CHK Chesapeake Energy Corporation

By Chelsey Dulaney 

Chesapeake Energy Corp. on Wednesday warned it could significantly cut its capital spending next year, as the U.S. shale driller swung to a third-quarter loss amid heavy write-downs

But shares of the company rose 4.9% in premarket trading as its loss, excluding the $4.51 billion impairment charge and other special items, was smaller than analysts had expected.

Chesapeake is among the large U.S. energy companies that have written down the value of their oil fields as a rout in commodities prices has made properties across the country not worth drilling.

Oklahoma City-based Chesapeake has also moved to cut 15% of its workforce, reduce its capital spending and pare back its rig operations.

The company again reduced its 2015 capital-spending plans, now forecasting $3.4 billion to $3.9 billion. It had previously forecast $3.5 billion to $4 billion in spending for the year.

For 2016, Chesapeake Chief Executive Doug Lawler said the company is "prepared to execute on a significantly lower capital program in 2016."

During the third quarter, Chesapeake cut its capital spending by more than half, to $623 million from $1.52 billion in the prior-year period.

Chesapeake reduced its average operated rig count to 18 in the third quarter from 26 in the second quarter and 69 in the prior-year period.

Chesapeake's daily production averaged around 667,000 barrels of oil equivalent a day, an increase of 3% over the same period in 2014 adjusted for asset sales. Chesapeake has also been selling properties to pay off its debt after years of heavy borrowing to snap up oil and gas prospects under its former chief executive.

The company's average realized oil price for the quarter fell 26% from the prior year to $62.68 a barrel.

Overall, for the quarter ended Sept. 30, Chesapeake reported a loss of $4.65 billion, or $7.08 a share, compared with a prior-year profit of $662 million or 26 cents a share.

Excluding the $4.51 billion impairment charge and other items, Chesapeake posted a per-share loss of 5 cents. Analysts had forecast a loss of 13 cents a share.

Revenue plunged 49% to $2.89 billion, missing the $3.02 billion analysts had forecast.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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(END) Dow Jones Newswires

November 04, 2015 09:27 ET (14:27 GMT)

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