Despite record oil production in the second quarter of 2019, Oklahoma City-based Chesapeake Energy reported a quarterly loss of a dime a share. The company had earnings of 15 cents a share one year ago.
Chesapeake reported revenues of $1.45 billion for the quarter that ended in June while one year ago, its revenues totaled $982 million. Its oil production totaled 122,000 barrels of oil a day which was an increase of 36%. The company is leaning toward more oil production and less gas production.
For the 2019 second quarter, Chesapeake reported net income of $98 million and net income available to common stockholders of $75 million, or $0.05 per diluted share. Adjusting for items typically excluded by securities analysts, the 2019 second quarter adjusted net loss attributable to Chesapeake was $158 million or $0.10 per share while adjusted EBITDAX was $612 million.
Doug Lawler, Chesapeake’s President and Chief Executive Officer, commented, “Driven by the integration of our Brazos Valley asset, steady growth from the PRB and improved base production performance from South Texas and the Mid-Continent, Chesapeake produced approximately 122,000 barrels of oil per day, the highest quarterly oil production in the company’s history, and oil production comprised approximately 25% of our total production mix, also a company record.”
Lawler said as a result of the record oil production, the company would be increasing the mid-point full-year oil production guidance by nearly 250,000 barrels.
“As we formulate our initial 2020 plans, we expect to allocate more capital to oil growth areas, with less capital going toward our gas assets. As a result, with an approximately flat capital program to 2019, we project our 2020 oil volumes will show double-digit percentage growth over 2019, while our gas volumes will show a double-digit percentage decline, yet our projected adjusted EBITDAX remains approximately the same at 2019 levels using today’s lower NYMEX strip pricing and current hedge position. We look forward to driving further value from our scale, diverse portfolio and capital discipline in 2020 and beyond,” stated Lawler in a company announcement.
The company expects to increase oil production in the second half of 2019 as 170 oil wells are expected to be placed to sales which is an increase of 50% over the first half of 2019. Chesapeake stated it projects to increase oil production by double-digits in 2020 on flat year-over-year capex. But the company anticipates a reduction in its capital allocation to gas assets and it forecasts a double-digit gas decline in 2020.
Chesapeake said it projects 2019 total savings of upwards of $280 million as it eliminated nearly $600,000 in costs per well. It also is accelerating cycle times with nearly 45 oil wells planned to be placed to sales in the second half of 2019 in the Brazos Valley operations compared to 28 wells in the first half.
Chesapeake invested total capital expenditures of approximately $559 million during the 2019 second quarter, including capitalized interest of $6 million, compared to approximately $530 million in the 2018 second quarter. The increase in capital expenditures in the 2019 second quarter was largely attributable to an increase in net wells spud, completed and connected.