Chesapeake Energy Corp.'s (CHK) fourth-quarter earnings rose 92% as the natural-gas producer reported higher revenue and production and as a hedging gain boosted bottom-line results.
The No. 2 U.S. natural-gas producer after Exxon Mobil Corp. (XOM) said it is reducing its operated drilling capital expenditures in dry gas plays by approximately 70% this year, while natural-gas production is expected to decrease 4% year-over-year. The company said it will double its capital expenditures in liquids-rich plays this year. It sees average net liquids production to rise 70% from last year to approximately 150,000 barrels per say.
The company, which formerly had been an aggressive acquirer, has been cutting spending and selling assets as it aims to reduce its debt. Chesapeake recently said it was targeting $10 billion to $12 billion of asset monetizations this year to fully fund its 2012 capital expenditures and to provide additional liquidity for next year.
Chesapeake in January said slashed its long-term debt by just over $2 billion over the past year and expected to meet its 25% two-year debt reduction goal by the end of this year, regardless of natural gas prices.
Chesapeake has posted mixed results over the past year as natural-gas prices remain stubbornly low amid a glut of supply as energy companies race to tap alternative shale fields in the U.S. Chesapeake and others have been shifting their production resources to more profitable oil and natural-gas liquids.
Chesapeake Energy reported a profit of $429 million, or 63 cents a share, up from $223 million, or 28 cents a share, a year earlier. Excluding hedging impacts, earnings fell to 58 cents a share from 70 cents.
Revenue increased 38% to $2.73 billion. Analysts polled by Thomson Reuters most recently projected earnings of 59 cents on revenue of $3.05 billion.
Chesapeake's average daily production was up 23%. The average realized price dropped 26% for gas and rose 2.4% for oil, including realized hedging impacts.
Shares rose by 13 cents to $24.75 in after-hours trading. The stock is down 19% in the past year.
-By Tess Stynes and Nathalie Tadena, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com