I closed my short position on Chaparral Energy (CHAP) as it fell below $2. Chaparral's stock still has risks due to its significant cash burn and increasing leverage, but it no longer appears noticeably overvalued.
Chaparral's share price had become inflated after it announced strong Q2 2019 production expectations back in late May and Strategic Value Partners made a series of purchases in June and July. However, the strong Q2 2019 production was influenced by the timing of well completions, and Chaparral expected Q3 2019 production to be lower than Q2 2019 production.