Thu, Oct. 1, 10:58 AM
- Chesapeake Energy (CHK -4.6%) bonds plunge after the company announced an amendment to its existing $4B line of credit that would allow it to incur as much as $2B in junior debt.
- Under terms of the deal, CHK's existing credit line has become a secured credit facility, which can become unsecured again if the company meets certain conditions, which it does not disclose.
- CHK was able to extract some concessions from its lenders, such as the ability to incur new debt and the removal of the total leveraged ratio covenant.
Fri, Sep. 25, 3:15 PM
- Sterne Agee CRT’s Tim Rezvan notes that investors are still shorting oil and gas stocks, especially Chesapeake Energy (CHK -5.6%), and have been rapidly increasing their short positions in Approach Resources (AREX -7.4%), Occidental Petroleum (OXY +0.7%) and Energen (EGN -0.4%).
- According to Rezvan, AREX had a 77% increase in short interest to 7.9M shares (19.6% of shares outstanding) since the end of August, OXY had an 18.9% increase to 17.9M shares (2.3% of shares outstanding), and EGN had an 8.4% increase to 3.7M shares (4.7% of shares outstanding).
- Short interest in CHK rose another 3M shares to 220.6M (33.1% of shares outstanding), the seventh consecutive increase.
Fri, Sep. 18, 5:40 PM
Thu, Sep. 17, 3:59 PM
- Chesapeake Energy (CHK -4.4%) is a major loser today following chatter that it may not be able to raise desired capital with a sale of its Utica shale assets.
- Reports say CHK has been hoping for $2B from such a sale but instead has received "low-ball" offers of ~$700M.
- CHK has not announced it is selling these assets, but it has been rumored that the company is shopping for potential buyers.
Tue, Sep. 8, 3:49 PM
- Williams Cos. (WMB +1.4%) renegotiated contracts with Chesapeake Energy (CHK +5.3%) are supposed to be positive for WMB's EBITDA, but Amey Stone at Barron's says several MLP contracts likely will be rewritten in the coming months resulting in tougher terms for the midstream MLPs that provide the storage and transportation.
- Janney analyst Nathan Judge argues that such negotiations are healthy for the recovery of MLPs, saying the deals often will result in positive outcomes for the MLP and may be supportive for a recovery in the group as fears diminish.
- The MLP usually has the upper hand in contract renegotiations, Judge believes, as customers that wish to renegotiate must make it economically attractive to the MLP to make changes; also, if the customer expects to grow, it will need to incentivize the MLP to invest, which was clear from the WMB-CHK deal.
Tue, Sep. 8, 12:21 PM
- Chesapeake Energy (CHK +6.7%) surges higher after announcing a deal with Williams Cos. (WMB +1.4%) that will decrease its natural gas transportation costs in exchange for higher volume.
- The deal should help improve CHK's 2016 guidance by diminishing the issues of high transportation costs and minimum volume commitments that have weighed on the shares for nearly a year, Wunderlich's Jason Wangler says.
- The firm says it remains bullish on CHK’s assets and believes management "continues to navigate tough internal and external factors quite impressively."
Tue, Sep. 8, 9:14 AM
Tue, Sep. 1, 9:13 AM
Wed, Aug. 5, 12:24 PM
- An early sigh of relief evaporates as Chesapeake Energy (CHK -9.5%) shares plunge to new 12-year lows following its Q2 report and after CEO Doug Lawler said in this morning's earnings conference call that he does not expect any significant recovery in prices.
- The CEO also said CHK is in discussions with potential investors about cash-raising deals that could involve asset sales or drilling partnerships.
- Lawler said he is not worried about low energy prices deflating offers from potential partners, since any investors considering taking stakes in the company’s fields are focused on how much crude and gas they will yield and at how cheap a per-unit cost.
- CHK also said in the call that it is curtailing 275M cf/day of gas production in the Utica Shale through October.
Wed, Aug. 5, 8:28 AM
- Chesapeake Energy (NYSE:CHK) +1.9% premarket after meeting Wall Street expectations with an $0.11/share Q2 loss on $3B in revenues that came in 41% less than a year ago but slightly better than estimates.
- On a GAAP basis, CHK reported a net loss of $4.15B, or $6.27/share, primarily due to a $3.67B drop in the carrying value due to the low prices for oil and natural gas; the drop was roughly the same size as CHK's Q1 drop in carrying value.
- CHK says its Q2 production averaged 703K boe/day, up 13% Y/Y and up 2% Q/Q, adjusted for asset sales, consisting of 119.5K barrels of oil, 3B cf of natural gas and 79.2K barrels of natural gas liquids, which represent respective Y/Y increases of 11%, 11% and 24%.
- Natural gas accounts for 72% of CHK's production, and the company's average realized price for natural gas for Q2 was $1.01/Mcf, down from $2.45 a year ago and $2.37 in Q1; the average realized price per barrel of oil was $67.91, down ~$17.50/bbl Y/Y but up more than $5 Q/Q.
- Operating cash flow at the end of Q2 was $606M, compared to $1.269B in the prior-year quarter.
- CHK revises its outlook for the rest of 2015, with total production now expected to rise 5%-7% to 667K-677K boe/day, up 4% from the midpoint of prior guidance.
Mon, Jul. 27, 2:15 PM
- Chesapeake Energy (CHK +2.2%) is upgraded to Buy from Neutral with a $15 price target at SunTrust, in part because the firm sees the potential for a sale of the struggling company.
- SunTrust looks for CHK's share price to rebound with an additional asset sale, and sees the company potentially duplicating last year’s success by selling some non-core assets in the Powder River Basin or Mid-Continent South, with either possibly generating $500M-plus in proceeds, which could be used to take activity higher than the 9-19 rigs 2015 year-end forecast; the firm adds that it "would not be surprised to see an entire company sale."
- The firm does not see the nearly $7B in liquidity as an issue with a projected outspend of less than $1.5B this year, though CHK’s operating efficiencies appear to be getting buried in the current troubled commodity environment.
Wed, Jul. 22, 3:19 PM
- Chesapeake Energy (CHK -2%) is downgraded to Neutral from Outperform with a $13 price target, cut from $20, at Credit Suisse, which sees a company totally on the defensive and focusing on protecting its balance sheet rather than increasing its production and/or expanding its holdings.
- In an environment where operational efficiency has become critical, analyst Mark Lear considers CHK’s asset base sub-par and providing little cause for investment in such a weak oil and gas price environment.
- While Lear upgrades the energy E&P sector and issues high ratings for several individual stocks, he advises would-be CHK investors to "look elsewhere for investment in this environment and consider operators with core exposure and more flexible balance sheets that are capable of accelerating net asset value even at the strip."
Tue, Jul. 21, 2:18 PM
- A dividend cut often is viewed favorably in the credit markets, but Chesapeake Energy's (CHK -7.3%) dividend suspension (I, II) is having the opposite effect on CHK bonds, which have lost ~$217M in market value so far today, as creditors may be unnerved about a cash balance that was lower than expected at the end of Q2.
- CHK’s $1B of 6.125% notes maturing in February 2021 have plunged nearly six cents to $0.875 on the dollar to yield 9%, Bloomberg reports.
- "The message being sent out is that the next six months are going to be equally as difficult as the last six months," a Gimme Credit analyst says. "Bondholders are saying ‘Whoa, if the company has to cancel the dividend, I guess maybe things are bad.’”
- Goldman Sachs wonders why a company with nearly $3B of cash and a $4B untapped credit line at the end of Q1 would care so much about saving $240M/year at the risk of upsetting equity holders, and suggests CHK may not be able to cut costs as much as expected, or that earnings will miss expectations, or both.
Tue, Jul. 21, 11:28 AM
- Chesapeake Energy (CHK -5.9%) tumbles to new 52-week lows after suspending its quarterly dividend for the first time in 14 years, while most energy names are moving higher in today's trade as crude oil prices rebound.
- "More bold actions like this are needed,” says Oppenheimer's Fadel Gheit, adding that CEO Doug Lawler "has to throw a lot of things overboard to save the ship."
- The move is prudent to improve financial liquidity, RBC analysts say; Tudor Pickering echoes that view, adding that few investors buy CHK for its 3.4% dividend yield.
- "Clearly, management believes that preservation of cash is more important than appeasing a beaten-down shareholder base’s desire for dividend income," says Sterne Agee CRT's Tim Rezvan, who also supports CHK's move; he recently upgraded CHK to Buy with a $13 price target.
Fri, Jul. 17, 12:35 PM
- Chesapeake Energy (CHK -4.9%) appears to be in the process of quietly skipping its quarterly dividend, according to Forbes' Antoine Gara.
- CHK normally would have announced its dividend about six weeks ago and set its quarterly payout to shareholders of record, Gara writes, but the company last announced its $0.875 quarterly dividend on March 5.
- In order to produce the cash flow to service its debt and financial commitments to contractors, CHK needs to maintain its oil and gas production, meaning the dividend could be sacrificed, Gara writes.
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.
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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