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Chesapeake Energy Fell 6% in August: Can It Gain Momentum?


Aug. 29 2018, Updated 1:53 p.m. ET

Chesapeake Energy’s recent performance

Chesapeake Energy (CHK) has been sluggish for most of August. The company saw a sharp decline following its second-quarter earnings and a revenue miss. CHK stock plunged in mid-August after crude oil came close to a two-month low. But CHK has had a significant recovery since then.

Overall, CHK has fallen 6.1% since the beginning of August. During the same period, US crude oil fell 1.3%, and natural gas rose 6.4%. That shows Chesapeake Energy’s higher correlation with crude oil compared to natural gas. We’ll look more at that in the next part.

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US crude oil saw a sharp decline in mid-August with increasing US-China trade war tensions and a larger-than-expected increase in crude oil inventories. Oil has recovered with the start of US-China trade talks, Iran sanctions, and the recent fall in US crude oil inventories. For a recent update on US crude oil prices, be sure to read Is Oil Poised to Rise?

On the other hand, US natural gas has stayed at $2.76–$2.98 per MMBtu (million British thermal unit) this month. Natural gas could surpass $3 per MMBtu soon. We’ll look more at that in the next part.

Chesapeake Energy’s YTD performance

Overall, CHK has risen 11.9% since the start of the year. In that same period, US crude oil has risen 12.3%, while natural gas has risen 0.2%. CHK’s peers Southwestern Energy (SWN) and EQT (EQT) have fallen 1.3% and 12.1%, respectively, YTD (year-to-date). The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has risen 12.6%. Despite its YTD gains, CHK is down ~85% from its five-year high. The stock’s 52-week range is $2.53–$5.60.

Series overview

In the rest of this series, we’ll try to determine if CHK could gain upward momentum from here. We’ll look at its correlation with crude oil, its technical indicators, and its price forecast. Finally, we’ll look at the recent institutional activity in CHK and analyst recommendations.


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