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Jeffries Bearish on Chesapeake Energy Corporation (CHK) Following Sale of Barnett Assets

On Wednesday after market close, Chesapeake Energy Corporation (NYSE:CHK) made waves entering a transaction to transfer its Barnett assets to a PE-backed producer. In reaction, Jeffries analyst Jon Wolff reiterates an Underperform rating with a $4.00 price target, marking a 20% downside from where the stock is currently trading.

From Wolff’s eyes, the Barnett assets have been an “overhang,” resulting in “negative cash flow” and causing “an MVC shortfall on the asset.” The analyst believes that in exiting its Barnett position, Cheseapeake can now shed the weight of future contracted midstream liabilities.

Chesapeake intends to hand a cash payment of $400MM to William Partners (WPZ) to transfer its Barnett position in its entirety without confronting...