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Upstream player Chesapeake Energy Corporation (CHK - Free Report) reported strong first-quarter 2017 results on the back of higher oil equivalent price realizations and lower operating cost.
Earnings per share (excluding special items) of 23 cents beat the Zacks Consensus Estimate of 19 cents. The company reported adjusted loss per share of 10 cents in the prior-year quarter.
Total revenue increased to $1,469 million from $993 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,104 million.
Operational Performance
Chesapeake’s production for the reported quarter decreased 21.3% year over year to approximately 48 million barrels of oil equivalent (MMBoe). Production consisted of approximately 8 million barrels (MMbbls) of oil (down 11.1% year over year), 211 billion cubic feet (bcf) of natural gas (down 23%) and 5 MMbbls of NGL (down 17%).
Oil equivalent realized price – including realized gains (losses) on derivatives – in the reported quarter was $24.06 per barrel compared with $16.93 per barrel a year ago. Average realization for natural gas was $3.02 per Mcf as against $2.29 per Mcf in first-quarter 2016. Oil was sold at $51.72 per barrel compared with $37.74 per barrel in the prior-year quarter.
Total capital expenditure increased to $576 million from $365 million in the first quarter of 2016.
On the cost front, quarterly production expenses decreased more than 15% year over year to $2.84 per Boe.
Expenses
Total first-quarter 2017 operating expense was $2,512 million, down 18% year over year.
Financials
At the end of the quarter, Chesapeake had cash balance of $249 million. Net long-term debt was $9,509 million.
Guidance
Chesapeake has increased the lower end of the previous projection and now expects 2017 production in the range of 541,000–562,000 Boe per day. Moreover, the company projects 2017 capital spending in the $2,100–$2,500 million band, where the lower limit has been increased from the previous expectation.
First-Quarter Price Performance
The company’s shares have underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry in the first three months of this year. During the aforesaid period, Chesapeake’s stock lost 15.4% as against 11.1% decrease for the broader industry.
Zacks Rank and Key Stock Picks
Chesapeake Energy currently has a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector include McDermott International Inc. , China Petroleum and Chemical Corp. and Bellatrix Exploration Ltd. . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDermott beat the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 387.50%.
For 2017, China Petroleum is expected to witness 60.03% year-over-year earnings increase.
Bellatrix Exploration surpassed the Zacks Consensus Estimate in three of the prior four quarters with an average positive earnings surprise of 58.54%.
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Chesapeake (CHK) Beats Q1 Earnings, Revenue Estimates
Upstream player Chesapeake Energy Corporation (CHK - Free Report) reported strong first-quarter 2017 results on the back of higher oil equivalent price realizations and lower operating cost.
Earnings per share (excluding special items) of 23 cents beat the Zacks Consensus Estimate of 19 cents. The company reported adjusted loss per share of 10 cents in the prior-year quarter.
Total revenue increased to $1,469 million from $993 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,104 million.
Operational Performance
Chesapeake’s production for the reported quarter decreased 21.3% year over year to approximately 48 million barrels of oil equivalent (MMBoe). Production consisted of approximately 8 million barrels (MMbbls) of oil (down 11.1% year over year), 211 billion cubic feet (bcf) of natural gas (down 23%) and 5 MMbbls of NGL (down 17%).
Oil equivalent realized price – including realized gains (losses) on derivatives – in the reported quarter was $24.06 per barrel compared with $16.93 per barrel a year ago. Average realization for natural gas was $3.02 per Mcf as against $2.29 per Mcf in first-quarter 2016. Oil was sold at $51.72 per barrel compared with $37.74 per barrel in the prior-year quarter.
Total capital expenditure increased to $576 million from $365 million in the first quarter of 2016.
On the cost front, quarterly production expenses decreased more than 15% year over year to $2.84 per Boe.
Expenses
Total first-quarter 2017 operating expense was $2,512 million, down 18% year over year.
Financials
At the end of the quarter, Chesapeake had cash balance of $249 million. Net long-term debt was $9,509 million.
Guidance
Chesapeake has increased the lower end of the previous projection and now expects 2017 production in the range of 541,000–562,000 Boe per day. Moreover, the company projects 2017 capital spending in the $2,100–$2,500 million band, where the lower limit has been increased from the previous expectation.
First-Quarter Price Performance
The company’s shares have underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry in the first three months of this year. During the aforesaid period, Chesapeake’s stock lost 15.4% as against 11.1% decrease for the broader industry.
Zacks Rank and Key Stock Picks
Chesapeake Energy currently has a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector include McDermott International Inc. , China Petroleum and Chemical Corp. and Bellatrix Exploration Ltd. . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDermott beat the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 387.50%.
For 2017, China Petroleum is expected to witness 60.03% year-over-year earnings increase.
Bellatrix Exploration surpassed the Zacks Consensus Estimate in three of the prior four quarters with an average positive earnings surprise of 58.54%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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