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Chesapeake Energy (CHK) Q3 Profits and Sales Tumble (Update)

November 2, 2009 5:26 PM EST
CHK Hot Sheet
EPS Growth %: -76.0%

Financial Fact:
Service operations revenue: 145M

Today's EPS Names:
RAH, NAVR, UVV, More
(Update with comments from analysts)

Chesapeake Energy Corporation (NYSE: CHK) reported third-quarter earnings per share of 70 cents, ex-items, 5 cents better than the market estimate of 65 cents per share.

Revenue for the Oklahoma City, Oklahoma-based company in the third quarter was $1.81 billion, falls below the analyst estimate of $1.96 billion.

Net profit for the company in the third quarter was $186 million, or 30 cents per share, compared to the profit of $3.29 billion, or $5.62 per share in the year-ago quarter, as demand for oil has dropped and gas prices have declined.

The oil and natural gas exploration and production company's revenue of $1.81 billion was down significantly from $7.49 billion in the year-ago quarter.

The Company's stock, which has been up 10 percent over the past 12 months, has taken a slight hit in the aftermarket hours, down 0.95 percent to $23.91.


Analyst Comments:
Wells Fargo analysts expect a neutral reaction to the third-quarter results for Chesapeake. As a result the analyst have updated their 2009 earnings per share guidance to $2.29 from $2.31 and their 2010 guidance to $2.01 from $2.27. The analysts do believe that the stock will continue to hold value for shareholders over the next two years; however risks to the value include rising cost structure due to the company’s active acquisition strategy as well as the risk of a sustained material weakness in commodity prices. Wells Fargo maintains an outperform rating on Chesapeake Energy.

Deutsche Bank has maintained a buy rating on Chesapeake while lowering its earnings forecast for 2010 to $2.00, down 12.1 percent, and raising its 2010 projections to $2.29, up 10 percent. The analysts stated that the upside to their maintained $33 price target seems respectable given recent pullback.

the company's stock has rebounded from a dip in the aftermarket hours yesterday to move up 1.53 percent to $24.51 in current market movement.

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