NEW YORK (TheStreet) -- Chesapeake Energy (CHK) - Get Report stock is slumping 3.35% to $2.60 in afternoon trading on Thursday, as counterparties such as pipeline companies seek collateral to assure them of the company's financial stability.
Credit ratings agencies Moody's (MCO) and Standard & Poor's downgraded the natural gas producer's rating into junk territory in December as oil prices have plunged more than 70% since their June 2014 highs.
Since then, parties have asked Chesapeake Energy to post roughly $220 million collateral, Reuters reports. The company has posted about $92 million in cash and letters of credit.
Chesapeake Energy might need to post another $698 million, which could negatively impact its liquidity, according to an SEC filing, Reuters notes.
"Some of our counterparties have requested or required us to post collateral as financial assurance of our performance under certain contractual arrangements, such as transportation, gathering, processing and hedging agreements," Chesapeake Energy said in the filing.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D.
Chesapeake Energy's weaknesses include 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.
You can view the full analysis from the report here: CHK
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.