Saturday, July 30, 2011

Chesapeake Announces Q2FY2011 Earnings- 7/28/2011

Chesapeake Energy Corporation announced its 2011 second quarter financial and operational results. They reported 2011 Second Quarter profit of $510 million, or 68 cents per share, doubling its year-ago earnings of $255 million, or 37 cents per share. Excluding items, earnings arrived at 76 cents per share, while revenue surged 65% to $3.32 billion. The results surpassed expectations, with the consensus estimate calling for a profit of 72 cents per share on $2.77 billion in revenue. Output rose 9.3% during the quarter, said the natural gas giant. Net Income to Common Stockholders of $467 Million. The Company Adjusted Net Income Available to Common Stockholders of $528 Million, or $0.76 per Fully Diluted Common Share, Adjusted Ebitda of $1.4 Billion and Operating Cash Flow of $1.2 Billion. The company reported production of gas of 277 billion cubic feet of natural gas equivalent (bcfe).

Thursday in its second-quarter earnings statement, Chesapeake announced that Utica wells were “liquids-rich,” indicating that oil and wet gas were being found, along with natural gas. The company also said it is seeking a joint venture partner as it begins drilling more wells in the Utica shale. Chesapeake already has drilled five wells in Carroll County and is working on a sixth. McClendon said the company has five drilling rigs operating in the Utica shale. He expects to have eight rigs by the end of this year and 40 rigs drilling by the end of 2014. McClendon said Chesapeake’s work in the Utica shale will be a “key driver in the future growth” of Ohio’s economy and hopefully this will lead to growth for the company as a whole. “It’s pretty much the most ideal place in America for a new (oil and natural gas) play to develop,” McClendon said.

During the first half of 2011, Chesapeake continued the industry’s most active drilling program drilling 759 gross operated wells (480 net wells with an average working interest of 63%) and participating in another 708 gross non-operated wells (104 net wells with an average working interest of 15%). The company’s drilling success rate was 98% for company-operated wells and 99% for non-operated wells. During the first half of 2011, Chesapeake’s drilling and completion costs of $3.427 billion included the benefit of approximately $1.129 billion of drilling and completion carries from its joint venture partners.

The Company Increased its Full-Year 2011 and 2012 Production and Capital Expenditure Outlook and it largely offsets oilfield service inflation through its wholly owned oilfield service businesses and its 30% Stake in frac Tech. Chesapeake Energy is currently trading at $34.35.


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