Ticonderoga Upgrades Chesapeake Energy (CHK) to Buy; Paves Way Toward Targeted Debt Reduction
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Price: $20.27 +1.91%
Rating Summary:
8 Buy, 21 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
8 Buy, 21 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Trade CHK Now!
Ticonderoga upgraded Chesapeake Energy (NYSE: CHK) from Neutral to Buy. PT $40.
Ticonderoga analyst says, "In a surprise announcement, CHK plans to sell its Fayetteville Shale assets in Arkansas as well as its 25.8% interest in privately held Frac Tech and its 20% interest in Chaparral Energy. CHK expects to receive proceeds of $5.0B, with the transactions closing by mid-2011. CHK owns 487,000 net acres in the Fayetteville Shale (located in Arkansas), which produces net 415MMcf/d and has net proved reserves of 2.26 Tcfe and risked non-proven reserves of 7.1 Tcfe. We view the deal as positive and an indication that CHK is serious about capital discipline, and are moving to a Buy."
"Coming into 2011, we had CHK with a cash shortfall of $1.8B in 2011 and $1.5B in 2012, for a total shortfall of $3.3B the next two years. Last week's Niobrara JV asset sale added $0.5B of cash and reduced CAPEX by $0.7B (total $1.2B), bringing the shortfall down to $2.1B over the next two years. Today's announcement targets $5.0B of proceeds, leaving $3.0B of excess cash. CHK says it expects to pay down $2.0-$3.0B of debt after these deals close."
For more ratings news on Chesapeake Energy click here and for the rating history of Chesapeake Energy click here.
Shares of Chesapeake Energy closed at $30.06 yesterday, with a 52 week range of $19.62-$31.43.
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Ticonderoga analyst says, "In a surprise announcement, CHK plans to sell its Fayetteville Shale assets in Arkansas as well as its 25.8% interest in privately held Frac Tech and its 20% interest in Chaparral Energy. CHK expects to receive proceeds of $5.0B, with the transactions closing by mid-2011. CHK owns 487,000 net acres in the Fayetteville Shale (located in Arkansas), which produces net 415MMcf/d and has net proved reserves of 2.26 Tcfe and risked non-proven reserves of 7.1 Tcfe. We view the deal as positive and an indication that CHK is serious about capital discipline, and are moving to a Buy."
"Coming into 2011, we had CHK with a cash shortfall of $1.8B in 2011 and $1.5B in 2012, for a total shortfall of $3.3B the next two years. Last week's Niobrara JV asset sale added $0.5B of cash and reduced CAPEX by $0.7B (total $1.2B), bringing the shortfall down to $2.1B over the next two years. Today's announcement targets $5.0B of proceeds, leaving $3.0B of excess cash. CHK says it expects to pay down $2.0-$3.0B of debt after these deals close."
For more ratings news on Chesapeake Energy click here and for the rating history of Chesapeake Energy click here.
Shares of Chesapeake Energy closed at $30.06 yesterday, with a 52 week range of $19.62-$31.43.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
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