Chesapeake Cuts Budget Again On Weak Oil And Gas Prices
Nov 4 (Reuters) - Chesapeake Energy Corp cut its 2015 capital budget for the second time this year to cope with low oil and gas prices and swung to a large quarterly net loss as the second largest U.S. producer of natural gas wrote down the value of assets.
The Oklahoma City, Oklahoma company's shares fell 5 percent to $7.25 in morning New York Stock Exchange trading, as third-quarter cash flow fell short of Wall Street estimates.
U.S. oil and gas producers are slashing budgets, costs and streamlining operations as a near 60 percent drop in global oil prices since June last year saps profitability.
In response, Chesapeake has so far cut about 15 percent of its workforce and suspended its dividend. Now, the company cut its 2015 capital expenditure target by $100 million to $3.4 billion to $3.9 billion. And further reductions are on the way.
"We intend to meaningfully reduce our capital spending next year," Chesapeake Chief Executive Doug Lawler told investors on a conference call. "We are not designing this business around increasing prices."
He did not provide a specific budget for 2016.
Chesapeake said on Wednesday it wrote down the value of some oil and gas assets by $5.42 billion, adding to the $10 billion in impairment charges it has already booked this year.
Excluding the impairment charge and other items, Chesapeake reported a loss of 5 cents per share, compared with the loss of 13 cents estimated by analysts, according to Thomson Reuters I/B/E/S.
Net loss was $4.69 billion or $7.08 per share in the third quarter, compared with a year-ago profit of $169 million or 26 cents per share a year earlier.
Chesapeake had cash flow from operations of $219 million in the third quarter, well below the consensus estimate of $369 million, according to analysts at Simmons & Company International in Houston.
Drilling and completion expenses fell 41 percent in the third quarter ended Sept. 30, from the second quarter. Combined production expenses, and general and administrative expenses fell 10 percent.
The company's production in the quarter averaged 667,000 barrels of oil equivalent per day (boepd), up 3 percent from a year ago when adjusting for asset sales.
Chesapeake raised its 2015 total production forecast to 670,000-680,000 (boepd), from 667,000-677,000 boepd.
Chesapeake's stock has lost 65 percent in the past 12 months.
(Reporting by Shubhankar Chakravorty in Bengaluru and Anna Driver in Houston; Editing by Terry Wade, Saumyadeb Chakrabarty and Marguerita Choy)
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