Chesapeake Energy: Relationship with Oil Helped It Outperform

Natural gas–weighted stocks’ returns

On June 12–19, our list of natural gas–weighted stocks rose 1.6%, while natural gas active futures fell 4.6%. On average, natural gas–weighted stocks outperformed natural gas futures during this period. 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.

Chesapeake Energy: Relationship with Oil Helped It Outperform

Outperformers

The following natural gas–weighted stocks were the outperformers in the trailing week:

  • Chesapeake Energy (CHK) rose 4%.
  • Range Resources (RRC) rose 3.7%.
  • Southwestern Energy (SWN) rose 1.9%.

Chesapeake Energy and Southwestern Energy were among the stocks that had the highest correlation with US crude oil prices. On June 12–19, US crude oil active futures rose 5.1%. By the end of 2019, Chesapeake Energy’s production mix in oil could rise to 26% from 19% in the fourth quarter of 2018.

Underperformers

The following natural gas–weighted stocks were the underperformers in the trailing week:

  • Gulfport Energy (GPOR) rose 1.9%.
  • Cabot Oil & Gas (COG) rose 1.5%.
  • Antero Resources (AR) fell 3.1%

These three stocks had a positive correlation with US crude oil prices. Cabot Oil & Gas had a negative correlation with oil and natural gas prices. On June 14, BMO reduced its target price on Antero Resources by $2 to $5. On the same day, Antero Resources’ stock prices fell ~3.1% despite a 0.4% and 2.6% gain in US crude oil and Henry Hub natural gas prices.