Fri, Feb. 27, 10:54 AM
- Chesapeake Energy (CHK -2.4%) discloses that it expects to write down the value of its oil and gas properties in Q1, with more writedowns in subsequent quarters if prices stay low, according to its latest 10-K filing.
- "Based on the first-day-of the-month prices we have received over the 11 months ended February 2015, we expect to have a material writedown in the carrying value of our oil and natural gas properties in the first quarter of 2015," CHK says.
Thu, Feb. 26, 11:59 AM
- Chesapeake Energy (CHK -4.1%) is sharply lower for a second straight day following disappointing Q4 earnings, as UBS downgrades shares to Neutral from Buy and cuts its price target to $19 from $24.
- The view is that CHK offered a "surprisingly weak outlook" for volumes and price realizations, and the company's adjustment to growth for Marcellus curtailments (+3%-5%) does not add up since CHK has little incremental contracted takeaway capacity in the future.
- Also, Jefferies reiterates its Hold rating but with a reduced stock price of $16, as it guides CHK's headline volumes to fall 7%-8% in 2015.
- However, Oppenheimer says the two-day decline is an overreaction to overspending; despite the big earnings miss, CHK has "one of the most attractive asset portfolios of any E&P company,” the firm says.
Wed, Feb. 25, 3:28 PM
- Chesapeake Energy's (CHK -9.5%) team of "value barbarians" has worked to bring the company's costs in line after years of overspending, but CHK will continue to outspend its cash flow in 2015, CEO Doug Lawler said in today's earnings conference call.
- CHK is forecasting weak pricing for the full year in the Marcellus Shale, and says it started shutting in ~250M cf/day in Marcellus natural gas production in December; CHK plans to run only one drilling rig in the area this year, down from five rigs operating there last year.
- On CHK's plans for the $5B it made on last year's sale of a big piece of its Marcellus and Utica gas business to Southwestern Energy, Lawler said CHK could use the money to pay down debt, fund its exploration program or acquire new properties or another company.
- CapitalOne analysts consider Q4 results soft, telling clients that CHK's "weaker than expected liquids pricing plus 2015 guidance for production" likely would drive Wall Street estimates lower.
Wed, Feb. 25, 9:24 AM| 3 Comments
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.
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.
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.
Mon, Jan. 5, 12:18 PM
- Energy stocks severely underperform the broader market, with the sector -4.2% vs. the S&P 500's -1.4%, as U.S. oil prices briefly slip below $50/bbl for the first time since April 2009; Nymex crude recently was -4.4% at $50.37, while Brent crude -5.9% at $53.08.
- Among the day's biggest losers: DNR -9%, RIG -7.6%, NBR -4.8%, CHK -5.9%, SDRL -9.1%, SD -12.3%, NOV -5.9%, PSX -6.2%, APA -5.9%, DVN -4.4%, EOG -6%, SU -5.2%, OXY -4.2%, APC -8.7%, PWE -9%, ECA -5.5%, MRO -5.3%.
- Global oil majors, which have been seen as less vulnerable to falling oil prices, are posting big losses: XOM -2.7%, COP -4.5%, CVX -3.8%, BP -5.8%, RDS.A -4.6%, TOT -6.5%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, FCG, DIG, PBW, BNO, GASL, DTO, DBO, DUG, IYE, XES, IEO, QCLN, IEZ, UWTI, PXE, USL, PXI, FENY, DWTI, PXJ, DNO, PSCE, RYE, SZO, PUW, FXN, OLO, DDG, HECO, TWTI, OLEM
Dec. 23, 2014, 12:33 PM
- Chesapeake Energy (CHK +7.9%) and Southwestern Energy (SWN -2.2%) are headed in opposite directions today after SWN's $5.4B price tag on its purchase of Marcellus Shale assets from CHK is the most the company has ever paid in an acquisition.
- At ~$13K/acre, CHK's 413K net acres, wells and equipment fetched a price that energy producers typically have been paying for land soaked in oil, not gas, analysts say; SWN "paid literally 2x or 3x times more than any gas deal we’ve seen in the last few years... 20% higher than anyone would have thought,” according to Wunderlich's Jason Wangler.
- In a conference call today, SWN CEO Steve Mueller said the company believes the acreage has more than enough potential to grow to a size that would justify the high price, and investors will see “significant cash flow in just a few years.”
- Sterne Agee's Tim Rezvan says the deal proved recent speculation on CHK's ability to close its previously announced sale to SWN unfounded and opens up CHK's road to investment grade credit.
Dec. 23, 2014, 9:18 AM
Dec. 22, 2014, 4:37 PM
- Chesapeake Energy (NYSE:CHK) +3.2% AH after closing its asset sale to Southwestern Energy (NYSE:SWN) for net proceeds of $4.975B, $400M less than expected due to a settlement for various items, including SWN's waiver of any future claims related to title defects and environmental liabilities.
- The properties sold to SWN consist of ~413K net acres and 1,500 wells located in West Virginia and Pennsylvania with 57K boe/day in net production, along with related property, plant and equipment.
- Also, CHK's board authorizes a $1B stock buyback program.
Dec. 22, 2014, 10:45 AM
- Natural gas prices fall 9.5% to near two-year lows at $3.133/mmBtu, in the biggest one-day percentage loss since February and the lowest intraday price since January 2013, on mild weather forecasts and inventory that is above year-ago levels.
- Prices are now down more than 15% in three straight losing sessions and are 30% lower than the six-month high closing price of $4.489/mmBtu it hit just a month ago.
- Weather has been unseasonably warm for December, limiting demand for home heating and allowing relatively low stockpiles to catch up to where they were a year ago and encouraging traders to sell based on the belief that supply is relatively healthy.
- Gas producers are among the biggest early decliners: XOM -1.1%, CHK -7.3%, APC -2.6%, SWN -6%, DVN -2.2%, COP -2.3%, BP -1.5%, COG -4%, BHP -1.9%, CVX -1.3%, ECA -5.1%, EQT -4.3%, RDS.A -1.7%, UPL -12%, WPX -6.9%, EOG -1%, OXY -1.1%, RRC -6.1%, APA -2.3%, AR -3.2%, CNX -3%, QEP -4.8%, LINE -4.9%, NBL -1.6%, SM -2.6%, XEC -4.2%, PXD -2.9%, NFX -5.1%.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, NAGS, DCNG
Nov. 5, 2014, 3:48 PM
- Chesapeake Energy's (CHK +6.7%) balance sheet is "close to being fully healed," Sterne Agee analyst Tim Rezvan exults after CHK's strong Q3 results, reduced expenses and the $5.4B sale of western Marcellus acreage expected to close this quarter.
- CHK’s focus on expense reduction was evident quantitatively in terms of the lowest all-in unit expense number since Q3 2010, and qualitatively with sharply lower well costs across all core operating areas, according to Rezvan.
- The company's "mantra of operational efficiency is being reflected at the field level, and CEO Doug Lawler's push to drive costs down appears to have more room to run," Rezvan writes.
Nov. 5, 2014, 9:17 AM
- Chesapeake Energy (NYSE:CHK) +3.8% premarket after Q3 earnings easily beat Wall Street estimates, posting a 17% Y/Y increase in revenues driven by 48% revenue growth in its natural gas, oil and natural gas liquid segment as production increased.
- Q3 production averaged 725.6K boe/day, up 11% Y/Y, adjusted for asset sales; oil production rose 5% to 118.9K bbl/day, production of natural gas liquids jumped 14% to 95.9K bbl/day, and natural gas production gained 3% to 3.1B cf/day.
- Analysts at Tudor Pickering Holt had estimated CHK's Q3 production at 704K boe/day, and characterize the results as a "strong beat."
- For the full year, CHK estimates production to rise 9%-12%, with liquids production up 29%-33%, oil production up 11%-15%, NGL production up 63%-68%, and natural gas production up 4%-6%. The daily equivalent total is expected to be 695 million to 705 million barrels a day.
Oct. 22, 2014, 11:49 AM
- Chesapeake Energy (CHK +3.3%) is upgraded to Buy from Neutral with a $27 price target, up from $24, at UBS, which says new CEO Doug Lawler has removed most of the firm's bear arguments concerning high leverage, lack of transparency, and material free cash flow outspend.
- CHK's turnaround is not reflected in discounted valuation, the firm says, adding that high leverage has been reduced, visibility has increased, and free cash flow deficit has been narrowed.
- Given CHK's strong liquidity, below average oil inventory and attractive market valuations, UBS believes CHK may pursue an acquisition targeting oil-weighted U.S. resource assets.
Oct. 16, 2014, 3:36 PM
- Southwestern Energy (SWN -10.6%) appears to be paying a steep price to buy $5.375B in high quality Appalachia assets from Chesapeake Energy (CHK +16.7%); SunTrust estimates SWN paid $9,625/acre for the land, when previous deals in West Virginia had come in below $5K/acre and the sharp decline in commodity prices over recent months.
- Stock investors clearly think CHK got a great deal, which is boosting shares of other West Virginia players such as Magnum Hunter (MHR +9.9%), Gulfport Energy (GPOR +6.7%) and Consol Energy (CNX +2.5%).
- Topeka Capital believes MHR has superior assets in the core Utica and Marcellus, and an average of the transaction metrics on MHR's production and acreage implies upside of 39.2%; with its scale in the area, the firm thinks MHR makes for an attractive takeout over the next 12 months.
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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