Bank of America Maintains Buy on Chesapeake Energy

Bank of America has published a research report on Chesapeake Energy CHK responding to the company's plans to close its funding gap. In the report, Bank of America writes, "Chesapeake announced multiple high impact initiative moves that we believe will address one of the key perceived headwinds facing the stock – the funding gap vs. planned capex in 2012. The announcement includes a volumetric production payment (VPP), a financial transaction involving Cleveland Tonkawa plays and JV transactions in Mississippi Lime and Permian Basin. Critically, CHK is considering a complete exit from the Permian Basin in a move that high grades the asset base and shows management's willingness to monetize asset value in what would be the second major asset sale after Fayetteville in early 2011. Our recent initiation note argued that the market was being short-sighted in management's commitment to release value. We view today's announcement as a major proof, reiterate Buy." Bank of America maintains its Buy rating and $38 price objective on Chesapeake Energy, which is currently trading up $0.19 from Friday's $22.13 closing price.