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US Equities
Chesapeake buyback cheers investors
From the Financial Times of Tue, 23 Dec 2014 18:17:44 GMT

Chesapeake Energy stood out as a rare example among energy companies managing to cheer Wall Street on Tuesday.

It announced that $1bn that it had pocketed from the sale of shale assets will be returned to shareholders.

Shares in the company rose 10 per cent to $20.29 on the news of the $1bn buyback after it closed the sale of oil and gas assets in the Marcellus and Utica shale fields to Southwestern Energy for just under $5bn.

The value of the company remains down about 25 per cent this year after a sharp drop in crude prices that has cast a shadow over the resurgence in US oil production driven by drilling techniques that allow oil and gas to be extracted from tight shale rock underground.

Even before the oil price began sliding, Doug Lawler, Chesapeake chief executive, had been cutting costs and scaling back investments in an attempt to restore investor confidence shaken by the tenure of his predecessor, Aubrey McClendon.

Mr Lawler said on Tuesday that Chesapeake had a liquidity position of about $9bn after the sale, which put it in “an advantageous position to enhance shareholder value in this volatile commodity price market”.

Shares in US pharmacy chain Walgreens were boosted 3 per cent to $76.51 after the company reported a 14 per cent surge in quarterly earnings as strong prescription drug sales helped fatten its bottom line.

Walgreens sales rose 6.7 per cent to $19.5bn in the three months ending in November while earnings grew to $809m from $695m the year before.

Its pharmacy business has expanded as more people in an ageing population join Medicare, the US insurance programme for the elderly and disabled.

Walgreens, taking a bigger share of US customers, filled 222m prescriptions during the quarter, a 4.3 per cent increase from the year ago quarter.

Pharmacy sales, which account for 66.8 per cent of total revenue, were up 9 per cent. The group has 19 per cent of the US retail prescription market.

In the pharmaceutical sector, shares in Gilead Sciences fell another 3 per cent to $89.81.

This took the fall in the company’s market value to almost 20 per cent over two days following a decision by Express Scripts, the US’s biggest pharmacy benefits manager, to recommend a rival, less expensive, hepatitis C treatment.

Gilead shares had more than quadrupled since the start of 2012.

US discount chain Family Dollar was trading slightly higher at $79.15, valuing the company at about $9bn, after being forced to adjourn a shareholder meeting convened to approve its $8.5bn sale to rival Dollar Tree.

Family Dollar’s investors failed to support the sale to Dollar Tree and a second meeting to consider was rescheduled for January 22, the company said.

Dollar Tree faces competition for Family Dollar from Dollar General, which has made a competing $9.1bn bid.

Although Dollar General is offering more, Family Dollar has rejected the bid on the grounds that regulators will not approve it. Dollar General shares added 1 per cent and Dollar Tree shares also rose nearly 2 per cent.

Major Wall Street indices rose for the fourth straight session with the benchmark S&P 500 index edging up 0.2 per cent to its 50th record high of the year at 2,082.17.

The Dow Jones index also went past 18,000 for the first time, up about 0.4 per cent. The Nasdaq Composite lost 0.3 per cent at 4,765.42.

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