Beleaguered energy producer Chesapeake Energy Corporation (NYSE:CHK) has been fighting a long, difficult battle. But it finally looks like the tide is turning Chesapeake’s way, and CHK stock is climbing as a result.

We all know Chesapeake Energy’s story of high debts, falling natural gas and energy prices, major insider selling and its brush with bankruptcy. Simply put, CHK stock was firmly in the “speculation” category, in terms of investment.

Thus, Chesapeake had much to prove this earnings season … and prove it did.

CHK actually managed to be profitable (at least on an adjusted basis) in one of the worst energy environments in recent history. More importantly, it managed to execute on a number of its major turnaround initiatives. Those plans are key for the firm to keep the profits going into the future.

In the end, Chesapeake Energy stock is quickly becoming the investment it used to be.

Chesapeake Beats the Street

As I said previously, the focus for Chesapeake Energy was never going to be the headline number. It was everything else — the background, and the projections.

Still, Chesapeake managed to report a profit of 9 cents per share that kicked out non-recurring items, but did include a gain from the sale of its now noncore assets. Analysts surveyed by FactSet expected to see a loss of 3 cents per share.

And even its unadjusted net loss was a far cry from the previous year’s. CHK bled $1.19 billion, versus the year-ago period’s $4.65 billion.

Revenues did decline, too, by more than 30% to $2.28 billion, but that also beat out expectations of $2.16 billion.

So, what all went right?

Firing on All Cylinders

CHK stock holders taking a deeper dip into the report will love this: Chesapeake’s operating expenses continued to drop.

Chesapeake has focused on reducing capex spending and using long lateral drilling techniques for a few quarters now. Those efforts to drill for cheaper are working. Chesapeake reduced operating expenses by 5% sequentially, and for the year, drilling costs have sank by almost 20%.

In addition to reducing its drilling costs, CHK entered into several new midstream commitments designed to reduce its shipping costs as well. These costs reductions will also help on the margin front.

Meanwhile, Chesapeake Energy is reducing debts and enhancing liquidity. For the quarter, CHK managed to end the period with $3.7 billion in liquidity. That’s huge considering just a few months ago, we were using the “B” word — bankruptcy — in concert with Chesapeake. Its debts were close to $20 billion at one point. But, continued buying of IOUs has left the firm with just $8.7 billion in long-term debt and $625 million due at the end of 2017.

Finally, CHK continues to right-size its portfolio and only focus on the best assets. The bloated and sprawling natural gas king has continued to slim down. This quarter, that meant selling some assets in the Devonian and adding bolt-on acreage in the natural gas rich Haynesville shale.

CHK Stock Is Turning Around

In a nutshell, this report indicates that Chesapeake Energy has righted the ship.

Yes, CHK still faces a boatload of risks — falling oil prices chief among them — but it appears that the company’s plans to become leaner, meaner and debt-freer are actually working.

The focus on the lowest-cost core areas, and reducing capex/drilling costs, will only work in Chesapeake’s favor as oil rises. And if it doesn’t rise, CHK should at least be able to navigate those waters more easily than it could before.

Chesapeake Energy stock looks less like a speculative buy, and more like an actual opportunity for value investors. If we get a follow-up quarter of strong results, consider that confirmation that CHK is back.

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