Here’s Why Chesapeake Energy Stock Climbed 61% During Turbulent Times in Oil & Gas

In a recent move intended to keep its $4 billion credit line open, Chesapeake Energy Corp. offered most of its assets including real estate, natural gas fields, and various securities, as collateral in the event of a default. Chesapeakes lenders accepted the offer, causing the companys stock price to jump nearly 34% on Tuesday. The stock is still down about 60% since last year, but analysts believe that the oil price has bottomed out, which should prove to be very beneficial for Chesapeakes recovery.

The rapid increase in the stock price, which jumped 61% in two days earlier this week, indicates that analysts did not consider the banks decision to accept Chesapeakes proposal to be a certainty. Chesapeake has nearly $10 billion in debt, which gave investors reason to doubt the companys solvency. However, the companys lenders have confidence that Chesapeake will make it out of this crisis in good standing as evidenced by their acceptance of the proposal. Citigroup Inc, in a letter to its clients, explained that the agreement is meant to help Chesapeake continue its operations in this low commodity price environment.

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