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Here's Why Chesapeake (CHK) is an Attractive Investment Bet

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Chesapeake Energy Corporation (CHK - Free Report) has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. In the past year, the stock, carrying a Zacks Rank #1 (Strong Buy), has gained 69.6%, outpacing the 65.2% rise of the composite stocks belonging to the industry.

What’s Favoring the Stock?

Chesapeake Energy is a premium natural gas operator and is well-positioned to gain from the significant improvement in gas prices in the past year. In the prolific gas-rich Marcellus shale play, CHK’s operation is spreading across roughly 650,000 net acres, where an average of four to five rigs will be operating this year.

Chesapeake Energy also has a strong presence in Haynesville and Eagle Ford shale play, making the production outlook bright. Overall, being a leading upstream energy player, CHK has more than 15 years of inventory, signifying more than 2,200 gas locations.

CHK has a strong focus on returning capital back to shareholders as reflected in June 2022. It has doubled its buyback program to up to $2 billion in an aggregate value of its common stock from the prior $1 billion. The program will possibly continue through year-end 2023. Stockholders are rewarded through lucrative dividend payments as reflected in the announcement of a base dividend increment of 10% to $2.20 per share annually.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Other top-ranked players in the energy space include BP plc (BP - Free Report) , EQT Corporation (EQT - Free Report) and Exxon Mobil Corporation (XOM - Free Report) . All the stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The positive oil price trajectory is a boon for BP’s upstream operations. The favorable oil price scenario and increasing daily oil equivalent production volumes are aiding the energy giant’s bottom line. BP stated that the target of adding a net production of 900 thousand barrels of oil equivalent per day by 2021 from key new projects had been delivered.

In the core of gas-rich Marcellus and Utica Shales, EQT Corporation has a strong foothold. Being a leading producer of natural gas, EQT is benefiting from high natural gas prices. For 2022, it is likely to witness earnings growth of almost 337%.

The positive trajectory in oil price is a boon for ExxonMobil’s upstream operations. This is because ExxonMobil has a pipeline of key projects in the Permian – the most prolific basin in the United States – and offshore Guyana.

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