Drilling Down

Investors Pump Chesapeake Amid Takeover Speculation

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YOUNGSTOWN, Ohio – Chesapeake Energy Corp., the most prolific oil and gas driller in Ohio’s Utica shale play, is scheduled to release its fourth-quarter and full-year 2015 results before the start of trading tomorrow amid speculation that the Oklahoma City company is a “prime takeover candidate.”

The speculation, posted Monday on the Seeking Alpha blog, was quickly noticed by investors who sent the company’s stock price up to $2.39 share at the close of trading Monday – a 20% increase – and “the biggest one-day increase since December 2008. Chesapeake has advanced for five consecutive sessions, racking up 50% in gains,” according to Bloomberg News.

The company, the nation’s second largest natural gas producer, announced Feb. 15 that it will pay $500 million of debt due next month. According to Bloomberg, its common shares were the worst-performing stock in the S&P 500 index last year.

Chesapeake announced Feb. 8 that it has “no plans to pursue bankruptcy and is aggressively seeking to maximize value for its shareholders.” Kirkland & Ellis LLP “has served as one of Chesapeake’s counsel since 2010 and continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange.”

Chesapeake holds the largest acreage position in the Utica shale, most of it in Carroll County, Ohio The company also holds a strong position in Columbiana County, Ohio, where it owns more than 30 producing horizontal wells.

Since late 2014, oil and gas prices have hit rock bottom, and energy companies such as Chesapeake are struggling to keep operations afloat in a very dismal market.

At the end of January, Chesapeake announced that it suspended preferred stock dividends in order to save the company $170 million. The company has also taken measures to halt new drilling activity and curtail production at its working wells.

In November the company reported a net loss available to common stockholders of $4.7 billion, or $7.08 per fully diluted share, compared to net income of $169 million, or 26 cents per share, in the third quarter of 2014.

Published by The Business Journal, Youngstown, Ohio.