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Why Chesapeake Energy, PG&E, and Kodiak Sciences Jumped Today

By Dan Caplinger - Dec 4, 2019 at 4:32PM

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These stocks helped lead the markets higher.

Major benchmarks rebounded on Wednesday, lifted by new hope that a preliminary deal on trade between the U.S. and China might still be possible in the short run. Market participants also got some readings that made them more optimistic about the prospects for continued economic growth across the economy. In addition, some companies had especially good news that lifted their shares substantially. Chesapeake Energy ( CHKA.Q ), PG&E ( PCG -1.58% ), and Kodiak Sciences ( KOD -6.28% ) were among the top performers. Here's why they did so well.

Chesapeake hopes for a way out

Shares of Chesapeake Energy jumped 17% after the energy specialist announced that it's taking steps to refinance key parts of its outstanding debt. Chesapeake is working with multiple banks on a term loan facility for $1.5 billion, which it hopes to use to buy back notes and refinance debt of two of its subsidiaries. The energy company also negotiated amendments to existing debt that allow for greater flexibility in managing its debt load. Shareholders were happy with the progress, but Chesapeake really needs some help from the oil and natural gas markets in order to get its business truly healthy again.

Chesapeake Energy logo in green and blue.

Image source: Chesapeake Energy.

PG&E nears a deal with fire victims

California utility PG&E saw its stock rise 11% on reports that it's close to finalizing a settlement with victims of recent wildfires. An article from Bloomberg said that a deal would likely be worth about $13.5 billion, with half payable in cash and half in PG&E shares. PG&E investors have been nervous about the uncertainty surrounding payouts for wildfire victims, as the failure to resolve the issue has opened up the possibility that creditors might get bankruptcy court approval of a competing plan of reorganization that could leave current shareholders with no recovery. Despite the high price tag, a settlement would increase the odds that PG&E will get its own bankruptcy plan approved and therefore leave current shareholders with the possibility of not losing everything.

Kodiak secures its future

Finally, Kodiak Sciences' stock soared 49%. Earlier in the week, Kodiak had given shareholders good news when it said it had made a royalty deal with a prominent biotech investor on its KSI-301 treatment for eye diseases. The company also took the opportunity to do a secondary stock offering to raise cash, and last night, Kodiak said that it had successfully sold 6 million shares at $46 per share. That was better than many had feared, and it opened the door to another wave of optimism about KSI-301's prospects. Between the proceeds from the offering and the money coming in from the royalty deal, Kodiak is in good financial shape to move forward with development of the treatment and others in its pipeline.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
CHKA.Q
PG&E Corporation Stock Quote
PG&E Corporation
PCG
$11.81 (-1.58%) $0.19
Kodiak Sciences Inc. Stock Quote
Kodiak Sciences Inc.
KOD
$83.99 (-6.28%) $-5.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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