Capital One Southcoast Starts Chesapeake (CHK) at Add; $74 PT
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Capital One Southcoast initiates coverage on Chesapeake Energy Corp. (NYSE: CHK) with an Add rating and a $74 price target.
The firm values Chesapeake based on an estimate of $60 per share of proved reserve value, $5 of service and midstream assets and $33 of probable reserve value, minus $25 of long-term debt and working capital. In regards to probable reserves, Capital One notes that the Street is "less willing to give large companies value for probable reserves than smaller ones", but believes that "this valuation gap will close over time."
Notably, Capital One feels that at Chesapeake's current price, the Street is not pricing in the value of the company's Haynesville or Marcellus acreages at all.
Capital One's $74 price target on Chesapeake represents a potential gain of 30% from yesterday's closing price of 57.10.
Chesapeake Energy Corporation, an oil and natural gas exploration and production company, engages in the acquisition, exploration, and development of properties for the production of crude oil and natural gas from underground reservoirs.
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