Chesapeake Energy (CHK) Stock Could Grow Legs

Chesapeake Energy Corporation (NYSE: CHK) is headed up in the market again today as good news continues to surround the company. Recently, the company announced a long-term frac sand agreement. On top of that, market conditions are becoming far more positive. Ultimately, the stock may have far more room for gains ahead. Today, we’ll talk about recent news surrounding CHK, what we’re seeing from the stock, and what we’ll be watching for ahead.

Recent News That Says CHK Could Run

As mentioned above, Chesapeake Energy is making a run for the top in the market this morning, and I believe that the gains are far from over. Here is some of the recent news that’s leading to the gains:

CHK Enters Sand Supply Agreement

The most recent news came a couple of days ago when Hi-Crush announced that it had entered into an agreement with CHK. The agreement surrounded the long-term supply of frac sand for the in-basin purchase of Northern White frac sand to support Chesapeake Energy and their completions program in the Marcellus and Powder River Basins. The company also said that it will use one PropStream® container crew and related logistics with the option to expand based on demand.

Ultimately, this agreement will help CHK to move the projects along in the Marcellus and Powder River Basins, leading to stronger production and better revenue opportunities.

Natural Gas Market News

In other news, it’s arguable that Chesapeake Energy is benefiting from market conditions. Natural Gas futures are sitting around $3.55 per MMBtu which is around a nine-month high. Not to mention degree days are increasing in the United States. This is a measure of days where natural gas will be in high demand for heating. Current degree day stats are running at more than a 10% increase over the 30-year average. This means that demand for natural gas will likely only climb. As a result, CHK, a company focused on the natural gas sector, is seeing even more opportunity.

So, at the end of the day, we have a company that’s foundation is building when it comes to production capacity. At the same time, we have a market that is seeing growing demand for the core product of CHK, and as demand grows, so too does the price. All in all, there are plenty of reasons to be excited about CHK.

What We’re Seeing From The Stock 

With so much positive news surrounding Chesapeake Energy and the natural gas market, it only makes sense that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:02), CHK is trading at $3.75 per share after a gain of $0.19 per share or 5.34% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on CHK. In particular, we’re interested in following the story surrounding the company’s continued production growth, expansion plans, and movements in the Marcellus and Powder River Basins. We’re also interested in following the natural gas market as the company is clearly benefiting from conditions in the sector.

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