Ahead of the Bell: Chesapeake

Susquehanna analyst boosts rating for Chesapeake to "Positive" citing energy prices, new CEO

Associated Press

NEW YORK (AP) -- A Susquehanna Financial Group analyst on Wednesday raised his rating on Chesapeake Energy Corp. to "Positive" from "Neutral," saying that the stock should get a boost from both higher oil and gas prices and its new CEO.

Duane Grubert boosted his valuations for Chesapeake's oil and gas reserves, saying that investors have become more comfortable with higher prices. Meanwhile, the company should benefit from its upcoming leadership change, he said.

"We think Chesapeake's new CEO Doug Lawler, due in mid-June, has a good shot at rebranding Chesapeake and enhancing sentiment towards the name," Grubert wrote in a note to investors.

Earlier this week, the Oklahoma City-based oil and gas company named Lawler, an Anadarko Petroleum executive, as its new leader. That came after a tough year during which Chesapeake's board ousted its founder and the company worked to shore up its finances.

Chesapeake's former CEO Aubrey McClendon was ousted in 2012 amid a scandal over his personal investments in the company's oil and gas wells.

The company also continues to sell assets to pare down an enormous debt burden. Chesapeake intends to sell $4 billion to $7 billion in assets this year. It has sold about $2 billion so far in deals that have either been signed or finalized.

Grubert said the sales are important to the company's value and have so far been of "mixed quality." He said that the new CEO could reinvigorate investor attention with a push for capital discipline.

Chesapeake Energy shares rose 36 cents, or 1.7 percent, to $21.21 in premarket trading Wednesday.

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