has investment grade qualities, and the firm's expectation that CHK could utilize its newly found financial strength to make a counter-cyclical M&A transaction to upgrade its asset base.
    • The firm says CHK's increase in its net asset value reflects the accretive nature of the recent Marcellus asset sale to Southwestern Energy, which was “the key transformative deal" for CHK and has the potential to “meaningfully enhance the company’s credit" and leaves CHK’s balance sheet as one of the strongest in the peer group.
    • Credit Suisse's upgrade comes even as the firm downgrades several energy names, including Exxon and Chevron.
  • Tue, Jan. 20, 11:33 AM
    • Chesapeake Energy (CHK +1.9%) moves higher as a report speculates that the company could be a potential acquisition target of India's ONGC.
    • India's government has directed state-run ONGC to make some acquisitions to hedge themselves against higher energy prices in the future, and reportedly considers CHK a strong strategic target, given its recent sales, balance sheet and diversification through two commodities.
    • The report says ONGC could already be in talks with a North American gas and oil company, with CHK believed to be the target.
  • Wed, Jan. 14, 3:49 PM
    • "If you think the long-term price of oil is going to be $45 per barrel, there's basically nothing in this sector it makes any sense to own," Oakmark Funds' Bill Nygren tells CNBC, but he quickly adds he doesn't expect that. Checking futures out five years, the price is $70 per barrel, and a look at cost of production - near $70 - means production is going to be shutting down at current prices.
    • One energy sector pick is Chesapeake Energy (CHK +5%). There's a stale perception of the stock, says Nygren, of a company designed to grow the top line as much as possible. But new management is laser-focused on maximizing rate of return, and their work at deleveraging the balance sheet is now allowing buybacks.
    • Nygren's also liking General Electric (GE -0.4%), noting its underperformance - nearly 2000 basis points over the past year - and discounted valuation means the company only has to be average for the stock to go up. He also takes note of the new CFO as changing the focus to cash returns rather than reported earnings.
  • Wed, Jan. 14, 2:35 PM
    • Barclays downgrades the large-cap E&P sector to Negative from Neutral and the small- and mid-cap E&P group to Negative from Positive, arguing that downside risk outweigh potential gains even if oil prices recover.
    • Equity investors are pricing in WTI crude assumptions of close to $75/bbl in 2016 compared to current strip prices of ~$57, Barclays says, also noting that an abundance of relatively cheap oil supply from U.S. producers could further delay a price recovery.
    • Among specific names, the firm downgrades CHK, SD, REN and HK to Underweight; DVN, CLR, KOS, MRO, RSPP and WLL are cut to equal weight.
    • At the same time, Barclays picked a few favorites, upgrading Range Resources (NYSE:RRC) to Overweight from Equal Weight, and maintained Overweight ratings on large-cap E&P companies CNQ, EOG and NBL; among small- and mid-cap E&P names, the firm favors AR, CXO and XEC.
    • ETFs: XOP, IEO, PXE
  • Tue, Jan. 13, 12:47 PM
    • Traders smelling blood - or oil - in the water have piled into shorts against energy E&P companies, with short interest jumping a total of 12% for the final two weeks of 2014, according to Sterne Agee analysts using NYSE data.
    • Oasis Petroleum (NYSE:OAS) led a 45.9% jump in short interest, followed by Pioneer Natural Resources (NYSE:PXD) with a 45.2% increase and Chesapeake Energy (NYSE:CHK) short growth of 31.9%.
    • Sterne Agee energy analyst Tim Rezvan thinks the shorts are on the right side of the oil trade for the foreseeable future, believing a break below $40/bbl "wouldn't be a surprise in the short term."
    • Short positions did not increase for all companies, as short growth fell for Viper Energy Partners (NASDAQ:VNOM), Callon Petroleum (NYSE:CPE), Energen (NYSE:EGN) and PetroQuest Energy (NYSE:PQ), among others.
  • Mon, Jan. 12, 3:17 PM
    • Goldman Sachs upgrades a few energy stocks even as it cast a pall of gloom over most of the sector today (I, II, III), raising Chesapeake Energy (CHK -3.6%) to Buy from Neutral and Parsley Energy (PE -4.2%) to Neutral from Sell as potential "shale sale" winners.
    • Despite PE's relative vulnerability to lower oil prices because of its weak balance sheet and negative projected free cash, Goldman has more confidence that its core Permian Basin position makes it an attractive M&A target.
    • Among potential "shale scale" winners - companies that either can build positions in the core and reduce costs of capital - the firm's favorites remain EOG Resources (NYSE:EOG), Range Resources (NYSE:RRC), Pioneer Natural Resources (NYSE:PXD), Cabot Oil & Gas (NYSE:COG) and Concho Resources (NYSE:CXO).
    • However, Goldman cuts Bill Barrett (BBG -8.3%) to Sell from Neutral, seeing greater downside risk to its production in a lower oil price environment, and lowers Eclipse Resources (ECR -1.5%) to Neutral from Buy due to a persistently wide funding gap through 2017 coupled with a weak balance sheet.
  • Wed, Jan. 7, 7:35 PM
    • Energy bonds have become one of the riskiest sectors in the bond market, as the cost of buying five-year credit default swaps protecting $10M of bonds has jumped from $139K/year last June to $377K today for companies in the S&P/ISDA CDS U.S. Energy Select 10 Index.
    • The index consists of 10 large major energy companies: APC, APA, CHK, COP, DVN, OTCQB:FSTO, HAL, BTU, VLO and WMB.
    • Even though most of the companies boast investment-grade ratings, it now costs more to insure bonds in that index against default than it costs to insure bonds of an average junk-rated company, according to S&P.
  • Tue, Jan. 6, 10:59 AM
    • A warm start to winter is disappointing investors who bet U.S. natural gas producers would offer a refuge from falling oil prices, as gas futures settled at a two-year low $2.882/MMBtu yesterday after dropping 32% in 2014.
    • Among the 10 worst performers on the S&P’s Exploration & Production Index since June 20 - when oil was $107.26/bbl and gas was $4.53 - seven are companies that produce more than 50% gas; since June 20, Chesapeake Energy (CHK -1.3%) has declined 37%, Range Resources (RRC -0.7%) has dropped 41%, and Southwestern Energy (SWN -1.6%) has plunged 45%.
    • The gas market “looks terrible” for 2015 and “has been structurally oversupplied for years," Raymond James analyst Marshall Adkins says as he cuts his forecast for average 2015 Henry Hub gas prices to $3/Mcf from $3.65, citing normal weather that will “unmask the bearish underpinning of the U.S. gas market."
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Company Description
Chesapeake Energy Corp is a natural gas and oil exploration and production company. It explores, develops and acquires properties for the production of natural gas and crude oil from underground reservoirs and also provides marketing & midstream services.