Can Chesapeake Regain Momentum?

Shares of Chesapeake Energy Corporation (NYSE:CHK) were down 2.83% at the bottom of the noon hour on September 28. Chesapeake released its second quarter results on August 3. Second quarter production was largely flat but revenues increased 41% year-over-year on higher commodity prices, but revenues were down from the last quarter.

Chesapeake locations were affected by the devastation caused by Hurricane Harvey in the Southeastern United States. According to a September 26 update Chesapeake stated that output had dropped by 15%. The company has plans to sell assets worth $2 billion to $3 billion, most likely Marcellus or Utica as potential sales targets.

Chesapeake stock is down 38% in 2017 and 36% year over year. Shares have no recovered since the collapse in oil prices in 2014. The stock dropped into the single digits in late 2015 and has been largely flat since then.

Still, production growth has shown some promise after Hurricane Harvey. The initial drop was to be expected as other large companies have reported similar dips from the disaster. Oil has retreated in recent days after catapulting into a bull market this month. OPEC recently committed to a continuation of its production halt which should help stabilize oil prices into 2018, but North American production continues to increase.

If oil prices can established a floor close to the $48 to $50 mark Chesapeake could see prices accelerate to late 2016 and early 2017 numbers. As the company recovers from the dip in output the stock could be an attractive buy with oil prices showing real strength.