Chesapeake’s stock performance
After Chesapeake Energy’s (CHK) 3Q17 earnings release on November 2, 2017, its stock fell ~7.6%. So far this year, Chesapeake Energy has dropped 47%.
The decline in CHK stock could be because of its revenue miss combined with the fact that revenues were lower both on an annual basis and a sequential basis.
As the graph above notes, CHK’s stock performance has been driven mainly by crude oil (CL) and natural gas prices (NG). Natural gas (UGAZ) and crude oil prices (DBO) have also been driving the movements of the Energy Select Sector SPDR ETF (XLE).
XLE has fallen ~10% since the beginning of the year. Crude oil prices have risen ~5% since the beginning of the year, and natural gas prices have fallen ~12% in the same period.
Chesapeake Energy stock along with XLE has underperformed the SPDR S&P 500 ETF (SPY) (SPX-INDEX). SPY rose ~14.4% during the same period.
CHK said that its focus in 2018 will be to improve its balance sheet position, increase its margins, and work toward its cash flow neutrality goal. While the company didn’t provide any details regarding its 2018 capital program, it said that it would “maintain the flexibility necessary to respond to changes in commodity prices.”
In 2018, CHK expects to deliver flat production growth with a lower capital expenditure.