Chesapeake Energy (CHK) Stock Soars on Q1 Results, Asset Sales

NEW YORK (TheStreet) -- Chesapeake Energy  (CHK) stock is spiking by 12.31% to $6.34 in pre-market trading on Thursday, after the company reported a 2016 first quarter loss in line with analysts' estimates and announcing asset sales. 

Before the market open, the natural gas producer reported an adjusted loss of 10 cents per share, in line with analysts' expectations. 

Revenue declined by 39% year-over-year to $1.95 billion for the most recent period, missing analysts' estimates for $2.55 billion. The drop in sales came as lower commodity prices were partially offset by improvement to the company's production expenses and general and administrative expenses.

Additionally, Chesapeake has signed an agreement to sell about 42,000 acres in Oklahoma's STACK field for roughly $470 million, according to a company statement. The transaction will "contribute substantially" to reaching the company's target for between $500 million and $1 billion in asset sales by the end of the year. 

"The STACK acreage sale we are announcing today accelerates value from a portion of our undeveloped acreage that currently generates very little cash flow, giving us the ability to enhance current liquidity," CEO Doug Lawler said in a statement. 

The company anticipates further divestitures during the second and third quarters. 

Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D+.

Chesapeake Energy's weaknesses include its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

You can view the full analysis from the report here: CHK

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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