Chesapeake Energy (CHK, Financial) is pleased with the way it is seeing value for its investments. The company’s transition efforts seem to have paid off well, which is evident from the robust improvement in both top line and bottom line. The company is further confident of taking this growth momentum to another level. To facilitate this, Chesapeake is focusing on various strategic moves which can help to gain profitability and improve its margins in future. It is focusing on meeting its production targets by reducing its capital expenditure budget and simultaneously reducing its cash cost.
Operational focus
The company’s operational and financial excellence has helped it in many ways. It is now among the top sailors on the stock market. Despite a weak commodity market, Chesapeake could post impressive results which indicates the strength and the leadership position that it is enjoying in the market. Further, the company has also increased in the production and has been competent for meeting the demands in the market. However, Chesapeake is expecting the inventory level to be slightly soft as compared to the last year as it is shifting its efficiencies to a multi-well pads which might eat away its margin for some time.
Moving forward, Chesapeake is also trying to be profitable by focusing on its core assets. It wants to get rid of some of its non-core assets. In this course the company is selling its Southern Marcellus assets. This is expected to be a wise move by the company under its transformational strategy. This strategic transaction to secure a better position in the market and also will have great opportunities that will lead it to gain good market share, improving the share-holder’s value.
It is seeing good growth in its business. It is seeing good improvement in per well capital cost. It has also ramped up rigs as compared to last fiscal year. This will help in better production and delivery by Chesapeake. It is further exceeding its production growth targets while keeping the capital budgets low. This will help the company in a good way. It is expanding its growth margins which will help it to offset the weakness that it is seeing due to soft commodity pricing.
In addition, the company is expecting better business opportunities in the upcoming winter season. The cold weather condition will lead the local and the regional prices to improve in the coming quarter. This will surely result in increasing the demands giving Chesapeake good opportunities to add value to its growth initiatives.
Conclusion
Thus, Chesapeake Energy seems to be making impressive moves to make its business better. Hence, investors should remain invested in the business for the long run to enjoy more gains.
