Yahoo Finance Why Chesapeake Energy’s Stock Is Rising
Why Chesapeake's Stock Keeps Rising despite Dreary Earnings
Chesapeake Energy’s stock performance
Since Chesapeake Energy’s (CHK) 1Q16 earnings release on May 5, 2016, the company’s stock has risen by ~1%. CHK’s stock has fallen by ~64% YoY (year-over-year).
By comparison, CHK’s peers EQT Corporation (EQT), Antero Resources (AR), and Cabot Oil & Gas (COG) have fallen by 33%, ~41%, and 29%, respectively, on a YoY basis. COG, CHK, and EQT make up ~7.6% of the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).
In the above graph, we can see CHK’s stock performance with respect to movements in the broader industry and the broader market.
In the period under discussion (April 21–May 5, 2016), CHK underperformed the broader energy industry sector (XLE), which fell by 1% during this period. But CHK decreased ~7.8% during the period. CHK also underperformed the broader market (SPY), which fell by ~1.9% during the period.
Natural gas and crude prices
In the above graph, it’s clear that CHK’s performance has been driven mostly by natural gas prices (UNG) and WTI (West Texas Intermediate) crude oil prices (USO). These have also been a major driver of XLE.
After CHK’s 1Q16 earnings release on May 5, the stock increased despite its lackluster earnings and the 3% drop in natural gas prices. So CHK’s stock was likely trading higher on its asset sale announcement.
CHK’s other efforts to improve liquidity include layoffs and restructuring of gathering agreements.
For a detailed overview on Chesapeake, you might want to check out our series Chesapeake Will Focus on Liquidity and Reduced Spending in 2016. But first, continue to the next and final part of this series for a look at analyst recommendations for Chesapeake after 1Q16.
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