Chesapeake Energy Corp (CHK)

[dude iligence]

$28 target now from analysts "Chesapeake: Asset Sales Look Promising, Says Canaccord" June 12, 2012, 9:56 A.M. ET



By Avi Salzman

Canaccord Genuity analyst John Gerdes raised his price target on Chesapeake Energy (CHK) this morning in a note highlighting the company’s recent plans to sell midstream assets to bring in more than $4 billion. The sales put the oil and gas producer in a strong position to meet its debt covenants and potentially hit its sales target of $9.5 billion this year, Gerdes argues.

“We view these targets as achievable given asset sales should net $6.5-9.5 billion (Permian $4-6 billion, Mississippian $1-1.5 billion, Utica oil $0.5-1 billion, northern DJ about $0.5 billion and miscellaneous about $0.5 billion). Looking to 2013, Chesapeake should outspend cash flow by about $6 billion, less than our prior about $6.5 billion estimate. Through identified asset sales, Chesapeake could pre-fund $1-4 billion of the 2013 estimated shortfall.”

Gerdes sees the company’s net debt slipping to $14.7 billion from about $18.5 billion at the start of the year. He raised his price target by $2 to $28. Shares are up 0.6% today at $17.71.