Chesapeake-GE Deal to Promote Gas - Analyst Blog


Oklahoma-based oil and gas producer, Chesapeake Energy Corporation ( CHK ) has formed an alliance with General Electric Company ( GE ) to develop and endorse infrastructure solutions to speed up the acceptance of natural gas as a transportation fuel.

The memorandum of understanding signed between Chesapeake and GE on a product and services development partnership, signifies a multi-year collaboration involving the two companies. Both parties will be involved in the development and introduction of compressed natural gas (CNG) and liquefied natural gas ( LNG ) transportation and natural gas home-fueling solutions.

The collaboration intends to reduce the ownership and operational costs of natural gas vehicle (NGV) fueling stations by leveraging GE's global Oil & Gas technology portfolio with Chesapeake's proficiency in developing innovative fueling solutions.

Given the abundance of low cost natural gas in North America, resulting from the development of shale resources, the deal between the companies will encourage operators to bring forth more NGVs. In line with this initiative, GE will supply over 250 modular and standardized CNG compression stations for NGV infrastructure, starting in fall 2012.

The units are designed in two ways-an 8 foot by 20 foot container or 8 foot by 40 foot container, depending on the requirements. The boxes manufactured by GE are cheaper and easier to install vis-a-vis other fueling options.

Assuming gasoline price of $3.50 per gallon and CNG at $2.09 per gasoline gallon equivalent, and 27,500 miles driven annually, the usage of CNG in a vehicle will lower fuel expenses by up to 40% per year.

The partnership will merge Chesapeake's natural gas proficiency with GE's widespread global manufacturing capabilities, resulting in transformative products for industries and individual consumers across the U.S.

Chesapeake holds a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the stock.

CHESAPEAKE ENGY ( CHK ): Free Stock Analysis Report
GENL ELECTRIC ( GE ): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CHK , GE , LNG

More from

Related Videos




Most Active by Volume

  • $15.38 ▼ 0.39%
  • $66.34 ▲ 2.26%
  • $8.36 ▼ 9.52%
  • $26.55 ▲ 1.34%
  • $6.55 ▲ 1.87%
  • $95.22 ▲ 0.19%
  • $51.49 ▼ 0.62%
  • $42.09 ▲ 0.97%
As of 7/11/2014, 04:03 PM