Chesapeake Energy stock
Chesapeake Energy (CHK) stock took a slight dip last week, falling 7.7% in the week ended January 19 compared to the week ended January 12. The decline was likely due to the dip in crude oil prices (USO)(UCO).
Year-over-year, crude oil prices have risen 21.10% while natural gas prices are still 4.3% lower compared to a year ago.
On a year-over-year basis, CHK stock has declined ~43%. The energy sector benchmark ETF, the Energy Select Sector SPDR ETF (XLE), rose 0.28% year-over-year. In comparison, the broader market S&P 500 SPDR ETF (SPY)(SPX-INDEX) rose ~24.5%.
In 2017, CHK had been weighed down by lower oil prices in 1H17, weak natural gas prices throughout the year, and a heavy debt burden.
What to expect for CHK in 2018
While oil prices have improved, as we saw above, debt remains a concern. One of the key strategies CHK will implement to address this problem is asset sales. CHK management has announced a goal of $2 billion–$3 billion in asset sales over the next several years.
Plus, CHK believes it could achieve free cash flow neutrality in 2018 at $50 oil prices and $3 natural gas prices.
Even as CHK has been aiming for oil-focused growth, a sustained increase in oil and natural gas prices in 2018 would also benefit the stock.