Chesapeake Energy (NYSE: CHK) has lost investors nearly 50% over the past two years, because of a combination of high debt expense and low natural gas prices. In the following video, energy analysts Joel South and Taylor Muckerman discuss what Chesapeake is doing to right the ship.
"They are trying to transition to a more balanced asset base between gas and liquids," Taylor says. Traditionally a natural gas player, historically low natural gas prices have been a major drag on the bottom line.
In addition, Chesapeake is shifting its focus to developing the "core of the core plays" that are giving the best returns, and it's selling off excess lease holds that the company isn't leveraging for development now. This is all part of a plan to reduce long-term debt to below $9.5 billion.
Factor in initiatives to balance capex and cash flow, and as Joel states, "There is no doubt that this is definitely a net asset value play."
Joel South, Taylor Muckerman, and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.