Chesapeake Energy's diligent restructuring work is finally paying
off. The oil and gas producer has logged three quarters of high earnings
growth, into the triple digits, and four quarters of solid double-digit
sales growth.
This year marks a big turnaround from a string of poor earnings
growth. The Oklahoma City-based firm earned 43 cents a share in its
third quarter, up 330% from a year earlier and on par with Wall Street
expectations. It took in $4.87 billion in revenue, up 64% and topping
the $3.84 billion that analysts polled by Thomson Reuters anticipated.
Much of Chesapeake's financial progress in 2013 is attributable to
its repositioning of focus more on oil than on natural gas, a big change
in management and a strategy of selling off noncore assets.
In
the third quarter its net daily oil production lifted 23% from a year
earlier to 120,000 barrels and natural gas liquids rose 31%, as natural
gas production decreased 10%.
"It's a pretty extensive restructuring story," said James Sullivan,
analyst at Alembic Global Advisors. "They went through a management
change and a significant shift in terms of spending priorities."
Fuel And Efficiency
Chesapeake is the second largest U.S. natural gas producer and 11th
largest U.S. liquid fuels producer. The company owns an interest in
45,900 producing natural gas and oil wells with a net production of
about 4.1 billion of cubic feet equivalent (BCFE) per day, 75% of which
is natural gas.
The company has significantly cut its number of assets. Chesapeake's
capital expenditures, especially to do with leasehold inventory
spending, dropped almost 60% in a two-quarter span, Sullivan noted ahead
of the third quarter report.
"They've exited almost entirely the midstream business now, which was
a very large part of what they had; multiple billions of dollars worth
of sales in that," he said. "They've exited the Permian Basin ... and
they've thinned out positions in certain areas, in the Eagle Ford and
elsewhere in the Utica."
Chesapeake also made Doug Lawler its new CEO and a board member.
There since June, Lawler has spent 25 years in the upstream E&P
industry. He comes from Anadarko Petroleum (APC), the No. 2 firm by market cap in IBD's Oil & Gas-U.S. Exploration & Production industry group after EOG Resources (EOG).
"Lawler has been in the midst of sorting through the organization,
making some early changes," said analyst Joe Magner of Macquarie
Research. "He's provided some high-level thoughts about what he hopes to
be able to accomplish and where he hopes to be able to get Chesapeake
long term."
No comments:
Post a Comment