Chesapeake falls short of 2Q revenue expectations

COLUMBUS, Ohio — Chesapeake Energy said Monday that it posted a second-quarter profit, one year after the natural gas producer recorded a $1.6 billion loss due to hedging.

Stripping out one-time costs, however, Chesapeake Energy said profit was down from last year with natural gas prices off 70 percent.

The company also said it is continuing to unload assets worth billions of dollars and using the proceeds to reduce debt and finance capital expenditures.

Oklahoma City-based Chesapeake Energy said it made $237 million, or 39 cents per share, for the quarter ended June 30, compared with a loss of $1.6 billion, or $3.17 per share, last year when it recorded hedging losses of $3.4 billion.

Discounting one-time costs, Chesapeake said it made $377 million, or 62 cents per share, down from adjusted profit of $479 million, or 89 cents a share, in the year-ago quarter.

Revenue was $1.7 billion compared with a revenue loss of $455 million a year ago.

Analysts surveyed by Thomson Reuters expected Chesapeake to make 52 cents per share on revenue of $1.9 billion for the most current quarter. Those estimates typically exclude one-time charges.

“Chesapeake was able to deliver very solid results for the quarter despite the 70 percent drop in natural gas prices over the past year as a result of our successful hedging program, strong operating capabilities, low cost structure, powerful assets and very attractive joint venture arrangements,” Aubrey McClendon, Chesapeake Energy’s CEO and co-founder, said in a statement.

The second-quarter results included a hedging gain of $597 million.

Gas prices have plummeted in the past year as the country sank into recession and demand wilted, especially as auto companies, steelmakers and other heavy users of gas cut production. At the same time, the country’s proved reserves have grown with producers improving their ability to tap sources of gas that previously had been hard to reach.

The government reported Thursday that U.S. stockpiles of natural gas are 18.8 percent above the five-year average of about 2.545 trillion cubic feet.

Chesapeake said last week that it boosted daily production by 4 percent in the second quarter over the first quarter and 5 percent from the 2008. It had cut production in previous quarters as prices fell.

Since March 31, the company said it has sold or agreed to sell $900 million in assets and that it wants to sell assets with a value of $2.35 billion to $3.05 billion this year and $1.25 billion to $1.8 billion next year.

The company announced a string of deals last year that included joint ventures with large gas and oil companies that have helped bolster its balance street.

The report was released after the close of trading Monday. Chesapeake shares rose 92 cents, or 4.3 percent, to $22.36 during the regular session, but fell 45 cents, or 2 percent in after-hours trading. The shares hit a five-year low of $9.84 in December and have been as high as $51.71 in the past year.

Year to date, Chesapeake has loss $5.5 billion, or $9.18 per share, compared with a loss of $1.8 billion, or $3.52 per share, in the first half of 2008. Revenue totaled $3.7 billion so this year compared with $1.2 billion last year.