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Chesapeake Energy Q4 profit jumps 57%, beats estimates

Chesapeake Energy Corp (CHK) reported a 57.3% jump in earnings for the fourth quarter helped by a gain on purchases or exchanges of debt. The results exceeded analysts’ expectations. The results exceeded analysts’ expectations.

Net income available to common stockholders climbed 57.3% to $486 million and earnings jumped 48.5% to $0.49 per share. Adjusted earnings dropped by 30% to $0.21 per share, due to higher costs and expenses as well as a loss on sale of oil and natural gas properties.

Revenues grew by 21.8% year-over-year to $3.07 billion, helped by an increase in revenue from oil, natural gas, and NGL as well as higher marketing revenue.

Looking ahead into the full year 2019, the company expects capital expenditures in the range of $2.3 billion to $2.5 billion, effectively flat compared to $2.37 billion in 2018. Cash costs projected to decrease by about $200 million, on lower gathering, processing, and transportation (GP&T) expenses.

Chesapeake Energy fourth quarter 2018 earnings snapshot
Chesapeake Energy Q4 2018 Earnings Infographic

For 2019, average daily oil production is predicted to be about 116,000 to 122,000 bbls, an absolute increase of about 32% (or 50% adjusted for asset sales), driven by the acquisition of the WildHorse asset and organic growth from the PRB.

For the fourth quarter, average daily production was about 464,000 boe, a 7% decrease compared to 2017 levels, adjusted for asset sales, and consisted of about 87,000 bbls of oil, 2.009 bcf of natural gas and 42,000 bbls of NGL.

Production expenses were $2.87 per boe, compared to $2.50 per boe in the prior-year quarter. The increase was primarily a result of certain 2018 and 2017 divestitures and increased ad valorem tax due to higher prices received for the company’s oil, natural gas, and NGL production.

Chesapeake’s total capital investments increased to $541 million from $523 million in the year-ago quarter, due to an increase in drilling and completion costs as well as higher exploration costs, leasehold and additions to other PP&E.

Chesapeake soars 9% after delivering strong Q3 results

Chesapeake signed an oil gathering agreement during the fourth quarter that will deliver its oil volumes via pipelines into the Guernsey, Wyoming market at a substantially lower cost than the company was incurring by trucking volumes. This was driven by the increase in oil volumes, which the company is projecting going forward.

In the company’s legacy Eagle Ford Shale position in south Texas, Chesapeake is currently utilizing four drilling rigs and expects to place on production up to 125 wells in 2019, compared to 157 wells in 2018. Of the wells planned for 2019, Chesapeake expects to test up to 10 Upper Eagle Ford and Austin Chalk wells.

Shares of Chesapeake Energy ended Tuesday’s regular session down 0.38% at $2.63 on the NYSE. Following the earnings release, the stock inched up over 9% in the premarket session.

 

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