Chesapeake Energy Corp. (CHK) reported Wednesday a profit for the third quarter that increased from last year, reflecting revenues growth amid higher production volumes. Both adjusted earnings per share and quarterly revenues topped analysts' expectations. Looking ahead, Chesapeake increased its 2014 daily production rate outlook.
"The improvements in our capital efficiency, our focus on cost leadership and the strength and quality of our assets and talented employees are very clear in our third quarter results," President and CEO Doug Lawler said.
The Oklahoma City, Oklahoma-based company reported net income available to common stockholders of $169 million or $0.26 per share for the third quarter, up from $156 million or $0.24 per share in the prior-year quarter. Excluding items, adjusted net income for the quarter was $251 million or $0.38 per share, compared to $282 million or $0.43 per share in the year-ago quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share. Analysts' estimates typically exclude special items.
Total revenues for the quarter grew to $5.70 billion from $4.87 billion in the same quarter last year, and topped eleven Wall Street analysts' consensus estimate of $4.91 billion.
Total operating expenses for the quarter increased to $4.53 billion from last year's $4.43 billion.
Oil equivalent net production in the quarter was 66.8 mmboe, up from 62 mmboe in the year-ago period. Meanwhile, average realized sales price, including realized gains or losses on derivatives, were $25.74 per boe, down from $28.67 per boe in the prior-year period.
Chesapeake's daily production in the third quarter averaged 725,600 barrels of oil equivalent or boe, up 11 percent year over year, adjusted for asset sales, with average oil production of about 118,900 bbls per day.
"Our results this quarter were outstanding, as adjusted production increased 11% compared to the 2013 third quarter, increased 5% sequentially and already reached our year-end exit rate target of approximately 730,000 barrels of oil equivalent per day during the month of September," Lawler added.
Further, Chesapeake entered into a purchase and sale agreement to sell certain assets in the southern Marcellus Shale and a portion of the eastern Utica Shale to a subsidiary of Southwestern Energy Co. (SWN) in mid-October for aggregate proceeds of about $5.375 billion. The transaction is expected to close in the 2014 fourth quarter.
Looking ahead to fiscal 2014, Chesapeake continues to project total adjusted production growth of 9 to 12 percent, while raising the daily equivalent production rate to between 695,000 and 705,000 boe per day from the prior forecast of between 685,000 and 705,000 boe per day.
The company also reiterated its full-year total capital expenditure guidance in the range of $5 billion to $5.4 billion, excluding capitalized interest.
CHK closed Tuesday's regular trading session at $21.29, down $0.17 on a volume of 10.43 million shares. In the past 52-week period, the stock has been trading in a range of $16.69 to $29.92.
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