Higher production, lower costs boost Chesapeake’s Q1 profit
Chesapeake Energy Corp. on Wednesday reported a first-quarter profit of $268 million as the company increased production while lowering costs.
The Oklahoma Citybased oil and natural gas company had total production of about 554,000 barrels of oil equivalent per day in the first quarter, up 11 percent from the year-ago period. Oil production increased 16 percent to 92,000 barrels per day.
“Our strategic priorities remain unchanged,” CEO Doug Lawler said Wednesday morning during a conference call with analysts. “That we’ve made foundational progress in transforming Chesapeake into a top-quartile E&P (exploration and production) company is evident in our systematic, sequential improvements in all aspects of our business.
“In the first quarter, we recognized material progress in enhancing our margins, achieving positive free cash flow and reducing our net debt. The underlying strength of our operations, coupled with higher realized prices, resulted in our best financial performance since before the downturn of 2014.”
The company operated an average of 15 rigs in the quarter and completed 76 wells. In the year-ago period, Chesapeake used 16 rigs to complete 99 wells.
Chesapeake’s firstquarter net income available to common shareholders of $268 million translates to 29 cents a share, up from $75 million, or 8 cents a share, in the year-ago quarter.
Adjusted for onetime items, the company generated a profit of $361 million, or 34 cents a share, up from an adjusted net income of $212 million, or 23 cents a share, in the first quarter of 2017. Revenues slipped to $2.49 billion from $2.75 billion one year ago.
Adjusted earnings before interest, taxes, depreciation and amortization of $733 million is up from $525 million one year ago.
Chesapeake cut its long-term debt by $581 million in the quarter. Lawler said the company’s continued debt reduction should boost the stock price.
“Much of the improvement in the underlying fundamentals has not been able to accrue to equity holders over the last several periods due to the need to address a variety of financial obligations and other uses of cash,” he said.
“Those cash obligations have been dramatically reduced. As a result, we are showing higher margins and returns. We see this developing trend continuing with the strength of our talented employees, high-quality capital efficiency and cash-cost discipline.”
Chesapeake shares slipped 5 cents, or 1.7percent, to $2.93 a share Wednesday.