Chesapeake Energy’s Earnings Disappoint, Shares Slide 4.5%

Chesapeake Energy’s Earnings Disappoint, Shares Slide 4.5%

Chesapeake Energy Corporation (NYSE:CHK) reported a recurring EPS/CFPS of $0.10/$1.4, compared with the consensus of $0.10/$0.94 and estimates of $0.13/$1.03 from RBC Capital markets.  The difference between the estimates and the actual reported numbers were mainly due to lower cash operating costs and higher production, according to a report from RBC Capital.

Chesapeake Energy's Earnings Disappoint, Shares Slide 4.5%

The Oil Company reported a 21 percent increase in production which almost doubled to 98 MBOE/d. Company’s production of 4.1 Bcfe/d was 3 percent above the estimate of 4.0 Bcfe/d from RBS Capital. Chesapeake Energy Corporation (NYSE:CHK) CAPEX for the third quarter was down marginally, but was $400 million above the estimates from RBC. Royal Bank of Scotland Group plc (NYSE:RBS) believes the company’s critical divisions have shown improvement, but at the same time expects a larger drop in the coming quarter.  “We think this is a critical area for the company to show progress in. We expect a larger drop in 4Q12 as the Permian asset was sold and because Chesapeake Energy Corporation (NYSE:CHK) is now running fewer than 100 operated rigs,” says a report from RBC Capital.

Fund Manager Profile: Kris Sidial Of Tail Risk Fund Ambrus Group

invest Southpoint CapitalA decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More

Based on the third quarter results, Company’s management have increased its 2012 production outlook slightly to 3,874 Bcfe/d “related to higher oil volumes”. The report believes “some of this increase could be related to plan asset sales that may bleed into 2013”. The energy company also increased its 2012 Drilling CAPEX by $500 million to $8,750 million, while acquisition CAPEX was reduced by $250 million to $1,750 million. The company did not touch its production and CAPEX guidance for 2013 but lowered its cash operating costs. As per the report “management and the Board of Directors are reviewing the current 2013 budget. We think this could portend deeper spending cuts”.

Company’s Eagleford production jumped 44 percent to 52.2 BOE/d. As per the report from Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS), Company is planning to sell its non-core acreage. Chesapeake’s production from Mississippian Lime Play increased 25 percent, here Company is operating a 9 rig program and has inventory of 55 wells, which are awaiting completion or pipeline connection. Company is also looking for a potential buyer or partner for a portion of its 2.0 million net acre position. In the Utica, Company announced three new wells in Carroll County, which the report believes “is decent but below prior results”. “Although Chesapeake Energy Corporation (NYSE:CHK) has 13 operated rigs and drilled 134 wells, production has not grown too much yet. There are a number of infrastructure projects in the works but production is currently constrained,” says report.

Chesapeake Energy Corporation (NYSE:CHK) also announced Thursday that it is working with banks to issue $2 billion in debt to pay off more-expensive loans. In May this year, company replaced a $4 billion existing debt with a pricier new $4 billion debt at 8.5 percent, which would increase to 11 percent if not paid by the end of the year.

 Share of Chesapeake are currently down 4.5% in today’s trading session.

No posts to display