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Chesapeake (CHK) Slips to Loss in Q1, Revenues Fall YoY

Chesapeake Energy Corp. CHK reported adjusted first-quarter 2016 loss of 10 cents per share, narrower than the Zacks Consensus Estimate of a loss of 11 cents. In the year-earlier quarter, the company had posted earnings of 11 cents per share.
 

Quarterly revenues decreased to $1,953.0 million from $3,218.0 million a year ago. Nonetheless, the top line breezed past the Zacks Consensus Estimate of $921.0 million. Revenues declined year over year due to lower commodity prices. This was partially offset by improvement in the company's production expenses and general and administrative expenses.

Operational Performance

Chesapeake’s daily production for the reported quarter averaged approximately 672,400 barrels of oil equivalent (Boe). Average daily production consisted of approximately 95,700 barrels (Bbls) of oil, 3.036 billion cubic feet (Bcf) of natural gas and 70,700 Bbls of natural gas liquids (NGL).

Oil equivalent realized price in the reported quarter was $16.93 per barrel of oil equivalent (Boe), down from $29.40 in the year-earlier quarter. Average realizations for natural gas were $2.29 per million cubic feet (Mcf) compared with $3.67 per Mcf in the prior-year quarter. Oil was sold at $37.74 per barrel, down from the year-ago price of $65.73. NGL was sold at $11.44 per barrel compared with $18.40 per barrel in the year-ago quarter.

Financials

At the end of the quarter, Chesapeake had a cash balance of $16 million. The debt balance was $9.4 billion compared with $11.5 billion in the year-ago period. In the reported quarter, the company retired its 3.25% Senior Notes due Mar 15, 2016, and repurchased approximately $282 million of debt due in 2017 at an average discount of approximately 39%.

Guidance

In 2016, Chesapeake expects total production in the range of flat to 5% decline from 2015, after adjusting for asset sales. Also for 2016, Chesapeake expects capital expenditure in the range of $1.3–$1.8 billion, down 57% from $3.6 billion in 2015.  

Zacks Rank

Chesapeake currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are ReneSola Ltd. SOL, Seadrill Partners LLC SDLP and Braskem S.A. BAK. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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BRASKEM SA (BAK): Free Stock Analysis Report
 
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
 
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