A. Lee Graham Reporter firstname.lastname@example.org
Chesapeake Energy Corp. has reported a first-quarter profit as the Oklahoma-based energy company enjoyed increased revenue while outlining ambitious oil production goals for this year. “Chesapeake is off to a strong start in 2013,” said Acting CEO Steven C. Dixon, commenting in a news release. The company reported a profit of $58 million just a year after reporting a $28 million loss. Stung by low natural gas prices, the past year saw Chesapeake shift to more liquids-rich shale plays, sell off assets and appoint Dixon as Acting CEO after former CEO Aubrey McClendon retired last month. Dixon has been the company’s executive vice president and chief operating officer since 2006. “We are beginning to see the benefits of our operational strategy shift from identifying and capturing new assets to developing our extensive existing assets and entering a new era of shareholder value realization,” Dixon said. Chesapeake reported net income available to common stockholders of $15 million, or 2 cents per fully diluted share in its first-quarter financial results. The company reported adjusted earnings before interest, taxes, depreciation and amortization at $1.1 billion, 35 percent higher year over year. Operating cash flow, which the company defines as cash flow provided by operating activities before changes in assets and liabilities, reached $1.2 billion, an increase of 29 percent year over year. Daily production in first-quarter 2013 averaged about 4 billion cubic feet of natural gas equivalent, 9 percent more than the same quarter a year earlier and 1 percent more than fourth-quarter 2012. First-quarter 2013 saw the company’s average daily oil production rise more than 6 percent sequentially and 56 percent year over year, with its average daily natural gas liquids production increasing 8 percent sequentially and 14 percent year over year. “These increases were driven primarily by strong contributions from the Eagle Ford Shale and Greater Anadarko Basin plays,” Dixon said. Average daily natural gas production during the quarter was flat sequentially but up 2 percent year over year due to strong growth in the northern Marcellus Shale play offset by expected declines in the Haynesville Shale play, the company said. “We are pleased to raise our 2013 oil production guidance by 1 million barrels, largely as a result of improving performance in the Eagle Ford Shale, where we are drilling longer laterals, achieving better-than-expected well performance and encountering improved gathering system pressures along with fewer gas processing constraints,” Dixon said. The company said it plans to increase the mid-point of its 2013 natural gas production guidance by 25 billion cubic feet, due primarily to strong well results in the Marcellus Shale. Chesapeake operated an average of 83 rigs in first-quarter 2013 and invested about $1.5 billion in drilling and completion costs, a run rate it described as consistent with the $6 billion midpoint of its full-year 2013 guidance. Meanwhile, Chesapeake plans to invest more than 80 percent of its total capital expenditures to drilling and completion activities in 2013 compared to an average of about 50 percent in the last three years, according to Domenic J. Dell’Osso Jr., the company’s chief financial officer. Chesapeake reported first-quarter 2013 production expenses averaging 86 cents per 1,000 cubic feet of natural gas equivalent, a decrease of 18 percent year over year. General and administrative expenses, excluding stock-based compensation, totaled 25 cents per million cubic feet equivalent, a decrease of 29 percent year over year. “We have achieved good progress in controlling costs and generating efficiency gains,” Dell’Osso said. “As a result, we are reducing our 2013 guidance ranges for per-unit production and [general and administrative] expenses for the second consecutive quarter,” Dell’Osso said. Chesapeake Energy Corp., the second-largest natural gas producer behind Irving-based Exxon Mobil Corp. and whose interests include North Texas’ Barnett Shale, focuses on discovering and developing unconventional natural gas and oil fields onshore in the U.S. More information is available at www.chk.com.