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Tuesday, December 1, 2015

Chesapeake Energy Rolls On, With Much Work Still to be Done

From Seeking Alpha:
Chesapeake Energy Corporation's (NYSE:CHK) Q3 2015 results came by with little fanfare, as there were no new major pieces of news for the market to grab onto. In regards to asset sales, Chesapeake Energy simply noted that investors should expect $200 million - $300 million in non-core divestitures through Q1 2016. While management noted that there were bigger deals in the works, they didn't provide enough information to paint some sort of timetable for a huge sale. 
News of a large cash infusion is just what Chesapeake needs and is what investors want, but it seems the market is going to have to keep anxiously waiting. With its hefty debt load of ~$11.2 billion (~$10.7 billion long term debt plus ~$900 million of debt maturing within a year at the end of Q3, minus ~$400 million that was recently paid off with cash) bearing down on its financials, Chesapeake remains in the hot seat to make a deal sometime relatively soon. 
A sale isn't needed right away to keep the lights on due to Chesapeake's ample liquidity position of ~$5.3 billion (~$5.7 billion at end of Q3 minus recent debt redemption) via its cash pile and undrawn revolving credit facility. However, an asset sale and subsequent debt reduction is needed farther out to push the company towards a better financial trajectory.
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