Chesapeake +6% after in-line Q1 earnings, asset sale
May 5 2016, 10:27 ET | About:
Chesapeake Energy Corporation (CHK) | By:
Carl Surran, SA News Editor
Chesapeake Energy (
CHK +5.8%) surges in early trading after posting a
Q1 lossthat met Wall Street expectations and striking a
$470M sale of some Oklahoma assets to Newfield Exploration.
Analysts at Sterne Agee CRT say the two factors "
further dent the weakening bear case on CHK... We expect CHK shares to respond favorably to another bullish reset to asset sale proceeds that minimizes the impact to current production, as well as to continued strong operational results."
CHK says Q1 production averaged 672.4K boe/day,
above the consensus forecast of 651K boe/day; associated production from the STACK asset sale is only 3.8K boe/day, less than 1% of CHK’s total current production.
Of the STACK sale, CHK says the move will "contribute substantially" to reaching the company's target for $500M-$1B in asset sales by year-end, and that more divestitures are expected for Q2 and Q3.
Wells Fargo analyst suggest remaining on the sidelines, however, believing CHK still needs a transformative M&A transaction, higher gas prices, and/or some meaningful delevering event.
Now read
Chesapeake Q1 results: The worst is over