Chesapeake Energy Corporation Shares Rise With Oil Prices

Updated on

Chesapeake Energy stock is on track for its second straight day of solid gains today after rallying on Thursday on the back of rising oil prices. Today oil fell back below the $52 per barrel mark due to abundant global supply, although stock in the U.S. remains tight, which of course is good news for Chesapeake.

Meanwhile analysts are preparing for the energy giant’s first Analyst Day in two years next week.

Chesapeake Energy moved by oil prices

Today Brent oil prices gave up their gains despite OPEC’s plans to reduce production. Brent crude touched $54 a barrel on Monday, which is its highest price so far this year. OPEC decided on Sept. 28 that it will cut oil production, although the organization said more recently that output continues to rise. Global benchmark Brent declined to $51.68 a barrel after touching $52.55 earlier today.

U.S. crude oil declined to $50.16 a barrel. The U.S. Energy Administration said on Thursday that overall crude inventory in the U.S. climbed 4.9 million barrels, marking the first increase in six weeks.  However, stock for crude futures at the Cushing delivery station fell.

Chesapeake Energy to hold Analyst Day Oct. 20

Chesapeake Energy is set to hold its first Analyst Day since May 2014 in Oklahoma City on Oct. 20. UBS analyst William Featherston, who has a Sell rating and $4.25 price target on the company’s stock, expects the focus to be on the improvements in its liquidity position and plans to cut another $2 billion to $3 billion off its debt by 2018. He notes that the company has cut more than $1 billion off its principal debt year to date and cut its debt maturities for next year by two-thirds to $658 million.

However, he feels that Chesapeake’s leverage is still too high and hopes to hear more about how management plans to cut its debt over the next few years. He expects them to highlight how they intend to shift their almost exclusively defensive debt reduction strategy to one that is more offensive.

Featherson also expects Chesapeake Energy to reiterate its guidance for next year for a 1% to 6% decline and capital expenditures budget of about $1.8 billion to $2.6 billion.

Other possible topics for Chesapeake Energy’s Analyst Day

In addition to the company’s capital structure, Johnson Rice & Company also expects management to unveil new “plays in the Midcontinent” and update its progress in its core plays, including Haynesville, Eagle Ford and Utica. Additionally, they expect Chesapeake to announce some more asset divestures, which they believe could be one of the non-core Haynesville assets, the Mississippian Lime play or possibly an area in the Midcontinent that has not been developed yet.

Shares of Chesapeake Energy rose by as much as 3.02% to $6.62 during regular trading hours on Friday.

Leave a Comment