Ongoing Commodity Slump Pulls Down Chesapeake’s 1Q16 Earnings; Significant Asset Sales Likely To Improve Liquidity For 2016
Chesapeake Energy (NYSE:CHK), the second largest producer of natural gas in the US, announced a weak set of March quarter 2016 earnings on the back of depressed commodity prices in the quarter. While the company’s overall production grew marginally (adjusted for asset sale), its revenue dropped almost 40% on a year-on-year basis due to the significant decline in price realizations. However, Chesapeake managed to reduce its operating expenses by almost 65% during the quarter, largely because of lower impairment charges and lower marketing, gathering, and compression costs. Yet, the company suffered net losses to the tune of $921 million, or $1.44 per share.
Key highlights of Chesapeake’s 1Q’16 results:
- Chesapeake signed an agreement to sell roughly 42,000 net acres of STACK play in Oklahoma for $470 million. The asset currently has an estimated production of 3,800 BOE per day.
- The company expects to close further asset sales in the second and third quarter of the year. As a result, it has raised its asset divestiture target to $1.2 to $1.7 billion for the year.
- Chesapeake also revised its operating expense and capex guidance for the full year.
- The oil and gas producer will remain focused at maximizing its liquidity, optimizing its portfolio, increasing the cash flow and reducing its long term debt during the year.
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Have more questions about Chesapeake Energy (NYSE:CHK)? See the links below:
- How Has Chesapeake’s Revenue And EBITDA Composition Changed Over The Last 5 Years?
- How Has Chesapeake’s Production Mix And Price Realization Changed Over The Last 5 Years?
- What Is Chesapeake Energy’s Revenue And EBITDA Breakdown?
- How Are Crude Oil Prices And Global Oil Rig Count Correlated?
- How Are Natural Gas Prices And Global Gas Rig Count Correlated?
- What Is Chesapeake Energy’s Fundamental Value Based On 2016 Estimated Numbers?
- How Will Chesapeake’s Revenue Move If Crude Oil Prices Rebound To $100 Per Barrel By 2018?
- How Will Chesapeake’s Revenue Move If Crude Oil Prices Average At $50 Per Barrel In 2018?
- How Much Value Will Chesapeake’s Crude Oil & NGLs Operations Add by 2020?
- How Much Value Will Chesapeake’s Natural Gas Operations Add by 2020?
- How Will Chesapeake’s Revenue And EBITDA Grow Over The Next 5 Years?
- By How Much Has Chesapeake’s Revenue And EBITDA Changed Over The Last 4 Years?
- How Has Chesapeake’s Revenue And EBITDA Composition Changed Over The Last 4 Years?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Chesapeake Energy
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