Revenue drop felt by Chesapeake Energy

Illustration shows Chesapeake Energy logo


A fall in natural gas prices resulted in Chesapeake Energy seeing a slide in profits from $1.24 billion or $8.27 a share a year ago to $391 million and $2.73 a share in the second quarter.

Gas prices in the U.S. averaged $2.417 per million Btu which were down neary 63% compared to a year ago. Still, the Oklahoma City company generayed $515 million of operating cash flow and had $903 million on had with zero dollars drawn on its credit facility at the end of the quarter.

The firm reported net income of $391 million or $2.73 per diluted share while adjusted net income was $92 million and 64 cents a share.

Chesapeake increased its base dividend 4.5%, and will pay $0.575/share on September 6, 2023, to shareholders of record at the close of business on August 17, 2023.

Through July 31, 2023, Chesapeake repurchased approximately 2.6 million shares of its common stock for approximately $200 million at an average price of $78.53 per share. Chesapeake has approximately $725 million remaining under its share repurchase program and, in total, has repurchased approximately 14 million shares of its common stock at a cost of approximately $1.275 billion under its current $2 billion authorization.

Despite the decline in revenue from a year ago, Nick Dell’Osso, Chesapeake’s President and CEO felt the company had another strong quarter.

“Our focus is clear — to Be LNG Ready and opportunistically capitalize on our strong financial position and leading operating performance. We remain confident in our ability to deliver affordable, reliable, lower carbon energy with peer-leading returns to shareholders.”

Chesapeake’s quarterly net production was down 11.6% at 3.65 billion cubic feet equivalent per day from a year earlier, of which 96% accounted for natural gas and 4% was total liquids.

Chesapeake is currently operating nine rigs including four in the Marcellus and five in the Haynesville. As previously announced, the company released a rig from the Marcellus at the beginning of the third quarter and another from the Haynesville this week. Drilling operations in the Eagle Ford asset have concluded for the year.

The company is currently operating one frac crew in the Marcellus and one in the Haynesville having released one crew each from the Marcellus, Haynesville, and Eagle Ford in the second or beginning of the third quarter.

In the Marcellus, the company drilled three of the five fastest wells in its history, including the fastest well, a 10,383-foot lateral to a total depth of 17,083 feet in less than eight days. In the Haynesville, continuous pumping technology employed in 2023 has led to a greater than 20% increase in efficiencies relative to previous zipper operations.

The company expects to drill 30 to 40 wells and place 40 to 50 wells on production in the third quarter of 2023. The company’s operating plan remains flexible and is prepared for further adjustments based on market conditions.

Year-to-date, the company has acquired 10,000 net acres through its ongoing leasing program in the Marcellus and Haynesville at an average cost of $2,400 per acre.