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Chesapeake Aims To Improve - Is It Enough?


Chesapeake reported a net loss of $0.05 per share in Q3, which was better than expected.

The company reduced costs and improved production efficiency.

Are these steps enough, considering the oil and natural gas markets aren't expected to recover anytime soon?

Chesapeake Energy (NYSE:CHK) recently reported an adjusted net loss of $0.05 per share in the third quarter, while the consensus among analysts was for a net loss of $0.13 per share. The company increased its annual production guidance and improved its efficiencies -- producing more with fewer rigs at lower costs. The company is likely to take additional steps toward saving cash and adjusting to the current conditions of the soft oil and natural gas markets. The outlook for natural gas and crude oil isn't optimistic in the near term, which is likely to keep the stock down.

Lower Production, Costs and Fewer Rigs

Chesapeake once again reduced the average number of its operating rigs from 26 in Q2 to 18 in the past quarter. Total output fell by 8%, as indicated in the following table; the biggest drop was attributed to the NGL segment -- a plunge of 20%.

Source: Chesapeake.

Despite the decline in production in the past quarter, the company actually slightly revised higher its output guidance for the year by 0.6%, compared to the previous estimate.