After a strong fourth quarter in 2018, Chesapeake Energy Corporation is stepping into 2019 with a bit of caution.

The Oklahoma City-based oil and gas company produced an estimated 462,000 to 464,000 barrels of oil equivalent per day in 4Q 2018. Chesapeake’s oil output during that period was an estimated 86,000 to 87,000 barrels of oil per day despite selling its Utica shale assets in July.

“The divested daily oil volumes associated with the Utica sale, which represented 10 percent of our third quarter oil production, were replaced in the last two months of the year through our legacy South Texas and emerging Powder River Basin oil engines,” Chesapeake CEO Doug Lawler said in a Jan. 9 company statement.

The company also reduced its debt by $1.8 billion. 

But a decline in crude oil prices in late 2018 seems to have been the catalyst for a more moderate approach as Chesapeake undergoes a strategy change.

Lawler said the company plans to reduce its CAPEX in 2019 by lowering the rig count and focusing on high-margin oil investments.

“We plan to reduce our 2019 capital expenditures by lowering our rig count by approximately 20 percent, expecting to average 14 rigs versus our current rig count of 18,” Lawler said. “Further, we expect our capital efficiency to improve in 2019 as total net capital per rig line is projected to decrease by 15 to 20 percent compared to 2018. The improvement in our capital efficiency, along with our focus on our high-margin oil investments, should result in higher operating cash flow and stronger margins in 2019 compared to 2018.”

Lawler also said the company plans on operating four rigs this year on WildHorse acreage, an acquisition Chesapeake announced in October 2018.

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