For the quarter, Chesapeake's Revenue was $1.7 billion, compared with a revenue loss of $455 million a year ago. The company reported second quarter net income of $237 million, or 39 cents per share, compared with a loss of $1.6 billion, or $3.17 per share, one year ago. Excluding one-time costs, Chesapeake saw an adjusted profit of $377 million, or 62 cents per share, down from $479 million, or 89 cents a share, in the same quarter last year. On average, Wall Street analysts expected a lower adjusted profit of 52 cents per share, but on significantly higher revenue of $1.9 billion.
Chesapeake saw production of 223 billion cubic feet of natural gas equivalent (bcfe) for the quarter with an Average Daily Production Increases of 4% over 2009 First Quarter Production and 5% over 2008 Second Quarter Production
(the company’s daily production for the 2009 second quarter averaged 2.453 bcfe, an increase of 86 million cubic feet of natural gas equivalent (mmcfe), or 4%, over the 2.367 bcfe produced per day in the 2009 first quarter and an increase of 125 mmcfe, or 5%, over the 2.328 bcfe produced per day in the 2008 second quarter.) The company is not currently curtailing production, but may do so again later this summer or fall as market conditions dictate.
I feel Chesapeake is currently undervalued and is poised for solid gains for the rest of 2009. As oil prices remain high and the overall economy continues to improve, Chesapeake should see increased overall demand and profit. They have a very successful hedging strategy (resulting in a gain of $597 million in the second quarter) that will combat price fluctuations of natural gas. Management remains confident in their ability to combat poor market conditions if they should arise. Currently, Chesapeake remains a Hold.
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