Why Chesapeake Energy (NYSE: CHK) may climb to $20 back ?

      Chesapeake Energy is a leading shale player with sizable operations ranging from the              Eagle Ford Shale to the Mississippi Lime and the Utica Shale. Since the crude oil price           got hammered last year, it was only logical that Chesapeake Energy wouldn't be in a                 position to present record results.

• Despite deteriorating fundamentals in the oil sector, Chesapeake Energy reported a 9% year-over-year increase in adjusted production from 586 mboe/d in 2013 to 640 mboe/d in 2014. Total revenues also held up nicely: Full-year 2014 revenues came in at $21.0 billion, a 20% year-over-year increase compared to 2013.
• Scaling back capital expenditures is one way to take pressure off the balance sheet. Other ways to accomplish that are selling non-core assets and driving down leverage. Chesapeake Energy is doing both: In the fourth quarter of 2014, the energy company received $5.1 billion in cash from asset divestitures, most of which related to the sale of Marcellus and Utica shale assets to Southwestern at the end of last year.
• Chesapeake Energy has tested the $17 and $18 levels multiple times over the course of last year. Shares managed to rebound twice in the $17 range in the fourth quarter of 2014, which has now developed into a robust resistance zone. Should Chesapeake Energy fall and close below $18, shares have downside potential until $17. This would be a level where I'd consider a long position if I wanted to play a technical rebound.
• Chesapeake Energy reported fourth quarter results that missed the Street's expectations.
• Lower budgeted capex and declining rig counts sent investors into a selling frenzy.
• Balance sheet rationalization and capex reduction will pay off for Chesapeake Energy.
• Panic selling is a buying opportunity for investors who don't only look forward to the next quarter.

•   Chesapeake is oversold as a consequence of its capex and rig count outlook, but today's dust should settle quickly. Chesapeake knows its business inside out and it has the size and balance sheet to withstand the sector downturn. Panic selling in Chesapeake Energy is an excellent opportunity for investors looking for asymmetric return potential. We recommend to buy this stock at current levels for $20 and later $22.70 in third quarter.