Chesapeake Energy’s Stock Performance This Year



CHK stock performance

Chesapeake Energy (CHK) stock has fallen significantly since the beginning of this year. Since the beginning of the year, CHK has fallen 47.2%.

As you can see above, CHK stock has mostly been tracking movements in natural gas (UNG) (UGAZ) prices and crude oil (USO) (DBO).

Considering CHK’s oil-targeted growth this year, oil prices could weigh heavily on CHK’s growth. However, CHK remains predominantly a natural gas–weighted company. Crude oil prices have risen 0.27% since the beginning of the year, while natural gas prices have fallen ~11.0% since the beginning of the year. As we can see, crude oil prices have been on an upward trajectory recently. Prices rose above $50 per barrel for the first time in almost two months on September 20, 2017. On October 24, 2017, crude oil prices closed at $52.47 per barrel.

Chesapeake Energy has underperformed the broader energy sector, the Energy Select Sector SPDR ETF (XLE), which has returned -11.3% since the beginning of this year.

CHK also underperformed the broader market, the S&P 500 ETF (SPY) (SPX-INDEX). SPY has risen ~14.0% during the same period. The energy sector (XLE) makes up ~6.0% of SPY.

Article continues below advertisement

What other factors are driving CHK stock?

Another reason for the negative momentum in CHK stock could be its debt level. At the end of 2Q17, Chesapeake Energy had a principal debt balance of $9.7 billion compared to a market capitalization of ~$3.2 billion. While the company made significant strides in reducing its debt in the past few years, it has been adding to its debt again, which has likely caused some investors to be concerned.

To know more, check out Chesapeake Energy: A Reason to Worry?


More From Market Realist