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Analyst: Asset Sale Home Run For Chesapeake Energy

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Chesapeake Energy Corp.'s (NYSE: CHK) sale of assets earlier this week for $4.975 billion was "an absolute home run" that will help improve 2015 results, an analyst said Wednesday.

The Oklahoma City-based oil and gas company, off more than 26 percent year to date, changed hands recently at $19.92, down $0.37 cents.

Wunderlich's Jason Wangler reiterated a Buy rating and a $24 target, citing the recent sale as well as recent high production levels amid lower capital spending.

On Monday, the company closed on the sale of about 1,500 wells in West Virginia and Pennsylvania to Southwestern Energy Co. (NYSE: SWN) for $400 million less than originally planned.

But Monday's payday, combined with a recent $4 billion credit facility, provides Cheasapeke with liquidity of $9 billion.

"While being strapped for cash used to be a staple for Chesapeake, we believe the new regime has the opposite 'problem' of too much cash today," Wangler said.

On Monday, the company also launched a $1 billion share buyback plan. Wangler said he doesn't expect this "problem" to last long.

Chesapeake's co-founder and chief executive Aubrey McClendon was ousted in 2013 after gaining a reputation for amassing heavy debt and substantial risk.

Wangler said that recently, the company has "undergone dramatic strategic improvements" that will help ensure future growth.

Latest Ratings for CHK

DateFirmActionFromTo
Nov 2016JefferiesUpgradesUnderperformHold
Oct 2016RBC CapitalUpgradesUnderperformSector Perform
Oct 2016Stephens & Co.UpgradesUnderweightEqual-Weight

View More Analyst Ratings for CHK
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Posted-In: chesapeake asset sale Jason Wangler WunderlichAnalyst Color Price Target Reiteration Intraday Update Analyst Ratings

 

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