Chesapeake Energy’s Review Post Q1 Earnings

RBC Capital provided their views on Chesapeake Energy (NASDAQ:CHK) following recently announced Q1 results, with EPS of $4.22 beating the Street estimate of $2.93. The company also announced the sale of a portion of its Eagleford assets.

The analysts believe the company is in a strong position to return free cash flow to shareholders, bolstered by recently announced acquisitions. At strip commodity prices, the fixed plus variable dividends support a 4-5% yield, and the $2.5 billion of sale proceeds likely are used for opportunistic buybacks (once the transactions close).

The analysts think acquisitions are not a high priority at this time given the company's high bar for accretion across several operational and financial metrics. Management has slowed activity given a softer natural gas environment, but the analysts think there is an optionality to add some activity in late 2023 with a supportive macro.

RBC Capital provided their views on Chesapeake Energy (NASDAQ:CHK) following recently announced Q1 results, with EPS of $4.22 beating the Street estimate of $2.93. The company also announced the sale of a portion of its Eagleford assets.

The analysts believe the company is in a strong position to return free cash flow to shareholders, bolstered by recently announced acquisitions. At strip commodity prices, the fixed plus variable dividends support a 4-5% yield, and the $2.5 billion of sale proceeds likely are used for opportunistic buybacks (once the transactions close).

The analysts think acquisitions are not a high priority at this time given the company's high bar for accretion across several operational and financial metrics. Management has slowed activity given a softer natural gas environment, but the analysts think there is an optionality to add some activity in late 2023 with a supportive macro.

RBC Capital provided their views on Chesapeake Energy Corporation (NASDAQ:CHK), noting that increased line pressures and well-completion timing could put production at the low end of Q3 guidance.

According to the analysts, stock buybacks were not significant during Q3 related to black-out periods. They estimate the Q3 declared quarterly variable dividend at $2.45/share, up from $1.77/share in Q2.

According to the analysts, the key investor debates are infrastructure and operations logistics in Haynesville and implications for the growth trajectory, early color on the Eagleford sale process, updated hedging with improvements in the back-end of the natural gas forward curve, and the appetite to be aggressive with stock buybacks at current equity valuations.

The analysts raised their Q3 EPS/CFPS estimates by $1.11/$1.09 to $4.27/$7.87 mostly reflecting final benchmark commodity prices that were above their prior natural gas price forecast. Street estimates stand at $4.64/$8.11.

RBC Capital provided their views on Chesapeake Energy Corporation (NASDAQ:CHK), noting that increased line pressures and well-completion timing could put production at the low end of Q3 guidance.

According to the analysts, stock buybacks were not significant during Q3 related to black-out periods. They estimate the Q3 declared quarterly variable dividend at $2.45/share, up from $1.77/share in Q2.

According to the analysts, the key investor debates are infrastructure and operations logistics in Haynesville and implications for the growth trajectory, early color on the Eagleford sale process, updated hedging with improvements in the back-end of the natural gas forward curve, and the appetite to be aggressive with stock buybacks at current equity valuations.

The analysts raised their Q3 EPS/CFPS estimates by $1.11/$1.09 to $4.27/$7.87 mostly reflecting final benchmark commodity prices that were above their prior natural gas price forecast. Street estimates stand at $4.64/$8.11.