Chesapeake Energy (CHK) Q3 Earnings And Revenues Beat

Chesapeake Energy Corporation (NYSE:CHK) reported adjusted third-quarter 2016 earnings per share from continuing operations (excluding special items) of 9 cents, which compared favorably with the Zacks Consensus Estimate of a loss of 4 cents and the year-ago quarter loss of 5 cents. Lower production expenses in the quarter resulted in the outperformance, partially offset by lower oil equivalent output and prices.

Total revenue decreased to $2,276 million from $3,376 million a year ago. The top line, however, beat the Zacks Consensus Estimate of $1,034 million.

Operational Performance

Chesapeake’s production for the reported quarter averaged approximately 59 million barrels of oil equivalent (MMBoe), down 3.3% year over year. Production consisted of approximately 8 barrels (MMbbls) of oil, 268 billion cubic feet (bcf) of natural gas and 6 MMbbls of natural gas liquids (NGL). Oil production was down 27.2% and NGL production fell more than 14%, whereas natural gas production improved 2%.

Oil equivalent realized price in the reported quarter was $17.86 per barrel compared with $18.52 per barrel a year ago. Average realizations for natural gas were $2.32 per Mcf as against $2.25 per Mcf in third-quarter 2015. Oil was sold at $42.94 per barrel compared with $44.60 per barrel in the prior-year comparable quarter.

Total capital expenditures decreased to approximately $412 million from around $623 million in the third quarter of 2015.

On the cost front, quarterly production expenses decreased 31.5% year over year to $2.80 per Boe.

Financials

At the end of the quarter, Chesapeake had cash balance of $4 million. Debt balance was $9,022 million.

Guidance

Chesapeake has lowered its 2016 production guidance to the range of 532,000–562,000 Boe per day from the prior projection of 625,000–650,000 Boe per day. The company now expects 2016 capital spending in the $1,820–$2,620 million band as against the prior range of $1,260–$1,760 million.

Zacks Rank and Key Stock Picks

Chesapeake Energy currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Ultra Petroleum Corp. (OTC:UPLMQ) , EQT Midstream Partners, LP (NYSE:EQM) and Helix Energy Solutions Group, Inc. (NYSE:HLX) .

Ultra Petroleum is likely to witness year-over-year earnings growth of 351.6% in the current year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EQT Midstream is projected to witness year-over-year earnings growth of almost 12% in the current year. It has a Zacks Rank #2 (Buy).

Helix Energy posted an average positive earnings surprise of 56.42% in the last four quarters. The company has a Zacks Rank #2.

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