NEW YORK (TheStreet) -- Chesapeake Energy (CHK) - Get Chesapeake Energy Corporation Report stock closed higher by 5.07% to $6.36 on Monday afternoon, as oil prices increased following a revision of U.S. crude oil production estimates.
WTI crude is up 7.85% to $48.77 per barrel, while Brent crude is gaining 6.95% to $53.53 per barrel, according to the CNBC.com index.
Crude oil production averaged 9.4 million barrels per day for the first half of 2015, down from the previous estimate of 9.5 million barrels, the U.S. Energy Information Administration report shows.
"If the downward trend in U.S. production continues, global markets should return to balance by early 2016," economist Philip K. Verleger told Reuters.
In June, U.S. oil companies produced an average of 9.3 million barrels a day, a 1.1% drop from the previous month, but a 7.1% increase year-over-year.
Data shows that production this year peaked in April with an average crude oil production of 9.6 million barrels per day.
Separately, TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHESAPEAKE ENERGY CORP (CHK) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 2250.8% when compared to the same quarter one year ago, falling from $191.00 million to -$4,108.00 million.
- The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CHK maintains a poor quick ratio of 0.70, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHESAPEAKE ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $314.00 million or 76.77% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.44%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 2950.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: CHK Ratings Report