NEW YORK (TheStreet) -- Energy companies, especially those specializing in exploration and production of oil and gas, are forced to rethink how they conduct business thanks to the weakness in oil prices. 

Wednesday, Chesapeake Energy (CHK) - Get Report , in an effort to preserve profits, announced plans to cut 2015 capital expenses and rig counts as part of its earnings announcement. What it didn't announce was a cut in its dividend, which could actually hurt the company.

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Like other energy companies, the Oklahoma City company is trying to survive in an oil environment where $100 per barrel or even $80 may not be seen for a while. Earlier Wednesday the price of Brent crude was at $49.50, according toCNN Money.

Most energy companies have adopted capital expense budgets for exploration projects that assumes oil prices would be at 60% to 80% higher than where they are today. Investors who placed huge bets on the dividends paid by energy companies must embrace a new reality where those dividends are no longer sustainable.

The choice is whether to accept near-term quarterly payments and risk long-term insolvency. In this case, Chesapeake, which made no adjustments to its dividend during the announcement, is risking solvency.

The company pays a quarterly dividend of 0.0875 cents per share, yielding 1.76%. It's not a huge yield compared to the 2% average yield paid out by S&P 500 stocks. But with its net debt of almost $11 billion, according toYahoo! Finance, the company's 37% capital expense reduction -- while it's a good start -- may not be enough. This is because, even with the cutbacks, the company expects a 3% to 5% increase in its oil and gas production for 2015.

More production is the last thing Chesapeake, or for that matter the entire energy sector, needs. With last week's report by the U.S. Energy Information Administration pointing to higher commercial crude oil inventories in the U.S., Chesapeake -- by producing any oil at all -- is throwing good money after bad.

This jump in oil inventories is more significant to Chesapeake's business because the company also relies on natural gas for a sizable portion of its profits. Natural gas prices have begun to decline due to lower-than-expected demand so Chesapeake will be hurt from multiple angles, as will its shareholders.

For the quarter that ended in December, Chesapeake reported net income of $639 million, or 81 cents per share. On an adjusted basis, when excluding out one-time gains and costs, earnings were 11 cents per share, missing estimates by 13 cents. Fourth-quarter revenue were up 11% year over year to $5.05 billion, beating estimates by more than $200 million.

Chesapeake shares are at $18, down 9.4% on the day and 33% for the past 52 weeks. There is still uncertainty surrounding its legal battle with founder and former CEO Aubrey McClendon, whom the company has accused of misappropriating information.

In short, there are too many distractions affecting this stock. Investors would be better served looking for value elsewhere.

TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHESAPEAKE ENERGY CORP (CHK) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins."

You can view the full analysis from the report here: CHK Ratings Report

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.