Chesapeake Energy Corp. has reported $391 million in net income for the second quarter, down nearly four times from $1.389 billion for the prior three-month period as output fell.
Production totaled 3.653 billion cubic feet of gas equivalent (Bcfe), down 416 Bcfe quarter on quarter. Natural gas comprised 96 percent of April-June production, the rest being liquids, the Texas state-based company said in a press release.
Chesapeake generated $515 million in cash from operations for the second quarter, down from $889 million for the previous three months.
It posted $903 million in cash on hand as of the end of the second quarter. But it did not disclose its debt only saying “Chesapeake now sits one notch below investment grade” at credit rating agencies Fitch Ratings and Moody’s and that it had “zero dollars drawn on its credit facility at quarter-end”.
Chesapeake announced February 9, 2021 it had emerged from bankruptcy with a court-approved restructuring plan that equitized $7.8 billion of loans.
Adjusted for extraordinary or non-recurring items, net earnings totaled $92 million, compared to $270 million in the January-March quarter.
While adjusted net income per common share fell to $0.64 diluted from $1.87 diluted Chesapeake said it is now raising its base dividend about 4.5 percent.
It said it had returned $515 million to shareholders between January and June through dividend payments and repurchases. “Chesapeake has approximately $725 million remaining under its share repurchase program and, in total, has repurchased approximately 14 million shares of its common stock at a cost of approximately $1.275 billion under its current $2 billion authorization”, it said.
Production in the second quarter got a boost from 27 wells put onstream, with 53 wells drilled, according to the company.
“In the Marcellus, the company drilled three of the five fastest wells in its history, including the fastest well, a 10,383-foot lateral to a total depth of 17,083 feet in less than eight days”, Chesapeake noted in its performance announcement. “In the Haynesville, continuous pumping technology employed in 2023 has led to a greater than 20 percent increase in efficiencies relative to previous zipper operations.
“In addition to the multiple D&C [drilling and completion] performance records, the combined employee and contractor Total Recordable Incident Rate for the first half of 2023, was more than 50% improved from the same time period last year.”
It plans to drill 30-40 wells and put 40-50 wells online during the third quarter depending on “market conditions”.
Chesapeake acquired 10,000 net acres in the first half of 2023, and is venturing into liquefied natural gas (LNG) production.
“On its continued path to Be LNG Ready, the company entered into a Heads of Agreement with Energy Transfer LP’s Lake Charles LNG project”, it said in the earnings release. “Under the agreement, Chesapeake will supply to Lake Charles LNG volumes of natural gas sufficient to produce up to 1.0 mtpa [thousand metric tons per annum] of LNG which, post liquefaction, would be purchased by Gunvor at a price indexed to JKM [Japan Korea Marker] for a period of 15 years.”
President and chief executive Nick Dell’Osso commented, “Our focus is clear — to Be LNG Ready and opportunistically capitalize on our strong financial position and leading operating performance”.
“We remain confident in our ability to deliver affordable, reliable, lower carbon energy with peer-leading returns to shareholders”, Dell’Osso added.
To contact the author, email jov.onsat@rigzone.com
