Chesapeake Energy Corp. Hits Record Low Again

Oil and natural gas production company Chesapeake Energy tumbled more this week after Wall Street learned that the company was planning for a reverse stock split.

Shares of Chesapeake Energy have closed at a record low over a dozen times this month with trading volume significantly higher than usual. The stock has been the most actively traded on major U.S. exchanges.

It was also revealed from the company’s CEO Doug Lawler this week that the commodities pricing environment has “further deteriorated” in recent weeks. “The second half of [2019] was marked by rapidly falling commodity prices, particularly for natural gas, a trend which continues today, causing a much softer commodity price outlook in 2020,” Lawler said.

On Wednesday the company reported fourth-quarter financial results that showed a 2019 loss per share (excluding special items) of 4 cents. The FactSet consensus called for 6 cents. In the year-ago quarter, the company had reported
a profit of 3 cents. Operating revenues were $969 million, down from $1,731 million in the year-ago quarter.

Revenue fell 31% to $1.93 billion, not meeting the FactSet consensus of $2.02 billion. Oil, natural gas and natural gas liquids (NGL) revenue fell 44% to $969 million. Average daily production rose to 477,000 barrels of oil equivalent (BOE) from 464,000 BOE and average prices sales prices for oil fell 8.7%, while for natural gas it fell 38% and for NGL it dropped 36%.

According to FactSet, Lawler remarked during a conference call, “[W]hile we have a stock price that has fallen to very low levels, we will commence actions to reverse split the number of shares with the filing of the proxy in a few weeks.”

A reverse stock split will have the effect of increasing the share price, as it involves converting a larger number of shares into a smaller number of shares.

It was in December that the company received notice from the NYSE for being out of compliance with listing standards that require shares to trade above a dollar.

The stock has sunk 50% over the past three months and 89% over the past 12 months.

Disclaimer: We have no position in Chesapeake Energy Corporation (NYSE: CHK) and have not been compensated for this article.