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Chesapeake (CHK) Q4 Earnings Beat Estimates, Revenues Miss

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Chesapeake Energy Corporation (CHK - Free Report) reported fourth-quarter 2019 loss per share (excluding special items) of 4 cents, narrower than the Zacks Consensus Estimate of a loss of 6 cents. However, in the year-ago quarter, the company had reported a profit of 3 cents.

Operating revenues amounted to $969 million, down from $1,731 million in the year-ago quarter. Moreover, the top-line missed the Zacks Consensus Estimate of $1,212 million.

The narrower-than-expected loss was a result of higher oil equivalent production. Lower price realizations of commodities partially offset the positive.

 

Operational Performance

Total Production Increases

Chesapeake’s production in the reported quarter was approximately 44 million barrels of oil equivalent (MMBoe), up from 43 MMBoe a year ago. The total production comprised 12 million barrels (MMbbls) of oil (up 50% year over year), 178 billion cubic feet of natural gas (down 4%) and 3 MMbbls of natural gas liquids or NGLs (down 25%).

Price Realizations Plunge

Oil equivalent realized price — exclusive of gains (losses) on derivatives — was $25.17 per barrel, down from $29.64 a year ago. Oil price was $57.48 per barrel, down from $62.98 in the year-ago quarter. Moreover, natural gas prices declined to $2.24 per thousand cubic feet from the year-ago level of $3.59. Average sales price of NGLs was recorded at $16.05 per barrel in the quarter compared with $25.11 a year ago. 

Operating Expenses

Total operating costs in the fourth quarter declined to $2,099 million from $2,375 million in the prior-year quarter. However, quarterly production expenses per Boe increased to $2.86 from $2.48 in the year-ago period.

Capital Expenditure

Total capital expenditure increased to $487 million in the fourth quarter from $476 million in the year-ago quarter, primarily due to a rise in drilling and completion capital spending.

Balance Sheet

At the end of the quarter under review, Chesapeake had a cash balance of $6 million. Net long-term debt was $9,073 million, leading to a debt-to-capitalization ratio of 67.3%.

Guidance

Chesapeake expects oil equivalent production for 2020 in the range of 161 to 173 MMBoE. Notably, in 2020, the company is planning to invest capital in the range of $1,325 to $1,625 million.

Zacks Rank & Stocks to Consider

Chesapeake currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector include Marathon Oil Corp. (MRO - Free Report) , Chevron Corp. (CVX - Free Report) and Hess Corp. (HES - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Marathon Oil is likely to see earnings growth of 7.8% in the next five years, higher than the industry’s 7%.

Chevron’s bottom line for 2020 is expected to rise 12.8% year over year.

Hess’ bottom line for 2020 is likely to grow 93.7% year over year.

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