Chesapeake Energy Outperformed Its Peers


Feb. 28 2019, Updated 11:05 a.m. ET

Natural gas–weighted stocks’ returns

On February 20–27, our list of natural gas–weighted stocks fell 2.8%, while natural gas April futures rose 4.9%. On average, natural gas–weighted stocks underperformed natural gas futures during this period.

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Chesapeake Energy outperformed natural gas–weighted stocks

The natural gas–weighted stocks that rose the most or fell the least in the trailing week are:

  • Chesapeake Energy (CHK) rose 5.5%.
  • Cabot Oil & Gas (COG) fell 0.8%.
  • Southwestern Energy (SWN) fell 0.9%.

During this period, Chesapeake Energy had the highest positive correlation with oil prices and the most negative correlation with natural gas prices, which we discussed in the previous two parts. However, despite a fall of 0.4% in US crude oil prices, Chesapeake Energy outperformed other natural gas–weighted stocks. On February 27, Chesapeake Energy reported an adjusted net income of $0.21 per diluted share for the fourth quarter, which was 16.6% above analysts’ consensus estimates. The adjusted net income might have helped the stock to rise 10.3% on the same day.

These natural gas–weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with production mixes of at least 60.0% in natural gas.

Since March 2016

Between March 3, 2016, and February 27, 2019, natural gas active futures rose 70.8% from a 17-year low. Our list of natural gas–weighted stocks fell 42.8% during the same period.

Cabot Oil & Gas (COG) has risen 14.2% since March 3, 2016. Cabot Oil & Gas was the only gainer on our list of natural gas–weighted stocks during that period. Let’s take a look at the natural gas–weighted stocks that fell the most during this period:

  • Antero Resources (AR) fell 62.4%.
  • Range Resources (RRC) fell 65.9%.
  • Gulfport Energy fell 69.3%.

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