Optimism at Chesapeake Energy after Jump in Stock Prices







Financial analysts like what financially-troubled Chesapeake Energy is doing to avoid bankruptcy. Investors apparently do too. Stock prices for the Oklahoma City-based company jumped 50 cents in mid-week trading after the firm announced in its quarterly and yearly earnings report that it intended to divest nearly $1 billion in assets in 2016. At least, that is the goal of the company leaders after they already sold more than $700 million in assets by the end of 2015.

Adding to the increased optimism on the markets was the plan by Chesapeake to cut spending on drilling and other projects by 57 percent from expenditures in 2015. At the same time, Chesapeake also announced FourPoint energy had agreed to buy some of its assets in Oklahoma and Texas for $385 million.

Chesapeake CEO Doug Lawler made it clear what the company intended to focus on in 2016.

“In light of the challenging commodity price environment, our focus for 2016 is to improve our liquidity, further reduce our cost structure and address our near-term debt maturities to strength our balance sheet,” he said.

Mark Hanson, an equity analyst for Morningstar, a Chicago-based investment research firm told the Associated Press, “I don’t think the quarter was nearly as dire as maybe some people thought. I mean, this is a company that was trading as if it was going into bankruptcy. It’s still something of a high-wire act. There’s only so low prices can go before this company’s in real trouble, but they did get some relief here in terms of the asset sales.”

Chesapeake reported yearly losses for 2015 of nearly $15 billion including a $2.19 billion loss in the fourth quarter. But the company also posted revenue of $1.27 billion for is oil and natural gas unit which surpassed Wall Street forecasts.