Investors Not Happy With Chesapeake Energy Corporation (NYSE:CHK)’s Q3 Results
Chesapeake Energy Corporation (NYSE:CHK) reported net income of $156 million or $0.24 per fully diluted share for the 2013 third quarter financial results. In addition, the adjusted net income available to common shareholders of $282 million, or $0.43 per share, compared to adjusted net income of $35 million, or $0.10 per share, in the same period last year.
Chesapeake’s CEO Doug Lawler said, “We are pleased with our operational performance during the third quarter. Our strong results compared to the 2012 third quarter were driven by a substantial increase in oil and natural gas liquids production, higher realized natural gas prices and significantly lower per-unit production, overhead and DD&A expenses. Additionally, our focus on financial discipline and operational efficiencies generated lower-than-expected capital expenditures during the 2013 third quarter, and we have reduced our full-year 2013 capital spending outlook accordingly. We look forward to achieving further efficiency gains and improvements in returns on capital in 2014.”
The daily production for the quarter dipped 2% to approximately 4.0 billion cubic feet of natural gas equivalent (bcfe). The dip was due to production losses associated with recent asset sales, CHK said. However, the company’s third quarter oil production was up by 23% year over year to 120,000 Bbls per day. Natural gas production fell 10% yoy and 3% sequentially. Liquids accounted for 27% of total production, up from 21% during the same period in 2012.
Thus, Chesapeake said it is lowering its 2013 full-year guidance for drilling and completion costs to $5.5–$5.8 billion from $5.7–$6.0 billion.
As of September 30, the company had completed asset sales of about $3.6 billion. For the fourth quarter, CHK expects to close more asset sales for net proceeds of worth $600 million.
Investors were not really impressed with Chesapeake’s third quarter earnings, due to which the company’s stock was down by 6% soon after the results were announced.
At the same time, rival EOG Resources Inc (NYSE:EOG)‘s third-quarter profit jumped 30%. The company’s crude oil and condensate revenue increased 55%. EOG again increased its crude oil and condensate production growth target from 35% to 39%. The company also announced CEO William R. Thomas will succeed Mark G. Papa as executive chairman of the company, effective Jan. 1, 2014.