Mon, Jul. 13, 5:38 PM
- Weakness in oil stocks should not be used as a buying opportunity, Barclays analysts say, viewing shares as significantly overvalued and appearing to discount an average oil price of $85-$90/bbl based on group average historical multiples.
- The firm removes Newfield Exploration (NYSE:NFX) and Cabot Oil & Gas (NYSE:COG) from its list of top oil and gas stocks, leaving only Canadian Natural Resource (NYSE:CNQ), EOG Resources (NYSE:EOG), Southwestern Energy (NYSE:SWN), Noble Energy (NYSE:NBL) and Concho Resources (NYSE:CXO).
- Barclays' bottom group consists of five Underweight rated stocks - CHK, OTCQX:COSWF, PXD, OXY and UPL - while WPX Energy (NYSE:WPX) is bumped off the bottom list to reflect an improved outlook as well as a 20%-plus share price decline.
Mon, Jul. 13, 10:25 AM
- Sterne Agee CRT’s Tim Rezvan reiterates his bullish views on Chesapeake Energy (CHK -3.1%), citing the latest short interest data which shows a 14.1% increase from mid-June to the end of June to 185M shares, 27.8% of shares outstanding and 8.1 days to cover; the increase in short interest increase from the end of February to the end of June was 163%.
- The firm upgraded CHK to Buy from Underperform on June 29, reflecting what it considered as oversold conditions, and Rezvan says the month-end short interest data validates the thesis and expect profit-taking from shorts to provide further support to CHK shares into Q2 earnings.
- The largest increase in short interest came from PetroQuest Energy (PQ +0.1%), which had a 16.1% increase to 7.2M shares (11% of shares outstanding, 5.0 days to cover); Noble Energy (NBL -1.1%) also showed a notable jump, with a 10.3% increase to 17.9M shares (4.6% of shares outstanding, 4.1 days to cover).
- CHK is sharply lower today, apparently in reaction to late Friday's court order for CHK to pay nearly $380M to bondholders.
Fri, Jul. 10, 3:55 PM
- A U.S. federal judge orders Chesapeake Energy (CHK -2.9%) to pay $379.7M to bond investors, ruling the company waited too long to tell them of its plan to redeem their $1.3B of bonds six years early.
- The judge agreed with bond trustee Bank of New York Mellon that holders of CHK's 6.775% notes maturing in 2019 were entitled to a special "make-whole" price because of the early redemption.
- The payout is more than triple the roughly $100M CHK hoped to distribute in "restitutionary" damages.
Thu, Jul. 9, 12:26 PM
- Energy stocks are setting the pace for today's trading, outperforming a positive broader market as crude oil prices bounce back by more than $1 on extended nuclear deal talk deadlines with Iran and China's stock market turnaround.
- Among top gainers so far: CHK +4%, WLL +3%, DNR +3%, NOG +8.1%, CLR +2.9%, SWN +2.5%.
- Oppenheimer's Fadel Gheit is unmoved, believing oil prices "could stay lower and for longer than expected based on the low level of M&A activities as the gap in expectation between potential buyers and sellers remains wide."
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Tue, Jul. 7, 4:59 PM
- Chesapeake Energy (NYSE:CHK) chalked up its strongest showing in six months, as its shares surged 10% in today's trade to lead all gainers on the S&P 500, even as natural gas fell to its lowest settlement in nearly a month as temperate weather forecasts suggest soft demand on the way.
- Nevertheless, CHK is still down 13% in the past month, 41% YTD and more than 22% in 2014.
- CHK earned some sell-side love last week, as Sterne Agee upgraded shares to Buy from Underperform and Goldman Sachs said CHK has the potential to rise 43% from its current level.
Thu, Jul. 2, 12:29 PM
- Chesapeake Energy’s (CHK +1.3%) decision to sell some assets to privately-held FourPoint Energy for $840M gets a thumbs-up from Wunderlich’s Jason Wangler, who says the deal should help improve the balance sheet while keeping the upside potential on CHK’s core assets.
- The deal likely reduces the balance and payments of its CHK Cleveland Tonkawa, Wangler says, as three tranches of payments come in as the deal is completed, and pricing looks "decent" given the current environment.
- Wunderlich says it likes CHK’s execution and believe so much has been made of the potential pitfalls that many forget the potential catalysts that could drive value, such as accretive acquisitions using the strong liquidity position, potential sales to further improve the balance sheet, and reducing its gathering and takeaway costs.
Wed, Jul. 1, 3:58 PM
- Chesapeake Energy (CHK -5.5%) agrees to sell assets in Oklahoma’s Western Anadarko Basin to privately-held FourPoint Energy for $840M.
- FourPoint will get interest in ~1,500 producing wells in western Oklahoma that produce an average 21.5K boe/day, split between oil, natural gas liquids and natural gas; the assets cover nearly 250K net acres of mineral rights.
- CHK had drilled and completed more than 190 horizontal wells in the acquisition area since 2012, and halted drilling there this Q1 in anticipation of selling the wells, FourPoint says.
Mon, Jun. 29, 8:45 AM
- Chesapeake Energy (NYSE:CHK) +1.2% premarket after Sterne Agee upgrades shares to Buy from Underperform with a $13 price target, saying the stock is "oversold," but that the issues facing the company are "not fatal."
- Shares have slipped 21% since March 18, and the firm's Tim Rezvan argues "investors would be late to the short-selling party at this level," as short interest has climbed to 162M shares vs. 661M shares outstanding and just 70M shares sold short at end February.
- CHK management has suggested recently that it is "aggressively pursuing" ways to continue to contract with Williams Cos. (NYSE:WMB) while making the obligating terms more effective; "we believe any positive traction on this front would ease investor angst on the current liquidity drain and reset CHK shares higher," Sterne Agee says.
Thu, Jun. 25, 12:43 PM
- While UBS downgraded Chesapeake Energy (CHK -4.2%) and Murphy Oil (MUR -2.4%) today (I, II), the firm also upgrades Marathon Oil (MRO +1.4%) to Buy from Neutral with a $32 target price, finding MRO an attractive way to play its expectation for a long-term recovery in oil prices.
- UBS notes MRO's high oil exposure, above average debt-adjusted growth, leverage to low-cost resource in the Eagle Ford and SCOOP/STACK, strong balance sheet and inexpensive valuation vs. peers.
- The firm also says MRO is trading at a wider than normal discount to peers despite an above average cash flow per debt-adjusted share growth outlook.
Thu, Jun. 25, 8:17 AM
- Chesapeake Energy (NYSE:CHK) -1.5% premarket after UBS downgrades shares to Sell from Neutral while also cutting its long-term normalized natural gas price forecast to $4.00/MMBtu from $4.50.
- CHK carries "far too much financial leverage," prompting a material reduction in activity that is contributing to a declining production profile in 2015-16, and the shares are expensive relative to peers, analyst William Featherston writes in cutting his price target for the stock to $11 from $16.
Wed, Jun. 24, 6:57 PM
- A spike in earthquakes across Oklahoma is forcing the state's energy regulator to urgently consider tougher restrictions on drilling activity, calling it a "game changer."
- During the June 17-24 period, Oklahoma experienced 35 earthquakes of magnitude 3.0 or greater, according to the Oklahoma Geological Survey, with some of the quakes occurring in the Oklahoma City metro area where there are no high-volume wastewater injection wells.
- The spike in quakes comes two months after drillers were ordered by the Oklahoma Corporation Commission, which regulates the oil and gas industry, to stop disposing wastewater below the state's deepest rock formation.
- Oklahoma's elected officials have been reluctant to shackle an industry that directly generated more than 7% of state revenues last year in the form of production taxes from companies such as Devon Energy (NYSE:DVN), SandRidge Energy (NYSE:SD), Chesapeake Energy (NYSE:CHK) and Continental Resources (NYSE:CLR).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG
Tue, Jun. 16, 5:45 PM
- The strained finances at U.S. E&P shale companies caused by collapsing crude oil prices is well known, and some analysts say the pain may be compounded by a steep drop in prices for natural gas liquids caused by oversupply, partly due to infrastructure constraints.
- SM Energy (NYSE:SM) said yesterday the price it is receiving for NGLs at the Mont Belvieu delivery point fell 36% Q/Q to $16.67/bbl and that the price declines would lower its 2015 total budgeted revenue by ~$25M while not affecting its drilling or production.
- Barclays recently said Chesapeake Energy (NYSE:CHK) could see 2016 cash flow cut by up to 3% if NGL price weakness persists, while Range Resources (NYSE:RRC) may see its cash flow cut by up to 5%; APC, DVN, PXD, QEP, SWN, ECA and EOG also could see reduced cash flow related to NGL pricing, the firm said.
- Analysts at Tudor Pickering have a more optimistic view and expect an NGL pricing recovery next year, as cresting U.S. nat gas and crude production looks to be flat-to-declining through 2016, giving U.S. infrastructure time to catch up; the firm upgrades SWN to Accumulate from Hold, with GPOR, MRD, COG, RICE and ECA as other top picks, and UPL and EQT recommended on weakness.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
Thu, Jun. 11, 7:56 AM
- Chesapeake Energy (NYSE:CHK) is downgraded to Perform from Outperform at Oppenheimer to reflect the negative impact on earnings and cash flow from lower oil and gas prices and lower production as a result of asset sales and sharply lower capital spending.
- Oppenheimer expects CHK to report losses of $544M this year and $833M next year, or a respective $0.48/share and $0.84/share; the firm also projects operating cash flow of $2.1B this year and $1.5B next year.
- Assuming $3.7B capex, annual dividends of ~$230M and preferred dividends of ~$220M, Oppenheimer foresees free cash flow deficits of $2.1B for 2015 and $2.7B for 2016.
- CHK -1.2% premarket.
Fri, Jun. 5, 11:49 AM
- Analysts say yesterday's release of a landmark EPA study that found fracking had no widespread impact on drinking water makes it less likely that the Obama administration or Congress will strip a 2005 exemption of fracking from drinking water laws and that the EPA will move to tighten rules on disclosure of the chemicals used and limits on the methane emitted.
- "The EPA fracking study does not appear likely to spur additional federal water regulation beyond initiatives that are already in process," ClearView Energy Partners analyst Kevin Book writes.
- That’s seen as good news for companies such as Halliburton (NYSE:HAL) and Schlumberger (NYSE:SLB), the largest oil services companies, as well as producers such as Exxon Mobil (NYSE:XOM) and Chesapeake Energy (NYSE:CHK), as they weather lower oil and natural gas prices.
- The study "is absolutely consistent with all the previous studies that show that effective well containment practices make hydraulic fracturing a very safe practice,” XOM said after the report's release.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG
Thu, Jun. 4, 6:32 PM
- Chesapeake Energy (NYSE:CHK) hit a 52-week low today amid a double whammy of negative news concerning the natural gas market.
- The U.S. Energy Information Administration said storage levels grew by 132B cf in the week ended May 15 to 2.2T cf, 51% more than a year ago; the weekly surplus is the largest in 12 years and the second largest in EIA records that date back to 1994.
- Many analysts believe the oversupply eventually will push another fall in gas prices; "The market was ready for a large injection, but it's still extremely bearish," one said.
- Also, the Natural Gas Supply Association said in its 15th annual Summer Outlook assessment of the natural gas market that it expects production to set records and inflict downward pressure on prices compared with summer 2014.
- "Even with record-setting demand expected, production is also projected to set summer records," says Bill Green, NGSA chairman and Devon Energy (NYSE:DVN) VP of downstream marketing.
- ETFs: XLE, VDE, ERX, OIH, ERY, FCG, DIG, GASL, DUG, BGR, IYE, FENY, FIF, PXJ, RYE, FXN, DDG
Thu, Jun. 4, 11:48 AM
- Chesapeake Energy (CHK -3.8%) shares have been whacked by a third YTD as investors punish energy exploration firms that are considered likely to outspend their operating cash flow this year, but StreetAuthority's David Sterman thinks CHK appears poised to buck the consensus forecast this year and at least get to breakeven.
- CHK is "clearly healthier than it was a few years ago and is no longer at risk of a balance sheet blow up," Sterman writes, and its "strong base of real estate, coupled with impressive cost controls, could set the stage for a sharp spike in cash flow if energy prices rise from current levels."
- Sterman spots a subtle turnaround underway - one that appears to have prompted Carl Icahn to keep adding to his CHK position this year - as the company has cut the cost to develop and operate a well by ~30% in the past few years.
CHK vs. ETF Alternatives
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.
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