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Chesapeake Energy (CHK) Beats on Q4 Earnings, Reserves Grow

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Chesapeake Energy Corporation (CHK - Free Report) reported strong fourth-quarter 2017 results, courtesy of higher oil equivalent production and price realizations.

Earnings per share (excluding special items) of 30 cents surpassed the Zacks Consensus Estimate of 25 cents and the year-ago adjusted figure of 7 cents.

Total revenues surged to $1,258 million from $678 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,234 million.

Operational Performance

Chesapeake’s production in the reported quarter was approximately 55 million barrels of oil equivalent (MMBoe), reflecting a year-over-year increase of 4%. Production comprised of approximately 9 million barrels (MMbbls) of crude (up 12% year over year), 239 billion cubic feet (bcf) of natural gas (up 1.3%) and 5 MMbbls of NGL (flat).

Oil equivalent realized price — including realized gains (losses) on derivatives — in the reported quarter was $24.41 per barrel of oil equivalent, up 20.2% year over year.

Total capital expenditure increased to $523 million from $463 million in the fourth quarter of 2016.

On the cost front, quarterly production expenses decreased 16% year over year to $2.50 per Boe.


Total fourth-quarter 2017 operating expense was $ 2,114 million, down more than 8% year over year.


At the end of the fourth quarter, Chesapeake had cash balance of $5 million. Net long-term debt totaled $9,921 million.

Proved Reserves

As of Dec 31, 2017, the company’s total proved reserves was recorded at 1,912 MMBoe, up almost 12% year over year.

Q4 Price Performance

During fourth-quarter 2017, Chesapeake lost 7.9% as against the industry’s rally of 9%. 


Chesapeake’s production guidance for 2018 is 515,000-550,000 Boe per day. Moreover, the recent capital budget projection for 2018 is $1,975-$2,375 million.

Zacks Rank & Key Picks

Chesapeake carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are Statoil ASA , Pioneer Natural Resources Company (PXD - Free Report) and Cabot Oil & Gas (COG - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Stavanger, Norway, Statoil is a major international integrated energy player. The company is expected to witness year-over-year earnings growth of 17.1% in 2018.

Headquartered at Irving, TX, Pioneer Natural Resources is an upstream energy firm. The company delivered an average positive earnings surprise of 66.9% for the last four quarters.

Headquartered in Houston, TX, Cabot is also an upstream energy company. The firm will likely see year-over-year earnings growth of 114.7% in 2018.

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