Chesapeake Energy Corp (CHK)

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Chesapeake Energy: Every Little Bit Helps -- Barron's Blog

9:57 am ET May 24, 2016 (Dow Jones) Print
By Ben Levisohn

It's hard to believe that just a few months ago we were wondering if Chesapeake Energy ( CHK) would be forced into bankruptcy. But with oil prices higher, Chesapeake is doing everything in its power to reduce its debt load, including a new debt-for equity exchange. SunTrust Robinson Humphrey's Neal Dingmann and team consider the implications:

Chesapeake announced further debt for equity swaps (15% discount) along with likely settling hundreds of royalty lawsuits. Both transactions signify further progress made in the company cleaning up its balance sheet. While critics likely will contend that each of the latest events is a small piece versus total debt/lawsuits, we suggest each step helps. We continue to further contend that Chesapeake remains asset heavy with over 8 million acres, which should easily help cover any upcoming required payments...

The company is likely settling over 400 lawsuits (13,000 clients) for $29.4 million ($13.1 million in cash / $10 million in 3yr promissory note) though a deal is contingent on the law firms getting written approval from 90% of the clients by July 11.

Shares of Chesapeake Energy have declined 0.4% to $3.66 at 9:48 a.m. today, while the Energy Select Sector SPDR ETF ( XLE) has ticked up 0.1% to $66.04.

More at Barron's Stocks to Watch blog, http://blogs.barrons.com/stockstowatchtoday/

(END) Dow Jones Newswires

May 24, 2016 09:57 ET (13:57 GMT)

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