Keeping an Eye on the Seventy Seven Energy Spin-Off
With the spin-off from Chesapeake Energy (NYSE: CHK ) finally here, investors can start watching Seventy Seven Energy (NYSE: SSE ). The oilfield services firm has had limited publicity typical of spin-offs, providing the opportunity for an attractive valuation.
One important thing investors need to understand about spin-offs is that the new companies typically come out in disarray. The parent company wouldn't typically perform the split up if it weren't for a desire to unload an underperforming unit, or at least one viewed as undervalued. In the case of Chesapeake Energy, the natural gas exploration and production firm was originally hoping to sell the company for several billion to help reduce debt at the corporate level. The spin-off was the last option.
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