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Chesapeake Energy (CHK) Misses Q4 EPS by 13c

February 25, 2015 7:04 AM EST

Chesapeake Energy (NYSE: CHK) reported Q4 EPS of $0.11, $0.13 worse than the analyst estimate of $0.24. Revenue for the quarter came in at $5.05 billion versus the consensus estimate of $4.83 billion.

Doug Lawler, Chesapeake’s Chief Executive Officer, said, “2014 was a year of accomplishments for Chesapeake. Because of these accomplishments and the progress we have made as a company in 2014, Chesapeake is well positioned to remain strong and flexible in 2015. We have taken and continue to take appropriate steps not only to weather the current difficult commodity price environment we face today, but to thrive in it. Chesapeake became a much stronger company in 2014, and we are looking forward to becoming even stronger in 2015.”

2015 Capital Program and Production Outlook

Chesapeake is budgeting total capital expenditures (including capitalized interest) of $4.0 – $4.5 billion for 2015. Using the midpoint of the range, this represents a 26% reduction from the company's 2014 capital expenditures before acquisitions of $5.8 billion, and a 37% reduction from the company’s 2014 total capital expenditures of approximately $6.7 billion (reconciled in the "Capital Spending and Cost Overview" section below). The company is targeting 2015 production of 235 – 240 million barrels of oil equivalent (mmboe), or average daily production of 645 – 655 thousand barrels of oil equivalent (mboe), which represents 3 – 5% production growth after adjusting for 2014 asset sales. Of the 2015 projected production, approximately 39 – 40 mmboe is estimated to be crude oil, 1,035 – 1,055 billion cubic feet (bcf) natural gas and 23 – 24 mmboe natural gas liquids (NGL).

Chesapeake plans to operate 35 – 45 rigs in 2015, which represents the company's lowest operated rig activity level since 2004 and a decrease of approximately 38% (using the midpoint of the range) from an average of 64 rigs in 2014. The company intends to spud approximately 790 gross operated wells and connect to sales approximately 800 gross operated wells in 2015, a decrease from approximately 1,175 and 1,150 wells, respectively, in 2014. The table below compares the capital and rig counts allocated to the company’s operating areas for 2015 and 2014:

2015E D&C 2014 D&C 2015E Avg. 2014 Avg.
Capex Capex Operated Operated
Allocation Allocation Rigs Rigs
Eagle Ford 35% 40% 12 – 14 20
Utica 25% 10% 3 – 5 8
Haynesville 13% 8% 7 – 8 8
Powder River Basin: Niobrara & Upper Cretaceous 10% 5% 3 – 4 4
Mid-Continent North: Mississippian Lime 5% 7% 7 – 8 9
Mid-Continent South 5% 8% 1 – 2 5
Marcellus 5% 11% 1 – 2 5
Other(a) 2% 11% 1 – 2 5
Totals 100% 100% 35 – 45 64

(a) For 2014, includes Marcellus South, Barnett Shale and exploration wells.

For earnings history and earnings-related data on Chesapeake Energy (CHK) click here.



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