Topic: Growth Stocks

Stock Pickers Digest Hotline – Friday, February 4, 2011

Article Excerpt

CHESAPEAKE ENERGY CORP., $30.06, symbol CHK on New York, has agreed to sell a third of its Denver-Julesburg and Powder River Basin shale-gas leases in northeast Colorado and southeast Wyoming to Chinese state-owned oil company CNOOC Ltd. (symbol CEO on New York). Shale gas is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas. CNOOC will pay Chesapeake $670 million for the stake, as well as up to 66.7% of Chesapeake’s share of the development costs, up to an additional $697 million. To put these figures in context, Chesapeake earned $515 million, or $0.81 a share, in the three months ended September 30, 2010. This is Chesapeake’s second sale to CNOOC. In October 2010, CNOOC bought a third of Chesapeake’s wholly owned Eagle Ford shale-gas project in south Texas. CNOOC paid $1.08 billion for the Eagle Ford stake, and will…