Chesapeake Energy (CHKA.Q) has been red hot this year. The oil and gas driller's stock has rallied more than 35% thanks to a rebound in the oil market and the company's needle-moving acquisition of WildHorse Resource Development.

Shares could continue running higher if Chesapeake reports strong first-quarter results later this week. Here are three things that would need to be in that report to give the company's stock the fuel it needs to keep rallying.

A drilling rig near a pump at dusk.

Image source: Getty Images.

Earnings need to exceed expectations

Chesapeake's stock caught fire in February after it reported better-than-expected fourth-quarter results. The company posted an adjusted profit of $0.21 per share, which came in $0.03 per share ahead of the consensus estimate due to its strong oil output during the quarter.

Analysts currently anticipate that Chesapeake's earnings will dip a bit in the first quarter to $0.14 per share because of the volatility in the oil market as well as the dilution from the shares it issued to close the WildHorse deal. However, given Chesapeake's recent track record, it wouldn't be a surprise to see the company beat expectations again. If that happens, it could provide the stock with more fuel to rally.

Integration of the former WildHorse assets needs to be going well

Another important thing to watch this quarter is the performance of the recently acquired assets from WildHorse, which Chesapeake has renamed its Brazos Valley unit. The company planned to drill 83 wells on the acquired acreage this year. Ideally, those wells will deliver results in line with Chesapeake's expectations. That would keep the company on track with its goal to grow its oil production by 32% this year.

In addition to that, Chesapeake Energy expects to capture $200 million to $280 million in annual cost savings from the deal. Investors should see how much progress the company made toward that goal during the quarter and whether it remains on track to achieve its longer-term target.

The third area to keep an eye on is leverage. Chesapeake estimated that the WildHorse transaction would help push its leverage ratio down to 3.6 times in 2019 while accelerating the company toward achieving its target to get that metric to around 2.0 times in the future. The company needs to stay on track with this goal, because its massive debt load has been one of the things weighing down its stock in recent years.

It needs to narrow the cash flow gap

One reason Chesapeake has so much debt is that the company has routinely outspent cash flow to grow production. While it has used asset sales to narrow that gap, the company wants to be able to live within its cash flow.

The company initially believed that it would only slightly outspend cash flow this year. However, Chesapeake was evaluating several options to close this gap, which has become more likely thanks to the rebound in oil prices. Hopefully, the company will have found the right balance of efficiency gains and improved performance to put it on track to balance spending with cash flows this year. That achievement alone could send its shares soaring.

Hoping for lots of good news

Shares of Chesapeake Energy have bounced back this year thanks to higher oil prices and the view that its acquisition of WildHorse will move the needle. Because of that, the company's investors have a lot riding on its upcoming first-quarter report. If those results disappoint, shares could give back some of their recent gains. However, if the company posts expectation-beating numbers, makes substantial progress on integrating WildHorse, and has line of sight to start living within its means, then the stock could continue soaring.