Thanks to falling oil prices, Chesapeake Energy Corporation (NYSE:CHK) has gotten crushed, falling as much as 33% since reaching its 2017 high of $7.32 on Jan. 3. So … when will CHK stock bounce back?

It has been feast or famine speculating on energy companies — especially names like Chesapeake, whose businesses rely heavily on the direction of oil prices.

CHK stock is off more than 25% year-to-date, compared to a still-significant 7% decline in the Energy Select Sector SPDR (ETF) (NYSEARCA:XLE).

While Chesapeake is not alone in its energy struggles, the Oklahoma City, Oklahoma-based natural gas and oil company, which has a net debt position of $9.5 billion, is more reliant upon higher energy prices than some of its peers. CEO Robert Lawler has done a decent job managing cash flow with timely asset sales, but with natural gas prices falling this year due to a warmer, there’s now a heightened fear that Chesapeake Energy may default on its debt obligations.

If that weren’t bad enough, plunging oil prices — down nearly 30% so far in 2017 — come at a time when CHK was looking to increase its production, which involves raising capital expenditures. Chesapeake, which projected 2017 output to be 10% higher YOY, had expected to hike its 2017 capex by almost 30% at the midpoint, based on its target spending range of $1.9 billion to $2.5 billion.

With oil and natural gas prices still on the decline, however, this strategy no longer makes sense. The end result will be higher spending, production with no demand to support it. And that’s not a great combination given Chesapeake’s feeble balance sheet.

Plus, while the company has shown some improvements, thanks to its cost-cutting efforts, CHK last month reported fourth-quarter earnings that were far from breathtaking.

Although EPS arrived inline with expectations, cash flow from operating activities turned negative during the quarter. And that was when gas prices were on the rise. But now gas prices are falling. These factors have attracted short sellers, who have made tons of money betting against the company.

Short interest in CHK stock rose almost 13% in the most-recent settlement date, reaching more than 134.59 million shares, accounting for about 14% of the float. The increase in short interest follows a 7% rise in early February.

Bottom Line for CHK Stock

Since the arrival of Lawler, Chesapeake Energy is no longer the “dead man walking” company it was once perceived to be. The fact that Q4 EPS was 84 cents per share, marking a significant improvement from the previous year’s Q4 loss of $3.47 per share, is one example.

Nevertheless, too many things must go right for CHK stock to recover. Notably, oil prices must rise and Chesapeake must boost cash flow to meed its debt obligations.

And with short sellers now in charge of the stock, either scenario may not matter in the near-term.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.