Chesapeake Energy Corporation (NYSE: CHK) is having a great day in the market today, and for good reason. The company released preliminary data with regard to fourth quarter production, beating expectations. As you would imagine, the news excited investors, sending the stock screaming for the top. Today, we’ll talk about:
- The announcement;
- what we’re seeing from CHK stock as a result; and
- what we’ll be watching for ahead.
CHK Announces Production Update
As mentioned above, Chesapeake Energy is having a great day in the market today after announcing an update with regard to production. In a press release issued early this morning, the company announced fourth-quarter production expectations that will come in ahead of the expectations of analysts.
In the announcement, CHK said that for the most recent quarters, the company is expecting to announce production in the range between 462,000 and 464,000 barrels of oil equivalent (BOE) per day. At the moment, analysts are expecting that the company will report production in the amount of 448,000 BOE per day.
The company also said that oil production is expected to come in between 86,000 and 87,000 barrels of oil per day (BPD). Analysts are expecting for this figure to be 85,200 BPD.
The company also announced that it has reduced its total outstanding debt by around $1.8 billion since 2017 and it plans on reducing capital expenditures by lowering its rig count by 20% in 2019.
In a statement, Doug Lawler, CEO at CHK, had the following to offer:
Looking forward to 2019, we are confident in our ability to drive further competitive performance through the quality of our investments and our capital and operating discipline. The improvement in our capital efficiency, along with our focus on our high-margin oil investments, should result in higher operating cash flow and stronger margins in 2019 compared to 2018.
Why Investors Are So Excited
At the end of the day, the reason for excitement in Chesapeake Energy is pretty simple. The company produced far more barrels of oil and barrels of oil equivalent than analysts were expecting to see. These are the core products that lead to revenue for CHK. Considering the fact that the company beat expectations with regard to product, chances are that it beat expectations with regard to revenue and earnings.
Also, with the company’s plans to cut capital expenditures, it is going to start the year off on a better financial foundation. This is also an important part of the source of excitement here.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news leads to moves in the market. When it comes to CHK, the news proved to be incredibly positive. After all, the company is likely to beat on all measures when their earnings report is released. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:46), CHK is trading at $2.78 per share after a gain of $0.33 per share or 13.27% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the iWatch Markets team will continue to keep a close eye on CHK. In particular, we’re interested in following the story surrounding the company’s continued work to improve its balance sheet and take advantage of the expanded production that it has announced. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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