Topic: Growth Stocks

Stock Pickers Digest Hotline – Friday, March 21, 2014

Article Excerpt

CHESAPEAKE ENERGY CORP., $24.67, symbol CHK on New York, is preparing to spin off its oil-field services division into a separate, publicly traded company. The new firm would be called Seventy Seven Energy and would trade under the SSE symbol. Chesapeake would then hand out all of the new company’s shares to its shareholders in a tax-free transaction. The division, now called Chesapeake Oilfield, provides contract drilling, hydraulic fracturing, equipment rentals, trucking and other services. Combined, drilling and hydraulic fracturing supply over 75% of its revenue. Chesapeake Oilfield has around 71 active drilling rigs and nine fleets of pressure-pumping trucks for fracturing. Chesapeake Oilfield’s revenue was $2.2 billion in 2013. That was 12.6% of Chesapeake Energy’s total revenue of $17.5 billion. Chesapeake Oilfield gets 90% of revenue from Chesapeake Energy and just 10% from outside companies. Operating as a standalone firm would let it use its successful history with Chesapeake to attract new customers. More importantly, a spinoff would let Chesapeake Energy take advantage of…