Chesapeake Energy’s stock performance
Chesapeake Energy (CHK) stock increased 18.5% in the week ending May 15. The stock was supported by higher crude oil prices (DBO) (UCO). Crude oil prices stayed strong at more than $70 per barrel last week. Read Is $73 Possible for US Crude Oil Until Next Week? for the latest updates on crude oil prices.
A first-quarter earnings beat has also been supporting Chesapeake Energy stock. To learn more about Chesapeake Energy’s first-quarter performance, read Chesapeake Energy’s 1Q18 Production Highlights and Stock Reaction.
In the first quarter, Chesapeake Energy’s cash flow from operating and investing activities (including net proceeds from asset sales) was $609 million—the highest level in more than three years. The company was able to reduce its long-term debt by $581 million.
For or against?
While Chesapeake Energy lowered its debt in the first quarter, the debt levels are still high. Chesapeake Energy’s principal debt balance was ~$9.40 billion—compared to $9.98 billion as of December 31, 2017. Chesapeake Energy’s market capitalization is $3.5 billion.
Chesapeake Energy is a natural gas–weighted producer. Around 74% of Chesapeake Energy’s first-quarter production was natural gas. Natural gas prices haven’t seen the same rally as crude oil prices. The higher oil price is still impacting Chesapeake Energy’s profitability, which will likely be offset by weak natural gas prices (UNG) (UGAZ).
On a YoY performance basis, Chesapeake Energy stock has declined 33%. Crude oil prices have risen ~53% on a YoY basis, while natural gas prices have fallen ~11% during the same period.
The Energy Select Sector SPDR ETF (XLE) rose ~14% YoY, while the broader market S&P 500 SPDR ETF (SPY) rose ~13.1% during the same period.
Approximately 65.5% of the analysts rated Chesapeake Energy stock as a “hold,” ~10.3% rated it as a “buy,” and 17.2% rated it as "underperform."
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