Chesapeake Energy Corporation (NYSE: CHK) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced a new supply agreement, exciting investors and sending the stock on a run for the top. Today, we’ll talk about:
- The supply agreement;
- what we’re seeing from CHK stock as a result; and
- what we’ll be watching for ahead.
CHK Gains On Supply Agreement
As mentioned above, Chesapeake Energy is having an incredibly strong start to the trading session this morning after the company announced a new supply agreement. In a press release issued in after-hours trading, the company announced that it has entered into an agreement with Emerge Energy Services LP subsidiary, Superior Silica Sands LLC.
In the release, CHK said that the agreement covers frac sand supplied from Superior’s San Antonio mine in South Texas. Under the terms of the agreement, the company will get the sand from Superior’s leading in-basin mine to support its growing completions program in South Texas.
In a statement, Rick Shearer, CEO of the general partner of Emerge Energy, had the following to offer with regard to the agreement with CHK:
We are very pleased to partner with one of the leading onshore Exploration and Production companies in the U.S… Chesapeake is committed long-term to growing its position in the Eagle Ford basin, and as a leading producer of frac sand in South Texas, we are the perfect fit to supply Chesapeake with a large portion of its frac sand needs. Chesapeake has always been at the forefront of unconventional horizontal drilling, and we look forward to building our relationship with this new customer.
Also, our San Antonio plant is ramping up to full capacity as our new wet plant began production in December. We are excited about the opportunity ahead of us for our San Antonio plant and our other in-basin and northern white operations in 2019.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Chesapeake Energy, the news proved to be positive. After all, this new supply agreement will help the company to increase production in South Texas, opening the door to further revenue. 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 (9:54), CHK is trading at $2.52 per share after a gain of $0.15 per share or 6.12% 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 expand its production in South Texas and elsewhere. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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