Chesapeake’s Stock Moves Higher on Analyst Comment

A little good news for Chesapeake Energy. Chesapeake’s stock opened at $18.05 yesterday, and closed at $18.44, a 2.2 percent boost. The price remains significantly down from the over $35 per share price it had been trading it within the past year, but still, a movement up is a good thing.

If you’ve been reading MDN for any length of time, you know about the current public relations firestorm Chesapeake finds itself in over it’s Founders Well Participation Program (FWPP), a program in which CEO Aubrey McClendon gets up to a 2.5 percent ownership interest in each well drilled by the company. The controversy surrounds how he finances his portion of the drilling cost. He’s taken out loans (in essence mortgages) against his 2.5 percent interest—to the tune of $1.4 billion. That “revelation” caused the Chesapeake stock price to take a tumble (see below).

What caused the stock price to increase yesterday? A recommendation from a single analyst:

Despite more reporting about the loan activity from CEO Aubrey McClendon, the news of the day that seemed to move the market was a ratings increase from BMO Capital Markets. Analyst Dan McSpirit said in a report quoted by MarketWatch that Chesapeake (NYSE: CHK) was being moved from market perform to outperform.

The company, with extensive operations in the Marcellus Shale, "presents an attractive opportunity for investors looking to venture out on this risk curve," McSpirit wrote.

*Pittsburgh Business Times (Apr 30, 2012) – Chesapeake gets boost from ratings report

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