Natural Gas estimate Impact Chesapeake Energy Stock.

Chesapeake Energy (CHK) stock showed signs of improvement in the last few weeks. The stock tracked natural gas prices higher, as you can see in the following graph. Since the beginning of the year, Chesapeake stock has fallen significantly.Chesapeake stock has fallen ~23.5% since the beginning of 2017. Chesapeake stock has been mirroring natural gas prices (UNG) (UGAZ) for the most part. Natural gas prices have fallen ~14% since the beginning of the year. Chesapeake also underperformed the Energy Select Sector SPDR ETF (XLE), which has returned approximately -8% year-to-date. The S&P 500 ETF (SPY) has returned ~5.2% during the same period.
Stock hasn’t been risingLower natural gas prices, compared to price levels at the beginning of the year, could have made investors wary, especially with Chesapeake’s plans to boost spending this year. To finance the spending, Chesapeake will need sufficient cash flows. If it takes on more debt to fund its spending, it might not please investors. As we know, Chesapeake continues to struggle under a huge debt load despite the various efforts it made in previous years.One of Chesapeake Energy’s significant achievements in 2016 was its debt management efforts throughout the year. The efforts included a combination of debt exchanges, open market repurchases, and equity-for-debt exchanges. Asset sales were another key strategy that Chesapeake used to reduce its debt. For more information, read Inside Chesapeake Energy’s Debt Management Efforts in 2016.Debt management will remain a key goal for Chesapeake Energy in 2017. The company wants to achieve a net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio of 2.0x by 2020 and retire debt of $2.0 billion–$3.0 billion.Read CHK Survived the Odds in 2016, but Can Investors Relax Now? to learn more about Chesapeake Energy.