It is one of those moments. A company presents great results but gets punished after announcement because investors take profits and drive share prices lower. Chesapeake Energy (CHK) just presented Q3 results and is one such company. Chesapeake Energy delivered Q3 results that outperformed analyst EPS and revenue estimates: Adjusted Q3 EPS stood at $0.43 which compares to analyst estimates of $0.42. Revenues came in at $4.87 billion beating consensus estimates by $1.38 billion.
Operational performance
Chesapeake has achieved great progress in developing its oil- and gas assets over the last year:
- Oil production increased to 11 mmbbls in the third quarter 2013 and is up 22% from 9 mmbbls in the third quarter 2012.
- The average realized oil price stood at $92.09 in Q3 2013 compared to $90.79 in Q3 2012 (a plus of 1.4%).
- Oil production now accounts for 18% of total production vs. 14% in the year ago quarter.
- NGL production increased to 5.4 mmbbls in Q3 2013 up 31.7% from 4.1 mmbbls in Q3 2012.
- Liquids are going to be more important in driving Chesapeake's earnings in the future: Liquids accounted for 65% of realized revenues in Q3 2013 compared to 61% in Q3 2012. In addition, the pricing environment for liquids is much better than the one for natural gas.
- Natural gas accounts for 73% of total production compared to 79% a year ago.
- The average realized price for natural gas has fallen 13.7% q-o-q to $2.26 but has increased 14.7% y-o-y.
- Net daily oil production stands at 120,000 bbls and marks a 23% increase y-o-y.
- Production increases YTD have led Chesapeake Energy to raise its 2013 production outlook: It now expects to increase oil production y-o-y by 28-34% to 40-42 million barrels.
- Strong performance is coming from Chesapeake Energy's shale plays: Eagle Ford for instance
