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Chesapeake Energy Releases 2017 Capital Budget Estimates

Energy player Chesapeake Energy CorporationCHK recently issued the estimates for its 2017 capital budget.

The projected capital spending for 2017 is in the range of $1.9-$2.5 billion compared with the 2016 expenditure of $1.65-$1.75 billion. This higher capital spending will likely be due to increased rig operations. During the year, the company is anticipated to operate 17 rigs as against 10 rigs in 2016. It is to be noted that during 2017, Chesapeake Energy is planning to spud and place on production roughly 400 and 450 gross operated wells, respectively. The company had spud and placed on production 213 and 428 wells, respectively, last year. Another energy firm that recently increased its 2017 capital spending is Denbury Resources Inc. DNR .

Chesapeake Energy also provided an outlook for 2017 production, which estimates output between 194 million barrels of oil equivalent (MMBoe) and 205 MMBoe. The 2017 production will likely comprises of 33-35 MMBoe of crude, 18-20 MMBoe of natural gas liquid and 860-900 billion cubic feet of natural gas.

Oklahoma-based Chesapeake Energy is an independent oil and gas company engaged in development of a diverse resource base of unconventional oil and natural gas properties in the U.S. The company is anticipated to release fourth-quarter 2016 results before the opening bell on Feb 23, 2017. The Zacks Consensus Estimate for the quarter stands at 7 cents per share.

In the last three months, the company's shares outperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry. During the aforesaid period, Chesapeake Energy's shares gained 6.1% compared with 2.6% increase for the broader industry.

Although Chesapeake Energy shows price strength, it seems overvalued in terms of EV/EBITDA ratio. This is one of the best multiples for valuing oil and gas companies because energy firms have a large amount of debt and EV (Enterprise Value) includes the parameter. Chesapeake Energy currently has a trailing 12-month EV/EBITDA ratio of 69.59, which is above the industry average of 14.59 for the last three months.

As a result, Chesapeake Energy carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy sector include Imperial Oil Limited IMO and Northern Oil and Gas Inc. NOG . While Imperial Oil sports a Zacks Rank #1 (Strong Buy), Northern Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

In 2017, Imperial Oil's earnings are anticipated to grow 386.6%.

Northern Oil and Gas posted an average earnings surprise of 81.35% in the last four quarters.

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Imperial Oil Limited (IMO): Free Stock Analysis Report

Chesapeake Energy Corporation (CHK): Free Stock Analysis Report

Denbury Resources Inc. (DNR): Free Stock Analysis Report

Northern Oil and Gas, Inc. (NOG): Free Stock Analysis Report

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


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

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