Chesapeake Energy Corporation (NYSE: CHK)
Chesapeake Energy Corporation (CHK), a oil and natural gas company gaped down on news that it has hired lawyers from Kirkland and Ellis to help restructure a $9.8 billion debt load. Chesapeake’s debt load has escalated to more than 8 times its market value. Leading the company to cancel future drilling projects, cut the size of its workforce and close offices to keep themselves afloat. Leading investors to speculate if bankruptcy is in the near future.
Chesapeake Energy Corporation Spokesman Comments
Chesapeake responded by issuing a statement saying it “has no plans to pursue bankruptcy.” It said Kirkland & Ellis has been working with the company since 2010 and “continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange.” A Chesapeake spokesman declined to elaborate further. Wall Street Journal
CHK Technical Analysis
CHK gapped down in price yesterday to $2.55, down from the prior day’s close of $3.06, which is a 17% decrease in price. Taking a look at the daily chart we can see that the last time CHK traded below this price level you have to go all the way back to March 2000 when it traded at lows of $2.37. Taking a closer look at the daily chart we can see that CHK has been on decline all year dating back to February 17th when it traded at its 52 week highs of $21.29. CHK has gapped down to new 52 week lows. CHK has a float of 579.13 million shares and is trading almost 4 times the normal daily trading volume. CHK hit pre market lows of $2.20, but bounced back $0.35, or equivalent to 16%. For trading purposes, my entry short would have been $2.50 looking for a run down to $2.00. My stop loss would have been $2.65, fearing anything above that and the stock would start to fill in the gap down.
Chesapeake Energy Corporation produces oil and natural gas through acquisition, exploration, and development of from underground reservoirs in the United States. It holds interests in natural gas resource plays, including the Haynesville/Bossier Shales in northwestern Louisiana and East Texas; the Marcellus Shale in the northern Appalachian Basin of West Virginia and Pennsylvania; and the Barnett Shale in the Fort Worth Basin of north-central Texas. The company also holds interests in liquids-rich resource plays, such as the Eagle Ford Shale in South Texas; the Utica Shale in Ohio and Pennsylvania; the Granite Wash/Hogshooter, Cleveland, Tonkawa, and Mississippi Lime plays in the Anadarko Basin in northwestern Oklahoma and the Texas Panhandle; and the Niobrara Shale and Upper Cretaceous sands in the Powder River Basin in Wyoming. It owns interests in approximately 45,100 oil and natural gas wells. As of December 31, 2014, the company had estimated proved reserves of 2.469 billion barrels of oil equivalent. It also provides oil, natural gas, and NGL marketing services, including commodity price structuring, securing and negotiating gathering, hauling, processing and transportation, contract administration, and nomination services for Chesapeake-operated wells; and marketing services for third-party producers. The company was founded in 1989 and is headquartered in Oklahoma City, Oklahoma. Yahoo Finance