The year has proven to be a volatile one for energy companies and their stocks, but the situation with CHK stock in recent days has been particularly brutal.
Over the course of the past few sessions, Chesapeake stock has crashed by as much as 50%, and much of the decline is due to Chesapeake Energy Corporation’s (NYSE:CHK) disappointing show in the Q3 2019 financial results. The headline figures were short of expectations, and the company expressed doubts about its ability to continue doing business, owing to its debt load.
One of the most intriguing things to point out with regards to CHK stock is that company insiders have been buying up the stock even though it has fallen like a stone over the past weeks. It’s important to keep in mind, though, that as of the end of Q3 2019, Chesapeake Energy had a debt burden of as much as $9.7 billion.
The $4 billion acquisition of WildHorse Resource Development has come at a cost for the company. Additionally, it has to pay off $301 million towards debt in 2020, and the following year, the company will need to pay $294 million in notes.
CHK stock is up 9% at $0.73 in Wednesday’s trading session.
In 2021, Chesapeake Energy will also have to make good on the $900 million credit facility that it received for the WildHorse acquisition. The company previously thought that rising oil prices would help it in paying off some of the debt, but things have not worked out. Chesapeake’s chairman Brad Martin and Chief Executive Officer Doug Lawler have recently bought a large block of stock in the open market.
However, it should be noted that executives are known to make such a move in order to send a message to the markets. As of now, there is too much uncertainty surrounding Chesapeake, and analysts believe that investors should stay away from CHK stock for the time being.
Featured image: DepositPhotos © 3dmentat