Chesapeake Might Not Face Difficulty In Cash Flow Despite Low Oil Prices

Analysts believe that the oil company is worth much more and the decreasing oil prices are not going to affect it much.

Chesapeake Energy Company has been facing some issues on the stock index, given the fact that the oil prices have been on a serious low for some time. Analysts at Oppenheimer were seen to give a downgraded rating to the shares of the oil digging company considering the fluctuation that the oil prices were showing in the market. Analysts have also expected the company to receive a negative cash flow in the upcoming months of 2015 and even in the next year. The rating that was received by the firm was of a ‘performer’ from previously ‘outperform’ given by the analysts of the same equity firm.

The oil and gas prices which have become quite a significant reason for the undoing of many oil companies in the industry have been adopting much of an undecided pace for some time. Chesapeake has also been reportedly selling off its assets in order to fill up for the loss being faced because of the declining prices of the natural has which is why the analysts seem to be holding a negative stance towards the firm. Furthermore, some analysts believe that the oil diggers are not going to face much of a cash flow problem as anticipated in the coming weeks.

Even though there are issues that the energy company is facing, cash flow is less likely to be one of them as per analysts’ belief. This is being said by equity firms keeping in mind a cash credit facility valued up to $4 billion that the oil services providing company currently has. This facility has also not been in use of the firm as per recent reports which mean that the firm has a strong reason to not panic at this moment. Also, the cash flows that the currently noted down by the firm are up to $2.7 billion, that too in cash.

Analysts are also looking at all the possible reasons why the firm should not worry about declining cash flows and one of them is that the oil company has strong boundaries made around the oil and gas prices which are making the analysts turn positive for the near future of the company.

As seen in the recent times, even though the Chesapeake is cutting down its assets and selling them off, it will be seen that the already being carried out production of the oil services and operations are being carried out quite perfectly, precisely in Utica and Eagle Ford. It has also been announced that a massive chunk of the company’s capex is going to be handed down to these two oil fields.