Chesapeake Energy (CHK) Stock Heads Up On Production News

Chesapeake Energy Corporation CHK Stock News

Chesapeake Energy Corporation (NYSE: CHK) is headed up in the market this morning, trading on gains of more than 6%, bouncing off of a 26-year low. The gains come after the company announced a preliminary fourth-quarter production update. Here’s what’s going on:

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CHK Stock Climbs On Production Update

Chesapeake Energy excited investors this morning after providing a preliminary fourth-quarter production update. This run is much appreciated by investors who have seen the stock tumble around 25% over the past seven sessions.

In the update, CHK said that its average estimated equivalent production will come in between 476,000 and 478,000 per day. This is a strong increase from the company’s daily average of 464,000 barrels of equivalent per day.

When it comes to oil production, the company said that it is expecting for the average production to come in between 125,000 and 126,000 barrels per day.

Importantly, the company said that during the quarter, it elimninated around $900 million in debt. Moreover, transportation and other general expenses fell by around $335 million and as of December 31, 2019, it had about $1.4 billion in liquidity.

In a statement, Doug Lawler, President and CEO at CHK, had the following to offer:

We delivered strong cash flow during the quarter on lower costs and higher oil volumes. Natural gas and natural gas liquids volumes were sequentially lower due to our decisions to direct capital to the highest-margin opportunities in our portfolio, enhancing our profitability. Our strong results in the fourth quarter have continued into early 2020 and are setting the foundation for the company to reach free cash flow this year. We remain committed to achieving further meaningful debt reduction through asset sales, capital markets transactions and cost discipline.

Why This Is Such A Big Deal

The bottom line is that investors have been waiting for quite a bit of time for conditions to improve at Chesapeake Energy, in terms of both finances and production. It seems as though, with this update, that’s exactly what’s happening.

Ultimately, production is up substantially over previous averages. Moreover, the company is seeing a strong reduction in debt, has plenty of money to get through key catalysts ahead and is reducing operating expenses in a big way.

At the end of the day, the company is seeing improvements across all key areas. If that’s not a reason to be excited about what’s going on at CHK, I’m not sure what is!

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