Chesapeake (CHK) Declares Pricing Of $750M Notes Offering

Chesapeake Energy Corporation (NYSE:CHK) declared the pricing of its senior notes that have been offered to eligible purchasers in a private placement.

The notes, worth $750 million, are expected to mature by 2027 and will likely pay an interest of 8%. Starting Dec 15, 2017, the interest will be paid semi-annually every year on Jun 15 and Dec 15. The offering of the notes is anticipated to be completed by Jun 6, 2017.

Any time before Jun 15, 2022, the company could redeem a part or the entire notes at a price of 100% of the principal amount along with a make-whole premium. Also, after Jun 15, 2022, Chesapeake might redeem the notes but at an applicable price given in the indenture.

Investors should know that the proceeds from the offering will likely get utilized to fund the tender offers of its senior notes. If any amount is remaining, that will be used by the company for general corporate activities that comprise paying its outstanding debt.

Oklahoma-based Chesapeake is an independent oil and gas company engaged in the acquisition, development, and production of U.S. oil and natural gas resources. The company also has businesses related to natural gas compression and marketing of oil and gas.

The pricing chart looks attractive as reflected by Chesapeake’s outperformance of the Zacks categorized Oil & Gas-U.S Exploration & Production industry over the last one year. During the aforesaid period, the company has gained 56% while the broader industry has lost almost 9%.

However, for second-quarter 2017, the Zacks Consensus Estimate for earnings has been revised lower over a period of last 30 days.

As a result, Chesapeake carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, better-ranked players in the energy sector include Canadian Natural Resources Limited (TO:CNQ) , McDermott International Inc. (NYSE:MDR) and W&T Offshore Inc. (NYSE:WTI) . Canadian Natural sports a Zacks Rank #1 (Strong Buy), while McDermott and W&T Offshore carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

We expect year-over-year earnings growth for Canadian Natural to be 720% for the current year.

McDermott beat the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 387.50%.

W&T Offshore delivered an average positive earnings surprise of 69.21% in the last four quarters.

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