Chesapeake Energy Has Quarterly Loss, Shares Tumble

Chesapeake Energy Posts Loss On $5B Impairment Charge
Chesapeake Energy reports a quarterly loss after taking a $5-billion charge on some of its oil and gas assets.



Aug 5 (Reuters) - Chesapeake Energy Corp swung to a quarterly loss on Wednesday from a year ago and shares fell as much as 10 percent as worries about hefty debt and spending at the No. 2 U.S. natural gas producer linger amid low prices.

The Oklahoma City, Oklahoma company's shares have been hammered in recent months as the more than 50 percent drop in crude oil and low natural gas prices sap cash flows. To narrow the gap, Chesapeake said on Wednesday it will sell assets or pursue partners to help shoulder drilling costs.

But that wasn't enough to soothe investors, who sent the stock to its lowest level since April 2003. It was down 8 percent at $7.32 in midday New York Stock Exchange Trading.

"While Chesapeake continues to pursue asset monetizations, until additional guidance or execution is consummated on this front, we suspect investor focus will remain on increasing leverage versus improving underlying operations," analysts at Houston based investment bank Simmons & Co said in a note to clients.

Chesapeake's capital expenditures of $960 million in the second quarter exceeded some expectations and long-term debt was $10.66 billion, up slightly from the 2015 first quarter.

The company, however, raised its oil and gas production forecast for 2015 to 667,000-677,000 barrels of oil equivalent per day (boepd) from 640,000-650,000 boepd.

Chesapeake's production rose 1.1 percent to 63.9 million barrels of oil equivalent (boe) in the second quarter, but average realized price fell more than 40 percent to $16.08 per boe.

Chesapeake reported a net loss of $4.15 billion, or $6.27 per share, attributable to shareholders for the quarter ended June 30 compared with a profit of $145 million, or 22 cents per share, a year earlier.

Excluding a $5 billion charge the company took to write down the value of assets and other items, the company reported a loss of 11 cents per share.

Analysts on average had expected a loss of 11 cents per share, according to Thomson Reuters I/B/E/S.

(Reporting by Shubhankar Chakravorty in Bengaluru and Anna Driver in Houston; Editing by Kirti Pandey and Chris Reese)

Copyright 2016 Thomson Reuters. Click for Restrictions.


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