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3 Beaten-Down Energy Stocks That Could Rebound in a Big Way in 2016

CHK Cash and Equivalents (Quarterly) Chart
CHK Cash and Equivalents (Quarterly) Chart

CHK Cash and Equivalents (Quarterly) data by YCharts .

It potentially gets worse. Chesapeake's available credit -- an important source of back-up liquidity -- keeps getting cut with each quarter of the downturn. In other words, things are bad at Chesapeake.

But that doesn't mean they are dire, at least not yet. The company has worked with Williams Companies , one of its main pipeline vendors, to rework its agreements, and this should lead to Chesapeake realizing higher selling prices for natural gas.

And, frankly, natural gas is more important to the company than oil at this stage, making up well over two-thirds of its production.

Bottom line? If Chesapeake can continue to rein in its costs and operating efficiency, that will help. If natural gas prices rebound from the current lows, Chesapeake's cash flows would surge, and the stock would skyrocket.

Natural gas prices are as low as they've been in a decade. That's no guarantee they'll rebound, but if they do, Chesapeake will be a huge winner.

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The article 3 Beaten-Down Energy Stocks That Could Rebound in a Big Way in 2016 originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. Jason Hall owns shares of Chesapeake Energy and National Oilwell Varco. Matt DiLallo owns shares of National Oilwell Varco. The Motley Fool owns shares of and recommends National Oilwell Varco. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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