Chesapeake Energy Corporation reported 2022 second quarter financial and operating results and announced the company is taking actions to solidify its strategic focus on its core Marcellus and Haynesville positions.
The company reported net cash provided by operating activities of $909 million and delivered adjusted EBITDAS of $1,269 million and $494 million in adjusted free cash flow.
Net income totaled $1,237,000 or $8.27 per diluted share and adjusted net income of of $729 million or $4.87 per diluted share.
Chesapeake also retired nearly $670 million or nearly 7.6 million common shares through the end of July. The firm said another $2 billion in common stock and warrant repurchase program remains active.
The company said it is positioning Haynesville assets for future growth while reducing activity in the Eagle Ford which Chesapeake now views as non-core to its future capital allocation strategy.
“”Our acreage positions in the Marcellus and Haynesville are truly differentiated with industry leading capital efficiency, deep runways of low breakeven inventory, strong operating margins, and advantaged emissions profiles. Given we now view our Eagle Ford assets as non-core to our future capital allocation strategy, we are increasing our capital allocation to the Haynesville in the second half of the year and into 2023 to position the asset for returns-driven growth,” he added.
During the second quarter of 2022, Chesapeake generated $909 million of operating cash flow and had $17 million of cash on hand at quarter-end. As a result of its significant free cash flow, Chesapeake is raising its base dividend by 10% to $2.20 per share. Consistent with the company’s cash return framework, Chesapeake plans to pay its base and variable dividend on September 1, 2022 to shareholders of record at the close of business on August 17, 2022.
Chesapeake’s net production in the second quarter of 2022 was approximately 4,125 MMcfe per day (approximately 91% natural gas and 9% total liquids), utilizing an average of 16 rigs to drill 63 wells and placed 57 wells on production. Chesapeake is currently operating 16 rigs including five in the Marcellus, five in the Eagle Ford and six in the Haynesville, with the sixth rig just added in the last week. The company expects to drill 60 to 70 wells and place 40 to 50 wells on production in the third quarter of 2022.
To position the company for additional returns-driven growth from the Haynesville, the company is reallocating capital to the Haynesville and increasing its capital investment program by 15% to $1.75–$1.95 billion (previous guidance was $1.5–$1.8 billion). The move reflects industry-wide inflation as well as the addition of two operated Haynesville rigs with the sixth rig added in early August and a seventh rig before year-end. Chesapeake intends to reduce planned activities and investments in the Eagle Ford which includes dropping to three rigs by the end of August and exiting the year with two rigs.
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