The oil company might be facing serious issues due to the fall in the natural gas liquid prices in near future
Chesapeake Energy Corporation has been experiencing a tough time on the financial stock index given the fluctuation in the oil prices increasing with the passage of time. The oil and gas prices are facing a deadly weakness on the index which is making all the analysts in the industry covering the oil company quite bearish towards it. The cash flow in the company is being affected by a huge difference due to the falling oil prices and analysts are worried as to where the firm is now headed.
However, there is one thing that majority of the analysts are not giving attention to and which could turn out to be the undoing of the company that it never expected. The prices of natural gas liquids has also been going down at an exceptionally disappointing speed which means the firm could be in a lot of trouble in the future a remedy is not thought of right away.
The price of oil that is being experienced by Chesapeake as per one barrel has come around at $60 and shows no signs of going up in any way, securing a somewhat still position in the bottom. However, the same cannot be said for natural gas liquids. In a recent published news article by SM energy, it was informed that this time it is expected that the NGL prices fall by a massive difference of $25 million from the revenue budget that has been expected out of the oil industry. This downfall is expected to be around 1.5 percent on a total basis.
On the other hand, it should also be noted down that the price of NGL has already experienced quite a low in the industry falling by around 36 percent to a price per barrel of $16.67. As for SM energy, the total production that was carried out by the firm accounted of around 23 percent of the natural gas liquids which means the NGLs made quite an impression on the revenue generation of the oil digging company.
Other than SM Energy, the fall in the NGL prices are also predicted to be making a negative effect on Chesapeake as well as the cash flow of the firm will also be going down sooner than later. Analysts, on the other hand, have also made expectations of the cash flow of the oil field services providing firm falling by around 3 percent if there is a continuation recorded in the decline of the natural gas liquid prices. The expected cash flow of $2.1 billion will go down if things do not get better on the index.
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