Stock Update (NYSE:CHK): Chesapeake Energy Corporation Announces Agreement To Sell Second Haynesville Shale Acreage Position For $465 Million


Chesapeake Energy Corporation (NYSE:CHK) announced that it has signed an agreement to sell a portion of the company’s acreage and producing properties in its Haynesville Shale operating area in northern Louisiana for approximately $465 million to an affiliate of Covey Park Energy LLC.

The sale includes approximately 41,500 net acres and 326 operated and non-operated wells currently producing approximately 50 million cubic feet (mmcf) of gas per day, net to Chesapeake. The company expects this transaction to close in the 2017 first quarter.

Doug Lawler, Chesapeake’s Chief Executive Officer, commented, “We are pleased with the results of our non-core Haynesville sales packages, totaling projected gross proceeds of $915 million, while divesting of only approximately 80 mmcf of daily gas production and approximately $50 million of estimated 2017 operating income. Upon closing, this strong bid for our second Haynesville package, along with our recent new issue and tender, will position Chesapeake with significant liquidity as we begin a new year.

“Chesapeake delivered on its strategy and achieved our stated financial and operational objectives in 2016. We exceeded our 2016 asset sales goal by approximately $500 million, bringing total gross proceeds from divestitures either signed or closed in the year to approximately $2.5 billion, excluding certain volumetric production payment repurchase transactions. We will continue to pursue opportunities to strengthen our balance sheet in 2017.” (Original Source)

Shares of Chesapeake Energy are currently falling 2.87% to $7.10, or down $0.21 in pre-market trading Tuesday. CHK has a 1-year high of $8.20 and a 1-year low of $1.50. The stock’s 50-day moving average is $6.43 and its 200-day moving average is $5.84.

On the ratings front, Chesapeake Energy has been the subject of a number of recent research reports. In a report issued on December 5, FBR analyst Joseph Allman reiterated a Sell rating on CHK. Separately, on November 15, Credit Suisse’s Mark Lear maintained a Hold rating on the stock and has a price target of $7.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Joseph Allman and Mark Lear have a yearly average loss of -7.6% and a return of 17.6% respectively. Allman has a success rate of 37% and is ranked #4068 out of 4288 analysts, while Lear has a success rate of 70% and is ranked #131.

Overall, 3 research analysts have rated the stock with a Sell rating, 9 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $6.10 which is -16.6% under where the stock closed yesterday.

Chesapeake Energy Corp. engages as a natural gas and oil exploration and production company. It operates through the Exploration and Production; Marketing, Gathering and Compression segments. The Exploration and Production segment focuses on finding and producing natural gas, oil and natural gas liquids. The Marketing, Gathering, and Compression segment deals with the marketing, gathering, and compression of natural gas, oil, and natural gas liquids primarily from Chesapeake-operated wells.