Chesapeake's (CHK) Q4 Earnings & Revenues Beat Estimates

Chesapeake Energy Corporation CHK reported fourth-quarter 2018 earnings per share (excluding special items) of 21 cents, beating the Zacks Consensus Estimate of 17 cents. However, the bottom line declined from the year-ago quarter’s 30 cents.

Total revenues amounted to $1.7 billion, up from $1.3 billion in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $1 billion.

Higher oil equivalent price realizations primarily led to the better-than-expected results. As a result, the stock rallied more than 9% in the pre-market trading hours. The outperformance was however partially offset by lower oil and natural gas production volumes and the rise in production expenses.   

Operational Performance

Chesapeake Energy’s production in the reported quarter was approximately 43 million barrels of oil equivalent (MMBoe), down from 55 MMBoe a year ago. Production comprised approximately 8 million barrels (MMbbls) of oil (down 11.1% year over year), 185 billion cubic feet (bcf) of natural gas (down 22.6%) and 4 MMbbls of natural gas liquids (NGL) (down 20%).

Oil equivalent realized price — exclusive of unrealized gains (losses) on derivatives — was $26.75 per barrel of oil equivalent, higher than $24.41 in the year-ago quarter.

Total capital expenditure increased to $541 million from $523 million in the fourth quarter of 2017.

On the cost front, quarterly production expenses increased more than 14% year over year to $2.87 per Boe.

Financials

At the end of the quarter, Chesapeake Energy had cash balance of $4 million. Net long-term debt was $7,341 million.

Guidance

The company issued production guidance for 2019 in the range of 475,000-505,000 Boe per day. Moreover, the company projects capital budget for 2019 at $2,300-$2,500 million.

Proved Reserves Decline

As of Dec 31, 2018, the company’s proved reserves were reported at 1,448MMBoE, down from 1,912 MMBoE as of Dec 31, 2017.

Zacks Rank and Key Picks

Currently, Chesapeake Energy carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players in the energy space include Jones Energy Inc. JONE, Golar LNG Partners LP GMLP and Sunoco LP SUN. Jones Energy and Golar LNG carry a Zacks Rank #2 (Buy), while Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jones Energy expects 2019 earnings growth of 19% year over year.

Golar LNG delivered average positive earnings surprise of 92.8% in the preceding four quarters.

Sunoco LP has average positive earnings surprise of 18.39% for the trailing four quarters.

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