Chesapeake Energy shares fall on fourth-quarter loss

Posted Wednesday, Feb. 26, 2014  comments  Print Reprints
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Chesapeake Energy, the No. 2 producer in the Barnett Shale, said it lost $159 million in the fourth quarter as it took several charges, including a $120 million expense “for the purchase of debt and the extinguishment of a lease obligation” in its shrinking Fort Worth-area operations.

It did not provide further details on the charge.

The Oklahoma City-based company said that after adjustments for unusual items, it earned $161 million, or 27 cents a share. That was well short of Wall Street’s consensus estimate of 41 cents for the quarter, and the company’s shares (ticker: CHK) slid 5 percent to $25.61 on Wednesday in heavy trading.

The reduced status of the Barnett, once the company’s mainstay, was evident in several Chesapeake disclosures. It said it will pay millions to pipeline operators this year for failing to meet its minimum volume commitments as production declines.

The company no longer breaks out its Barnett production, but according to Texas Railroad Commission data, its total production in the field fell 6.6 percent in 2013 to just over 1.2 billion cubic feet a day.

The company operated only one drilling rig in the Barnett last year and expects to do the same in 2014, with less than 5 percent of its 2014 capital budget being spent here, it said.

Chesapeake put its Chesapeake Plaza office tower in Fort Worth up for sale in 2012. In its earnings report Wednesday, the company said it “is marketing or has under contract sales of certain real estate and other non-E&P assets … which are expected to generate proceeds of approximately $650 million during 2014.”

That estimate does not include the company’s announcement Monday that it’s considering a sale of Chesapeake Oilfield Services, which includes 115 drilling rigs and had 2013 revenue of about $2.2 billion.

The company has struggled to bring spending in line with revenue as it works off billions in debt incurred during years of explosive growth.

The company said it spent $5.5 billion on drilling and well completions during 2013, down 38 percent from a year earlier. It expects total capital spending of $5.2 billion to $5.6 billion in 2014.

Chief Financial Officer Domenic Dell’Osso said the company expects about $1 billion in proceeds from asset sales in 2014 and could have additional deals, including the possible Chesapeake Oilfield Services transaction.

Chesapeake is now busiest in South Texas’ booming Eagle Ford Shale, an oil-heavy formation where it averaged 12 rigs during the fourth quarter. It finished the year with 862 producing wells in the field and 109 awaiting completion or connection to a pipeline.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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