Argus Research Still Forecasting A Loss For Chesapeake Energy

David Coleman of Argus Research still expects Chesapeake Energy Corporation (NYSE: CHK) to report a loss in 2016 due to weakness in commodity prices.

Coleman maintains his 2016 loss forecast of $0.36 per share and sees only modest earnings in 2017. The analyst projects 2017 adjusted earnings forecast is $0.40 per share. The Street expects a loss of $0.35 a share for 2016 and profit of $0.41 a share for 2017.

The analyst said Chesapeake's balance sheet remains weak, despite its steps to strengthen it by selling less profitable assets; Chesapeake has also postponed its dividend to conserve cash.

Related Link: Chesapeake Shares Slump Following RBC's Downgrade To Underperform

"Our rating on Chesapeake Energy remains HOLD as the company struggles to generate cash flow, manage its heavy debt load, and adapt to a lower commodity price environment," Coleman wrote in a note.

"Despite these signs of progress, we believe that Chesapeake will continue to face significant headwinds during a period of low commodity prices," the analyst added.

Coleman forecast that West Texas Intermediate crude will average $40 per barrel in 2016, down from $50 in 2015 and well below the average of $93 in 2014 and $98 in 2013. Oil prices can be volatile, and they could range between $25 and $55 per barrel in 2016.

At the time of writing, shares of Chesapeake Energy were down 1.19 percent to $4.55.