Chesapeake Energy (NASDAQ: CHK) is one of the latest oil and gas companies to deliver strong earnings. On the heels of reports from “big oil” companies such as Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVK), Chesapeake showed that the little guys are getting a piece of the action as well.  

At a time when energy stocks are under siege for their record-breaking profits, Chesapeake Energy is focusing its efforts on NYSE: CHK">delivering natural gas here at home as well as abroad. In fact, the company recently announced that it was cutting about 3% of its workforce as it exits oil-producing properties.  

Demand for natural gas is expected to remain high as long as the war in Ukraine goes on. And that means that despite being up 61% for the year, this may still be a time to scoop up some shares of CHK stock. 

What Did the Earnings Report Say? 

The independent exploration and production company delivered revenue of $2.99 billion in the quarter. This was well above analysts’ expectations for $2.05 billion. On the bottom line, the company delivered $5.06 in adjusted earnings per share (EPS), which was above estimates of $4.48.  

Both numbers were significantly higher on a year-over-year basis. The earnings number was also larger than the prior quarter. Revenue, however, came in 15% lower than the prior quarter. 

Not all the news was good. Chesapeake did lower its full-year earnings forecast. The company is now guiding to adjusted earnings between $4.45 and $4.55 billion. The earlier guidance was for a range between $4.8 billion and $5.0 billion.  

The Natural Gas Market is Changing 

Russia’s war on Ukraine is changing the trade routes for natural gas between Europe and Russia. And the changes may be long-lasting in their scope. While alternative energy alternatives may be the future, natural gas will still be the fuel of choice for the next five years. 

This is echoed by the Business Research Company. In its Natural Gas Global Market Report 2022, the business research firm predicts the size of the natural gas market will grow by 11% this year to $0.94 trillion. And the market will continue to grow at a compound annual growth rate (CAGR) of 6.9% through 2026. That will bring the market size to $1.23 trillion.  

Some of this growth will come from the need for Europe to receive natural gas from countries like the United States. The market for liquefied natural gas (LNG) is growing. Chesapeake was not a player in this market. However, in June 2022, the company hired a liquefied natural gas (LNG) adviser to help the company expand into this fast-growing market. And, in its most recent earnings presentation, Chesapeake noted that it is targeting 15% to 20% of the total company volumes to be in the form of LNG.  

CHK Stock Remains a Buy 

Chesapeake Energy may not be lowering the price that consumers pay at the gas pump. It may not be able to do much to bring the price of natural gas down this winter. But it will play an essential role in keeping the gas flowing. 

At the time of this writing, CHK stock is about 7% below the consensus forecast of analysts tracked by MarketBeat. However, the company just got a price target increase from $120 to $130 by the Royal Bank of Canada (NYSE: RY). Once other analysts weigh in, the consensus price is likely to go higher and so will the opportunity to profit from taking a position in the stock.