Tuesday, April 17, 2012

Pass On Chesapeake Oilfield Services IPO

After the close on Monday, Chesapeake Energy (CHK) filed for an IPO of its oilfield services division. Based on initial review of the S-1, Chesapeake Oilfield Services (COS) should be avoided at best if not shorted. Naturally this will highly depend on the ultimate valuation place on the stock once it prices and starts trading.

Chesapeake intends to raise $862M in a much announced IPO of the oilfield services division that performs a big portion of the work for Chesapeake itself. The interesting part is that the sector is under pressure so a lot of investors will see this as a desperate move. Industry leader Haliburton (HAL) is around 52 week lows and last year's fracing IPO C&J Energy Services (CJES) trades near lows as well.

Additionally, Chesapeake has made it clear that it needs to raise cash so most contrarian investors might think that such an IPO might be priced to sell. Unfortunately, the funds to be raised and the past comments from the company don't suggest any discounts on the sale.

Read the full article at Seeking Alpha.


Disclosure: Long CJES. Please review the disclaimer page for more details. 




3 comments:

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Mark Holder said...

and this has what to do with CHK?

Funny, seriously doubt you'll get a bunch of traffic based on a comment on an old post.

Patrick Odea said...

a post is a post, brother. there is no old or new. as long as it stays relevant to the topic. and that relevance is about trading. tax and trading may not be the same banana, but they are both referring to the financial inflows.