On Mar 31, 2014, we issued an updated research report on
Chesapeake Energy Corporation
). The company posted fourth-quarter 2013 earnings of 27 cents
per share, falling behind the Zacks Consensus Estimate of 40
cents. However, the reported figure improved from the
year-earlier profit of 26 cents a share. Quarterly revenues
improved to $4,541.0 million from $3,539.0 million a year ago.
The top line also got the better of the Zacks Consensus Estimate
of $1,758.0 million.
Chesapeake - an independent oil and gas company - registered a
significant fall in natural gas price realizations during the
fourth quarter. Average realizations for natural gas were $1.90
per per thousand cubic feet (Mcf) compared with $2.07 per Mcf in
the year-earlier quarter. Also oil was sold at $89.58 per barrel,
down from the year-ago price of $92.23 per barrel.
Chesapeake plans to invest heavily in the development of its
liquids-rich holdings in the Eagle Ford Shale, Granite Wash and
Mississippi Lime. The company's daily production for the reported
quarter averaged approximately 665,100 barrel of oil equivalent,
an increase of 2% from the 2012 fourth quarter and 1% decrease
from the 2013 third quarter. This decrease is primarily due to a
planned reduction in well connections.
Severe weather also impacted the company's production in
October and December. Average daily production in the fourth
quarter consisted of approximately 111,300 barrels per day
(Bbl/d) of oil, 63,700 Bbls of NGL and 2.9 billion cubic feet of
natural gas. As the company shifts its focus to more liquid-rich
plays, it expects natural gas production to fall in 2014, while
liquids production is expected to increase approximately 14-18%
year over year. For 2014, Chesapeake expects capital expenditure
in the range of $5,200-$5,600 million.
However, Chesapeake's results are vulnerable to fluctuations
in the natural gas market, since natural gas accounted for about
three-fourth of its 2013 production.
Key Picks from the Sector
Chesapeake Energy currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players in the energy
Valero Energy Corporation
Range Resources Corporation
Helmerich & Payne, Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
CHESAPEAKE ENGY (CHK): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
VALERO ENERGY (VLO): Free Stock Analysis
To read this article on Zacks.com click here.