On Apr 2, Zacks Investment Research upgraded natural gas
Chesapeake Energy Corporation
) to a Zacks Rank #2 (Buy).
CHESAPEAKE ENGY (CHK): Free Stock Analysis
CALUMET SPECLTY (CLMT): Free Stock Analysis
GASTAR EXPL LTD (GST): Free Stock Analysis
NGL ENERGY PART (NGL): Free Stock Analysis
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Why the Upgrade?
Operating environment and future growth prospects seem bright for
Chesapeake Energy, as reflected by the rising earnings estimates
for this Okla.-based company. Over the last 7 days, the Zacks
Consensus Estimate for the first quarter of 2013 has increased
4.54% to 23 cents per share, while that for 2013 went up 3.39% to
$1.22 per share.
The momentum has been strong since Chesapeake Energy released its
fourth-quarter and full-year 2012 earnings results on Feb 21.
Adjusted earnings per share came in at 26 cents per share,
comfortably beating the Zacks Consensus Estimate of 14 cents by
almost 86%. The outperformance came on the back of improved oil
Total revenue improved 29.8% to $3,539.0 million from $2,727.0
million a year ago. The top line also got the better of the Zacks
Consensus Estimate of $1,532.0 million.
Apart from delivering positive earnings surprises in two of the
last four quarters with an average beat of 8.47%, the company
also has an impressive long-term expected earnings growth rate of
Recently, Chesapeake Energy entered into a definitive agreement
to sell proven reserves and undeveloped leasehold interests in
Kingfisher and Canadian counties, Okla. to Houston-based energy
Gastar Exploration Limited
) for $75.2 million. Gastar would also buy back its common shares
held by Chesapeake for $9.8 million and settle all litigation.
The sale of assets and shares are in line with Chesapeake
Energy's strategy to reduce its long-term debt by monetizing its
assets and cutting lease-hold spending. The Gastar transaction
was mainly aimed at reining in debt as well as filling the
funding gap for its mounting expenses in the wake of continued
low natural gas prices.
In light of the downtrend in gas prices, we appreciate Chesapeake
Energy's plans of deploying more funds to drill liquids-rich
plays, mainly for the development of its holdings in the Eagle
Ford Shale, Granite Wash and Mississippi Lime.
Other Stocks to Consider
In addition to Chesapeake Energy, certain other energy operators
NGL Energy Partners LP
Calumet Specialty Products Partners L.P.
) offer value and are worth buying now. Both these firms sport a
Zacks Rank #1 (Strong Buy).