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Chesapeake Energy Corp. reported second-quarter 2014 adjusted earnings of 36 cents per share, falling behind the Zacks Consensus Estimate of 44 cents. Also, the reported figure deteriorated from the year-earlier profit of 51 cents.

Quarterly revenues improved to $5,152 million from $2,406 million a year ago.

Operational Performance

Chesapeake’s daily production for the reported quarter averaged approximately 694,650 barrel of oil equivalent (Boe), reflecting an increase of 13% from 2013 second quarter. Average daily production consisted of approximately 113,400 barrels per day (Bbl/d) of oil, 84,300 Bbls of NGL and 3.0 billion cubic feet (Bcf) of natural gas.

Oil equivalent realized price was $26.97 per boe, down from $29.73 in the year-earlier quarter. Average realizations for natural gas were $2.45 per Mcf compared with $2.62 per Mcf in the year-earlier quarter. Oil was sold at $85.23 per barrel, down from the year-ago price of $93.81.

On the cost front, quarterly production expenses were $4.46 per Boe, reflecting a decrease of 5% year over year. Chesapeake spud a total of 324 gross wells and connected 275 gross wells to sales during the reported quarter.

Financials

At the end of the quarter, Chesapeake − the largest U.S. natural gas producer after ExxonMobil Corporation − had a cash balance of $1,462 million. Long-term debt stood at $11,549 million, representing a debt-to-capitalization ratio of 36%.

Guidance

Chesapeake raised the midpoint of its expected 2014 daily production rate by 10,000 Boe, or 1.5%, to between 685,000 boe and 705,000 boe per day. In the second half of 2014, the company plans to connect approximately 35% more wells to sales than the first half. The increase in production is attributable to better production trends in the first half of the year, coupled with an increase in forecast well connections during the second half of 2014.

Zacks Rank

Chesapeake currently carries a Zacks Rank #3 (Hold). However, there are stocks in the oil and gas sector like Weatherford International plc , and Cameron International Corp. , which hold a Zacks Rank #1 (Strong Buy) and are expected to outperform the market.
 

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