CHK Chesapeake Energy Corporation

Chesapeake Energy Corp. (CHK) reported adjusted first quarter 2014 earnings of 59 cents per share, comfortably beating the Zacks Consensus Estimate of 47 cents. Also, the reported figure improved from the year-earlier profit of 30 cents a share.

Quarterly revenues improved to $5,046.0 million from $3,424.0 million a year ago. The top line also got the better of the Zacks Consensus Estimate of $1,864.0 million.

Operational Performance

Chesapeake’s daily production for the reported quarter averaged approximately 675,200 barrel of oil equivalent (Boe), an increase of 11% from 2013 first quarter. Average daily production consisted of approximately 109,500 barrels per day (Bbl/d) of oil, 84,200 Bbls of NGL and 2.9 billion cubic feet (Bcf) of natural gas.

Oil equivalent realized price in the reported quarter was $35.35 per boe, up from $26.71 in the year-earlier quarter. Average realizations for natural gas were $3.27 per Mcf compared with $2.13 per Mcf in the year-earlier quarter. Oil was sold at $85.08 per barrel, down from the year-ago price of $94.85 per barrel.

On the cost front, quarterly production expenses were $4.73 per Boe, reflecting an increase of 2.4% sequentially.

Financials

At the end of the quarter, Chesapeake − the largest U.S. natural gas producer after ExxonMobil Corporation (XOM) − had a cash balance of $1,004.0 million. Long-term debt stood at $12,653.0 million, representing a debt-to-capitalization ratio of 39.0%.

Guidance

The company raised its 2014 total production growth outlook on an adjusted basis to 9–12% from 8–10%, to reflect higher-than-expected natural gas liquids volumes. However as the company shifts its focus to more liquid-rich plays, it expects liquids production to increase approximately 25–29% in 2014. For 2014, Chesapeake expects capital expenditure in the range of $5,200–$5,600 million.  

Zacks Rank & Other Stocks

Chesapeake carries a Zacks Rank #3 (Hold) and is expected to perform in line with the market in the next one to three months. However, there are stocks in the oil and gas sector like, Clayton Williams Energy, Inc. (CWEI) and Matrix Service Company (MTRX), which hold a Zacks Rank #1 (Strong Buy) and are expected to outperform the market.

 
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
 
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EXXON MOBIL CRP (XOM): Free Stock Analysis Report
 
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