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Chesapeake Misses on Earnings, Beats Revenue in Q4 - Analyst Blog

Zacks Equity Research

Chesapeake Energy Corp. (CHK) reported adjusted fourth-quarter 2014 earnings of 11 cents per share, missing the Zacks Consensus Estimate of 25 cents. The reported figure also decreased from the year-earlier profit of 27 cents a share.
 


Chesapeake Energy Corporation - Earnings Surprise | FindTheBest

Quarterly revenues improved to $5,050.0 million from $4,541.0 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $1,627.0 million.

Full-year 2014 adjusted earnings of $1.49 a share came below our expectation of $1.65. The reported figure also decreased from the year-ago profit level of $1.50 a share.

Total revenue in 2014 was $20,951.0 million, up from the 2013 figure of $17,506.0 million and also ahead of the Zacks Consensus Estimate of $7,121.0 million.

Operational Performance

Chesapeake’s daily production for the reported quarter averaged approximately 67.1 million barrels of oil equivalent (MMBoe), an increase of 9.6% from fourth-quarter 2013 and 0.5% from the third quarter of 2014.

Average daily production consisted of approximately 11.2 million barrels per day (MMBbl/d) of oil, 9MMBbls of NGL and 281.6 billion cubic feet (Bcf) of natural gas.

Oil equivalent realized price in the reported quarter was $19.68 per barrel of oil equivalent (Boe), down from $26.49 in the year-earlier quarter. Average realizations for natural gas were $1.61 per million cubic feet (Mcf) compared with $1.84 per Mcf in the year-earlier quarter. Oil was sold at $67.16 per barrel, down from the year-ago price of $91.46 per barrel.

On the cost front, quarterly production expenses were $5.07 per Boe, an increase of 9.7% year over year.

Financials

At the end of the quarter, Chesapeake had a cash balance of $4,108 million. The debt balance stood at $11,154 million, representing a debt-to-capitalization ratio of 38.0%.

Guidance

The company expects production in the range of 235–240 MMBoe/d, up 3–5% from 2014, after adjusting for asset sales. Of the total, about 39–40 MMBoe is estimated to be crude oil, 1,035–1,055 Bcf natural gas and 23–24 MMBoe natural gas liquids (NGL). The rig activity is expected to be the lowest since 2004, with plans to operate 35–40 rigs in 2015.

For 2015, Chesapeake expects capital expenditure in the range of $4–$4.5billion, down 26% from 2014.  

Zacks Rank

Chesapeake currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same sector include Valero Energy Partners L.P. (VLP), Golar Energy Partners LP (GMLP) and Hallador Energy Co. (HNRG). All these stocks sport a Zacks Rank #1 (Strong Buy).


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