Chesapeake Energy Swings to Loss on Impairments -- Update
November 04 2015 - 9:42AM
Dow Jones News
By Chelsey Dulaney
Chesapeake Energy Corp. on Wednesday warned it could
significantly cut its capital spending next year, as the U.S. shale
driller swung to a third-quarter loss amid heavy write-downs
But shares of the company rose 4.9% in premarket trading as its
loss, excluding the $4.51 billion impairment charge and other
special items, was smaller than analysts had expected.
Chesapeake is among the large U.S. energy companies that have
written down the value of their oil fields as a rout in commodities
prices has made properties across the country not worth
drilling.
Oklahoma City-based Chesapeake has also moved to cut 15% of its
workforce, reduce its capital spending and pare back its rig
operations.
The company again reduced its 2015 capital-spending plans, now
forecasting $3.4 billion to $3.9 billion. It had previously
forecast $3.5 billion to $4 billion in spending for the year.
For 2016, Chesapeake Chief Executive Doug Lawler said the
company is "prepared to execute on a significantly lower capital
program in 2016."
During the third quarter, Chesapeake cut its capital spending by
more than half, to $623 million from $1.52 billion in the
prior-year period.
Chesapeake reduced its average operated rig count to 18 in the
third quarter from 26 in the second quarter and 69 in the
prior-year period.
Chesapeake's daily production averaged around 667,000 barrels of
oil equivalent a day, an increase of 3% over the same period in
2014 adjusted for asset sales. Chesapeake has also been selling
properties to pay off its debt after years of heavy borrowing to
snap up oil and gas prospects under its former chief executive.
The company's average realized oil price for the quarter fell
26% from the prior year to $62.68 a barrel.
Overall, for the quarter ended Sept. 30, Chesapeake reported a
loss of $4.65 billion, or $7.08 a share, compared with a prior-year
profit of $662 million or 26 cents a share.
Excluding the $4.51 billion impairment charge and other items,
Chesapeake posted a per-share loss of 5 cents. Analysts had
forecast a loss of 13 cents a share.
Revenue plunged 49% to $2.89 billion, missing the $3.02 billion
analysts had forecast.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 04, 2015 09:27 ET (14:27 GMT)
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