Chesapeake (CHK) Incurs Wider-than-Expected Loss In Q2

Chesapeake Energy Corp. (NYSE:CHK) reported adjusted second-quarter 2016 loss per share from continuing operations (excluding special items) of 14 cents, wider than the Zacks Consensus Estimate of loss of 9 cents. The quarterly figure was also wider than a loss of 11 cents a share incurred in the year-earlier quarter.

Total revenue decreased to $1,622 million from $3,521 million a year ago. The top line beat the Zacks Consensus Estimate of $970 million.

Operational Performance

Chesapeake’s production for the reported quarter averaged approximately 60 million barrels of oil equivalent (MMBoe), up 6.25% year over year. Production consisted of approximately 8 barrels (MMbbls) of oil, 269 billion cubic feet (bcf) of natural gas and 7 MMbbls of natural gas liquids (NGL). Figures for oil was down 27.3% and natural gas declined 2.2% but that for NGL remained flat, all on a year-over-year basis.

Oil equivalent realized price in the reported quarter was $14.76 per barrel. Average realizations for natural gas were $1.97 per Mcf. Oil was sold at $44.31 per barrel, while NGL was sold for $12.88 per barrel.

CHESAPEAKE ENGY Price, Consensus and EPS Surprise

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Total capital expenditures decreased to approximately $456 million from around $957 million in the second quarter of 2015.

On the cost front, quarterly production expenses were $3.05 per Boe, down 29.4% year over year.

Financials

At the end of the quarter, Chesapeake had a cash balance of $4 million. Debt balance was $8,621 million, representing a debt-to-capitalization ratio of 97.4%.

Guidance

Chesapeake has raised its full-year 2016 production by 3% to the range of 625,000–650,000 boe per day from 605,000–635,000 boe per day. The company has maintained its total capital investments for 2016 between $1.3 billion and $1.8 billion.

Zacks Rank

Chesapeake holds a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Sasol Ltd (NYSE:SSL) , Concho Reources, Inc. (NYSE:CXO) and Total SA (TO:TOT) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).