CHK: Stock drivers
In this part of the series, we’ll look at Chesapeake Energy’s (CHK) stock movements compared to the performances in crude oil, natural gas, the broader industry, and the broader market. CHK stock has fallen ~46.0% year-over-year.
Much of the negativity surrounding CHK stock (apart from weak energy prices) is likely due to its debt. Although CHK has been actively focusing on lowering its debt, its debt remains high. As of June 30, 2017, it was $9.8 billion. For context, its market cap is $3.4 billion.
As we can see in the graph above, CHK stock has performed poorly compared to the Energy Select Sector SPDR ETF (XLE) or the broader energy sector, which has fallen 16.0% since the beginning of this year. In comparison, the broader market, or the SPDR S&P 500 ETF (SPY), has risen ~10.0% since the start of this year. The energy sector makes up ~6.0% of SPY.
Crude oil prices have fallen 9.4% since the beginning of this year, while natural gas prices have fallen 9.2% in the same period.
Key management commentary
Speaking about the company’s path toward meeting its strategic objectives, CHK’s management commented in the 2Q17 earnings conference, “We’re executing as planned with our program, reiterating our guidance on capital production, and the capital efficiency that we continue to improve upon is something that we will be taking advantage of across the strength of our diverse portfolio.”