Chesapeake Energy Earnings: It’s Been a Rough Winter
To be fair, Chesapeake Energy Corp. (NYSE:CHK) did warn the market something like this was probably going to happen: fourth-quarter production was down. The independent oil and gas company reported year-end earnings on Wednesday morning that were not quite what Wall Street was looking for, and shares were down as much as 3 percent in early trading as a result.
Fourth-quarter average daily oil production increased 15 percent on the year but decreased 7 percent sequentially, average daily natural gas liquids (NGL) production increased 26 percent on the year but just 9 percent sequentially, and natural gas production decreased 3 percent on the year and 1 percent sequentially. Some, if not most, of the slowdown was due to planned reductions in output, but a harsh winter has taken its toll on the company. Chesapeake has a large footprint in the Utica and Marcellus Shale, which span Ohio, Pennsylvania, West Virginia, and part of New York. Earlier this month, CEO Doug Lawler explained to analysts that cold weather was partially to blame for lower-than-expected production in December. The news drove stocks down nearly 7 percent.
According to Chesapeake, operational issues and infrastructure construction delays had a negative impact on the production ramp in the Utica shale. According to the report, “As a result of the infrastructure and operational issues, the vast majority of Chesapeake’s wells that are connected to sales lines are on restricted choke and have not been producing at full capacity.”