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Is Chesapeake Signalling a Turnaround?

While it’s still too early to declare that Chesapeake Energy Corp. (NYSE: CHK) has completed a 180-degree turn, there are definite signs of progress. The latest is the company’s first-quarter earnings announcement.

Chesapeake posted an adjusted net loss per share of $0.10, in line with the consensus estimate, and net revenues of $1.95 billion, well below the consensus estimate of $2.55 billion. But neither of these data points is responsible for the 11% jump in Chesapeake’s share price at the opening bell Thursday morning.

The proximate cause for the jump was the company’s announced sale of 42,000 net acres in the so-called STACK play in Oklahoma. The acronym stands for Sooner Trend Anadarko Basin Canadian and Kingfisher Counties, and the region is one of the top shale plays in the country, and Newfield Exploration Co. (NYSE: NFX), the announced buyer of Chesapeake’s acreage, is one of the STACK’s top operators.

Newfield paid $470 million for the acreage, which...