UPDATE: Goldman Sachs Downgrades Chesapeake Granite Wash Trust on Unit Price Downside

In a report published Wednesday, Goldman Sachs analyst Theodore Durbin downgraded the rating on

from Neutral to Sell, and lowered the price target from $13.00 to $11.00. In the report, Goldman Sachs noted, “We downgrade Chesapeake Granite Wash Trust (CHKR) to Sell, with 21% unit price downside to our $11, 12-month target price (vs. 14% average upside for our coverage). We expect weak well results and a reduced rig count in its sole area of production, Washita County in the Colony Granite Wash, will drive sharply lower volumes and cash distributions to unitholders in coming quarters and years. We also expect a less favorable production mix over time, with more low-margin natural gas and less high-margin NGL and crude oil production. We expect cash flows only slightly above the subordination threshold, leaving limited room for error.” Chesapeake Granite Wash Trust closed on Tuesday at $14.00.