Chesapeake Profit Jumps On Higher Gas Prices; Shares Up 2%
May 7 (Reuters) - Higher gas prices helped Chesapeake Energy Corp beat expectations with a big jump in quarterly profit Wednesday and the company hiked its production forecast for the year, sending its shares up more than 2 percent in midday trading.
The results showed Chesapeake was off to a "strong start" in 2014, analysts at Houston-based energy focused investment bank Simmons & Co. said.
Still, Doug Lawler, chief executive of the second-largest U.S. producer of natural gas told investors: "We've got a lot of wood to chop."
In the post for less than a year, Lawler has been working to cut costs and improve profitability after taking the reins from Aubrey McClendon, who was pushed out amid governance issues and a liquidity crunch.
A harsh winter in much of United States sapped stockpiles and drove benchmark Henry Hub natural gas prices up 50 percent from a year earlier. Those gains helped Chesapeake and other companies post better-than-expected results for the first quarter.
Chesapeake earned a profit of $374 million, or 54 cents per share, in the three months ended March 31, compared with $15 million, or 2 cents, a year earlier.
Adjusting for one-time items, Chesapeake earned 59 cents a share, while analysts expected 48 cents, according to Thomson Reuters I/B/E/S.
The Oklahoma City, Oklahoma company said its oil and gas production was 675,200 barrels oil equivalent per day, up 11 percent from a year ago after adjusting for asset sales.
Looking ahead, Chesapeake expects total oil and gas output to grow 9 percent to 12 percent in 2014, up from a prior forecast of 8 percent to 10 percent growth.
The increase in production will mostly be driven by higher volumes of natural gas liquids as the company looks to ship more ethane on a pipeline coming into service.
Natural gas liquids like ethane and propane are stripped out of natural gas because they fetch higher prices.
Shares of Chesapeake were up 2.5 percent at $29.06 in midday trading on the New York Stock Exchange.
(Reporting by Anna Driver; Editing by Sofina Mirza-Reid and Bernadette Baum)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Shale Companies Sink On Investor Disappointment, Hedging Losses (Aug 01)
- Chesapeake to Sell Utica Shale for $2B (Jul 26)
- Chesapeake Says To Raise 2018 Output On Lower Spending, Shares Jump (Feb 22)