Natural gas provider
Chesapeake Energy Corp.
) reported adjusted third quarter 2013 earnings of 43 cents per
share, up over threefold from 10 cents in the year-earlier
quarter and a penny above of the Zacks Consensus Estimate. The
outperformance came on the back of improved liquids production
and higher price realization.
Total revenue improved nearly 64% to $4,867.0 million from
$2,970.0 million a year ago. The top line also got the better of
the Zacks Consensus Estimate of $1,781.0 million.
Chesapeake's average daily production in the quarter increased
6.3% year over year to 372 billion cubic feet of natural gas
equivalent (Bcfe), of which natural gas accounted for 73%. The
percentage of natural gas production to total volume decreased 6%
points on an annualized basis. However, natural gas production
declined 9.6% to 273 billion cubic feet (Bcf) from 302 Bcf, while
oil production expanded 22.2% from the year-ago level.
Natural gas equivalent realized price in the reported quarter was
$4.78 per thousand cubic feet equivalent (Mcfe), up 18.3% from
$4.04 in the year-earlier quarter. Average realizations for
natural gas were $2.26 per Mcf compared with $1.97 per Mcf in the
year-earlier quarter. Liquids were sold at $92.09 per barrel, up
1.4% from the year-ago price of $90.79 per barrel.
On the cost front, production expenses decreased 9.5% from the
year-earlier level to 76 cents per Mcfe.
At the end of the quarter, Chesapeake − the largest U.S. natural
gas producer after
) − had a cash balance of $987 million. The debt balance stood at
$12,736 million, representing a debt-to-capitalization ratio of
41.0%. Operating cash flow increased 42.9% year over year to
As the company shifts its focus to more liquid-rich plays, it
expects natural gas production to fall in 2013, while liquids
production is expected to increase approximately 28-34% year over
Chesapeake expects 2013 total production in the band of
1,440-1,468 Bcfe. Natural gas is expected to contribute
1,080-1,090 Bcf to the total production. Oil production forecast
has been increased to 40-42 million barrels/MMBbls from 38-40
MMBbls projected previously and NGL will likely be in the 20-21
For 2013, Chesapeake decreased its drilling, completion and
leasehold capital expenditure outlook by $300 million to
Chesapeake holds a Zacks Rank #3 (short-term Hold rating).
However, there are Zacks Ranked #1 (Strong Buy) stocks in the oil
and gas industry like
TransAtlantic Petroleum Ltd
Northern Oil and Gas, Inc.
) that appear attractive in the short term.
CHESAPEAKE ENGY (CHK): Free Stock Analysis
NORTHRN OIL&GAS (NOG): Free Stock Analysis
TRANSATL PETROL (TAT): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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