OKLAHOMA CITY, Sept. 26, 2017 /PRNewswire/ -- Chesapeake Energy
Corporation (NYSE:CHK) today provided an update on its 2017 third
quarter operational results and revisions to its 2017 full-year
guidance. Highlights include:
- Disruptive weather, closed asset sales and changes in
capital allocation result in adjusted average 2017 third quarter
production estimate of approximately 542,000 boe per day, higher
sequentially compared to 527,600 boe in the 2017 second
quarter
- Average 2017 third quarter oil production estimate of
86,000 barrels per day
- With delays largely mitigated, Chesapeake expects 2017
fourth quarter oil production to average approximately 100,000
barrels of oil per day
Doug Lawler, Chesapeake's Chief
Executive Officer, commented, "As a result of operational delays
and curtailments due to disruptions caused by Hurricane Harvey,
closed asset sales and capital allocation adjustments, we are
forecasting our 2017 third quarter volumes to be approximately
542,000 boe per day, including approximately 86,000 barrels of oil
per day, compared to total production for the 2017 second quarter
of approximately 527,600 boe per day, including approximately
88,400 barrels of oil per day. We expect these impacts to be
limited to the third quarter, but are revising our guidance for the
full year. Last week we averaged approximately 555,000 boe per day
and 91,000 barrels of oil per day, and we anticipate our volumes
will continue to grow substantially in the 2017 fourth quarter as
our current production rate has recovered from the delays noted
above. We plan to place 120 to 130 new wells into production in the
2017 fourth quarter, primarily in the Eagle Ford and Powder River
Basin. Accordingly, we now project that our oil volumes will
average approximately 100,000 barrels per day for the 2017
fourth quarter."
Lawler continued, "As we enter 2018, we remain focused on
reducing our debt and driving toward cash flow neutrality. We will
continue to take all of the appropriate steps to retain a
disciplined pace of activity, while creating the most value from
the capital efficiencies we are seeing throughout our
operations."
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INVESTOR
CONTACT:
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MEDIA
CONTACT:
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CHESAPEAKE ENERGY
CORPORATION
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Brad Sylvester,
CFA
(405)
935-8870
ir@chk.com
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Gordon
Pennoyer
(405)
935-8878
media@chk.com
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6100 North Western
Avenue
P.O. Box
18496
Oklahoma City, OK
73154
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Headquartered in Oklahoma
City, Chesapeake Energy Corporation's (NYSE: CHK) operations
are focused on discovering and developing its large and
geographically diverse resource base of unconventional oil and
natural gas assets onshore in the United States. The company
also owns oil and natural gas marketing and natural gas compression
businesses.
This news release and the accompanying Outlook include
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are statements
other than statements of historical fact. They include statements
that give our current expectations, management's outlook, guidance
or forecasts of future events, production and well connection
forecasts, estimates of operating costs, wells placed into
production, cash flow neutrality, lowering debt, anticipated
capital and operational efficiencies, planned development drilling
and expected drilling cost reductions, general and administrative
expenses, capital expenditures, the timing of anticipated asset
sales and proceeds to be received therefrom, projected cash flow
and liquidity, our ability to enhance our cash flow
and financial flexibility, plans and objectives for future
operations, and the assumptions on which such statements are based.
Although we believe the expectations and forecasts reflected in the
forward-looking statements are reasonable, we can give no assurance
they will prove to have been correct. They can be affected by
inaccurate or changed assumptions or by known or unknown risks and
uncertainties.
Factors that could cause actual results to differ materially
from expected results include those described under "Risk Factors"
in Item 1A of our annual report on Form 10-K and any updates to
those factors set forth in Chesapeake's subsequent quarterly
reports on Form 10-Q or current reports on Form 8-K (available at
http://www.chk.com/investors/sec-filings). These risk factors
include the volatility of oil, natural gas and NGL prices; the
limitations our level of indebtedness may have on our financial
flexibility; our inability to access the capital markets on
favorable terms; the availability of cash flows from operations and
other funds to finance reserve replacement costs or satisfy our
debt obligations; downgrade in our credit rating requiring us to
post more collateral under certain commercial arrangements;
write-downs of our oil and natural gas asset carrying values due to
low commodity prices; our ability to replace reserves and sustain
production; uncertainties inherent in estimating quantities of oil,
natural gas and NGL reserves and projecting future rates of
production and the amount and timing of development expenditures;
our ability to generate profits or achieve targeted results in
drilling and well operations; leasehold terms expiring before
production can be established; commodity derivative activities
resulting in lower prices realized on oil, natural gas and NGL
sales; the need to secure derivative liabilities and the inability
of counterparties to satisfy their obligations; adverse
developments or losses from pending or future litigation and
regulatory proceedings, including royalty claims; charges incurred
in response to market conditions and in connection with our ongoing
actions to reduce financial leverage and complexity; drilling and
operating risks and resulting liabilities; effects of environmental
protection laws and regulation on our business; legislative and
regulatory initiatives further regulating hydraulic fracturing; our
need to secure adequate supplies of water for our drilling
operations and to dispose of or recycle the water used; impacts of
potential legislative and regulatory actions addressing climate
change; federal and state tax proposals affecting our industry;
potential OTC derivatives regulation limiting our ability to hedge
against commodity price fluctuations; competition in the oil and
gas exploration and production industry; a deterioration in general
economic, business or industry conditions; negative public
perceptions of our industry; limited control over properties we do
not operate; pipeline and gathering system capacity constraints and
transportation interruptions; terrorist activities and
cyber-attacks adversely impacting our operations; potential
challenges by Seventy Seven Energy Inc.'s (SSE) former creditors in
connection with SSE's recently completed bankruptcy under Chapter
11 of the U.S. Bankruptcy Code; an interruption in operations at
our headquarters due to a catastrophic event; the continuation of
suspended dividend payments on our common stock; the effectiveness
of our remediation plan for a material weakness; certain
anti-takeover provisions that affect shareholder rights; and our
inability to increase or maintain our liquidity through debt
repurchases, capital exchanges, asset sales, joint ventures,
farmouts or other means. The guidance provided in this press
release and outlook supersede all prior guidance for the third and
fourth quarter and full year 2017.
In addition, disclosures concerning the estimated
contribution of derivative contracts to our future results of
operations are based upon market information as of a specific date.
These market prices are subject to significant volatility. Our
production forecasts are also dependent upon many assumptions,
including estimates of production decline rates from existing wells
and the outcome of future drilling activity. Expected asset
sales may not be completed in the time frame anticipated or at all.
We caution you not to place undue reliance on our forward-looking
statements, which speak only as of the date of this news release,
and we undertake no obligation to update any of the information
provided in this release or the accompanying Outlook, except as
required by applicable law. In addition, this news release contains
time-sensitive information that reflects management's best judgment
only as of the date of this news release.
CHESAPEAKE ENERGY
CORPORATION MANAGEMENT'S OUTLOOK AS OF SEPTEMBER 25,
2017
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Chesapeake
periodically provides guidance on certain factors that affect the
company's future financial performance. New information or changes
from the company's August 2, 2017 Outlook are italicized
bold below.
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Year
Ending
12/31/2017 |
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Adjusted Production
Growth(a)
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(1%) to
1%
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Absolute
Production
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Liquids -
mmbbls
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51.5 -
53.5
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Oil -
mmbbls
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32.0 -
33.0
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NGL -
mmbbls
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19.5 -
20.5
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Natural gas -
bcf
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855 -
875
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Total absolute
production - mmboe
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194.0 -
199.0
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Absolute daily rate -
mboe
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532 -
545
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Estimated Realized
Hedging Effects(b) (based on 9/22/17 strip
prices):
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Oil -
$/bbl
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$2.97
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Natural gas -
$/mcf
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($0.04)
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NGL -
$/bbl
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($0.13)
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Estimated Basis to
NYMEX Prices:
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Oil -
$/bbl
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$0.60 -
$0.80
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Natural gas -
$/mcf
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$0.30 -
$0.35
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NGL -
$/bbl
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$3.75 -
$4.15
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Operating Costs per
Boe of Projected Production:
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Production
expense
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$2.75 -
$2.95
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Gathering, processing
and transportation expenses
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$7.00 -
$7.50
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Oil -
$/bbl
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$4.00 -
$4.20
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Natural Gas -
$/mcf
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$1.25 -
$1.35
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NGL -
$/bbl
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$8.00 -
$8.40
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Production
taxes
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$0.40 -
$0.50
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General and
administrative(c)
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$1.15 -
$1.25
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Stock-based
compensation (noncash)
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$0.10 -
$0.20
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DD&A of natural
gas and liquids assets
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$4.00 -
$5.00
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Depreciation of other
assets
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$0.40 -
$0.50
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Interest
expense(d)
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$2.00 -
$2.10
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Marketing, gathering
and compression net margin(e)
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($80) -
($60)
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Book Tax
Rate
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0%
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Capital Expenditures
($ in millions)(f)
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$1,900 -
$2,300
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Capitalized Interest
($ in millions)
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$200
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Total Capital
Expenditures ($ in millions)
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$2,100 -
$2,500
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(a)
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Based on 2016
production of 529 mboe per day, adjusted for 2016 and 2017
sales.
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(b)
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Includes expected
settlements for commodity derivatives adjusted for option premiums.
For derivatives closed early, settlements are reflected in the
period of original contract expiration.
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(c)
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Excludes expenses
associated with stock-based compensation.
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(d)
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Excludes unrealized
gains (losses) on interest rate derivatives.
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(e)
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Excludes non-cash
amortization of approximately $22 million related to the buydown of
a transportation agreement.
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(f)
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Includes capital
expenditures for drilling and completion, leasehold, geological and
geophysical costs, rig termination payments and other property and
plant and equipment. Excludes any additional proved property
acquisitions.
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SOURCE Chesapeake Energy Corporation