Chesapeake Energy Falls to 15-Year Low as Oil Market Sinks

Chesapeake Energy Corp. fell to the lowest since April 2000, making it the worst-performing stock in the Standard & Poor’s 500 Index Tuesday, on investor concern that sinking oil prices would hurt the company’s ability to repay debt.

The stock fell 13.5 percent in New York, anchoring an average 4.4 percent decline on the Standard & Poor’s 500 Oil and Gas Exploration & Production Index. The $3 puts expiring Feb. 19 were the most-traded Chesapeake option Tuesday.

"The market is not very kind to the whole group and especially to companies with high debt and very limited financial flexibility," said Fadel Gheit, managing director at Oppenheimer & Co.

ConocoPhillips was the second-worst performing oil and natural gas producer in the S&P Tuesday, as its shares fell 7.5 percent to $36.40.

Chesapeake shares have plunged 84 percent in the past year as oil prices continued their drop to below $30 a barrel. The oil and gas explorer has halted dividend payouts, reduced its drilling budget and cut one out of every six employees in an attempt to cope with the worst market rout since the 1980s.

"Chesapeake tends to move more than others because of their financial leverage," said Subash Chandra, managing director of Guggenheim Securities. "But they have company in today’s move." 

West Texas Intermediate, the U.S. crude benchmark, slipped 3.3 percent to $28.46 a barrel on the New York Mercantile Exchange Tuesday, the lowest settlement since September 2003.

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