Why Chesapeake Energy (CHK) Is Falling Today

NEW YORK (TheStreet) -- Chesapeake Energy (CHK) was falling 0.6% to $24.88 Monday after the company filed paperwork to spin off its oilfield services business to shareholders.

The Form 10 the company filed with the SEC has some preliminary information about the financial, business, management, and risk factors involved in the potential spin-off. Following a spin off the oilfield services division would become its own corporation with the name Seventy Seven Energy.

Chesapeake Energy first said it was considering strategic alternatives for the division in February. At the time the company said the business would generate about $650 million in 2014, and that a sale of the division would have "minimal impact" on the company's 2014 guidance.

Morgan Stanley (MA) was hired to serve as a financial advisor in regards to the spin-off.

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TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHESAPEAKE ENERGY CORP (CHK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk."

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