CHESAPEAKE ENERGY $21.75 - New York symbol CHK

CHESAPEAKE ENERGY $21.75 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848- 8000; www.chkenergy.com; Shares outstanding: 666.5 million; Market cap: $14.5 billion; Dividend yield: 1.6%) is the second-largest natural gas producer in the U.S.

Chesapeake continues to sell assets to meet its debt-reduction targets—it’s now selling properties in the Eagle Ford and Haynesville shale formations to Exco Resources for $1 billion.

With this deal, Chesapeake has now sold $3.6 billion of properties this year. By the end of 2013, it aims to raise that to $6 billion to $7 billion. These sales, plus its cash flow from production, will let it pay for its planned 2013 exploration and development spending of $7.6 billion.

The company will also be able to lower its debt. On March 31, 2013, Chesapeake’s long-term debt was $13.4 billion, or a high 96% of its market cap.

Natural gas prices are up over 80% since early 2012, but shares of many producers, including Chesapeake, have not kept pace. The stock trades at just 3.0 times the company’s forecast 2013 cash flow per share.

Chesapeake Energy is a buy for aggressive investors.

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