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Why Did Chesapeake Energy’s Stock Fall Last Week?

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Nov. 20 2020, Updated 3:37 p.m. ET

Chesapeake Energy stock

In the two weeks since January 6, 2017, Chesapeake Energy (CHK) has returned about -4.6%, underperforming the energy sector. The Energy Select Sector SPDR ETF (XLE) returned -1.78% in the same period. The broader market S&P 500 ETF (SPY) returned about -0.21% in the same period.

CHK’s stock had a good run in 2016, given the crucible it had gone through. It ended 2016 on a positive note, following its Haynesville divestiture news in December 2016 and its debt management efforts deployed throughout the year.

On December 5, 2016, CHK announced that it had agreed to sell 78,000 net acres in Louisiana’s Haynesville Shale for $450 million. On December 20, CHK announced its second Haynesville asset sale. The assets were to be sold to for $465 million.

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In 2017, the stock has seen some weakness, owing to weak natural gas prices. In the two weeks ended January 20, 2017, natural gas prices fell ~2.5%. CHK’s natural gas peers such as WPX Energy (WPX) and Rice Energy (RICE) also saw their stocks fall ~6% and ~2%, respectively, in the same two-week period.

On January 20, 2017, however, CHK’s stock increased slightly while natural gas prices continued to drop. The increase likely came on the back of CHK’s announcement the same day, saying that it would be reinstating dividends on its preferred stocks

Year-over-year, however, CHK had a return of ~101% compared to XLE’s ~44%. This return could be due to CHK’s debt management efforts including asset sales.

You can read more about Chesapeake Energy in An In-Depth Analysis of Chesapeake Energy: What Will 2017 Bring?

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