The nation's No. 2 natural gas producer, Chesapeake Energy Corporation (OTC:CHKA.Q), is on deck to report second-quarter results Wednesday morning before the market opens. The company really needs to impress investors as its stock price -- which is down 58% since the start of the year -- has been creamed. Here's what to keep an eye on when the company reports:

1. How well Chesapeake Energy managed expectations
Given how weak oil and gas prices were in the quarter, analysts don't expect much from Chesapeake Energy. In fact, the current consensus is that it will lose $0.11 per share during the quarter. That is quite a reversal from last quarter, when it earned $0.04 per share, and from the year-ago quarter's $0.36 per share.

What investors will want to see is if the company can actually beat those muted expectations. That's not a stretch since so far this quarter several energy-related companies have beaten expectations on the back of solid production and better-than-expected cost reductions. Ideally, Chesapeake Energy will be able to do the same.

2. Any changes to the plan for spending
A couple of weeks ago, Chesapeake Energy unveiled a new financial strategy, which included the elimination of its dividend. The company said it would redirect that cash to its 2016 capital program. However, its current capital program as well as what's projected for next year are both expected to be much higher than cash flow, which has investors worried.

What investors will want to keep an eye on is for any changes to its capex plan for the balance of the year. What we might see is the company cut a bit more out of its capex plan as a result of cost reductions that it's now receiving from oil-field service companies. Such a cut should enable it to keep its production growth target intact as it would simply be getting the same production growth for less money. 

3. Any announcements for plans to use its vast liquidity
When Chesapeake Energy announced its dividend elimination, it also pointed out that its balance sheet was loaded with $2 billion in cash and another $4 billion of undrawn capacity on its credit facility. So, it wasn't making the move because it was worried about its liquidity position.

Instead, CEO Doug Lawler stated that the company was continuing "to move forward with multiple opportunities that will strengthen our cash flow generation capabilities" and that he's looking "forward to future announcements regarding the ways we are creating additional value in the months ahead." In other words, it seems like Chesapeake Energy is actively exploring acquisition opportunities that would turn the cash on the balance sheet into cash flow for the company. Because of this investors should watch to see an acquisition announced on Wednesday.

Investor takeaway
Chesapeake Energy has had a really rough year as persistently weak oil and gas prices have crushed its stock. Analysts expect that weakness to result in a loss this quarter. That said, there's reason to be optimistic given success other producers have had in cost reductions. Furthermore, the company has a lot of cash at its disposal so it will be interesting to see what it does with it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.