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On February 23 Chesapeake Energy (CHK) reported another big step toward break-even. The company’s net loss for the fourth quarter fell to $741 million (or 84 cents a share) from $2.23 billion (or $3.36 a share) in the fourth quarter of 2015. Investors were disappointed that revenue fell 24% to $2.02 billion in the period, but that’s what happens when you sell assets to repair a dangerously indebted balance sheet.  Chesapeake still finished 2016 with $9 billion in debt, but the company has successfully reduced the amount of that debt that’s due soon (through 2018) to less than $100 million from a prior and very threatening $3.2 billion. The company also showed solid additions to oil and natural gas reserves. Proved reserves climbed 14% and the company showed a reserve replacement ratio of 267%. For 2017 the company expects to increase its capital spending program and put more rigs to work on its 8 million leased acres with increased activity weighted toward the second half of 2017. The company ended 2016 running 17 rigs and projects that it will complete 130 to 160 wells per quarter in the second half of 2017.

The year certainly will present challenges to Chesapeake. The big profits in the U.S. oil shale boom have gone to producers of liquids not natural gas and to production companies that have been skilled at driving down finding and development costs. Chesapeake has been working to increase the percentage of its production that is either oil or natural gas liquids but that category still made up just 25% of total production at the end of 2016. Historically, Chesapeake has been most skilled at acquiring promising lease acreage and the shift to a company focused on costs isn’t be any means guaranteed to result in success.

But, nonetheless, this is a company that has made substantial progress from the days when it looked like its debt load might force it into reorganization.

However, you’d never think there had been any progress at all if all you did was look at the recent behavior of Chesapeake’s stock. The shares closed at $5.32 today, March 3. That’s down from $6.44 on February 14 and from $7.13 on January 15. In fact the chart shows nothing but a rather brutal decline from $7.72  share on December 9.

A large part of that drop is the result of improvements at Chesapeake the company being overshadowed by a surprising build in natural gas inventories as a result of warmer than expected weather in much of the United States. For example, on Thursday March 2, the U.S. Energy Information Administration reported that U.S. natural gas inventories climbed by 7 billion cubic feet in the week ended February 24. Analysts had expected a drop of 5 billion cubic feet. Natural gas inventories almost always decline in the winter as cold weather pushes up demand for the fuel. The five-year average for this past week on the calendar is a drop in inventories of 132 billion cubic fee. Last year the drawdown for this week was 48 billion cubic feet.

Naturally nature gas markets haven’t exactly jumped with joy over this unexpected increase in inventories. Natural gas, which closed at $2.80 per million BTUs on Wednesday before the report fell to $2.76 after the report. Natural gas rebounded slightly to $2.82 on Friday, March 3, but the commodity is still down by 25% since the beginning of the year.

Things aren’t likely to get better for gas prices in the next few months. We’re about to enter the shoulder period, one of two each year, when seasonal demand for natural gas falls as we move away from winter heating season and toward summer cooling season–but haven’t yet arrived at either of those higher demand periods.

At the close on Friday March 3 at $5.32 a share, a recovery on anticipation of a summer peak in demand–and a connected draw down in inventories–that took the stock back to $7.00 a share would result in a gain of a little more than 30%. That’s an attractive short term gain in my opinion.

It’s quite probably early to put on that trade–as I noted above we’re just approaching the shoulder period of weaker demand–and natural gas prices and the share price for Chesapeake could well fall further. That’s especially the case because Chesapeake has announced a delay in filing its 10-K with the Securities and Exchange Commission so it can perform more tests on controls and procedures. The company has said it expects to file that 10-K no later than March 6. You might want to wait for that event.

But I’m willing to start averaging in on this trade at $5.32 a share with the idea of adding to my initial position if natural gas and Chesapeake continue to retreat. The 52-week range for Chesapeake shares is $3.53 to $8.20 a share.

Full disclosure: I own shares of Chesapeake Energy in my personal portfolio.