Shares of Chesapeake Energy Corporation (NYSE:CHK) recorded their highest single day surge since 2008 following speculative news of a possible buyout.
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The surge came after SeekingAlpha ranked it as one of the best candidates for an acquisition. The company’s stock spiked by 20% on Monday to $2.39, making it the biggest one day surge since 2008. The firm has risen by 50% over five consecutive trading sessions since February 12 after Bloomberg announced that it was planning to pay out $500 million in debt service costs as obligated.
The stock has been struggling mightily due to poor energy sector conditions. Shares had crashed at the beginning of the month due to worries that Chesapeake was facing bankruptcy. Despite the concerns, the company issued a statement to investors saying it does not plan to file for bankruptcy.
The company currently has $9.8 billion in debt and more than $1 billion of that debt is due by the end of 2017. The firm’s 3.25% notes that will mature in February have recovered to 95.45 cents on the dollar after tanking to 84 cents on February 8.
Chesapeake ranks second to Exxon Mobil Corporation (NYSE:XOM) in natural gas production in the US. Bloomberg reported that the firm had been shutting down some of its offices, putting some drilling projects on hold and sending employees home. These actions plus debt restructuring efforts are geared towards placing the company in a better position to address declining natural gas prices.
The company has as a result been facing other problems such as unattractive returns on equity, weak historical performance, and deteriorating operating cash flow. Chesapeake is expected to release its fourth quarter financial report for 2015 before market open Wednesday.
