NEW YORK (TheStreet) -- Chesapeake Energy (CHK) shares are falling in pre-market trading today, down -2.5% to $28.25, following the announcement that it s is going ahead with plans to spin off its drilling-rig business.
The spin off will shed about half of the energy company's workforce with the new company to be named Seventy Seven Energy Inc. The move is an effort to raise capital for the struggling company and, along with other divestitures and asset sales, is expected to generate $3.1 billion.
Along with the cash windfall the moves are expected to shave $250 million off of the company's operating cash flow during the current fiscal year.
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TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHESAPEAKE ENERGY CORP (CHK) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."