Chesapeake Energy Swings To 1Q Loss On Derivatives, Lower Revenue

Chesapeake Energy Corp. (CHK) swung to a first-quarter loss on steep derivatives loss and a sharp drop in revenue as energy prices declined, while production increased from a year ago.

Shares fell 3.4% to $32.10 in after-hours trading Monday as the top line missed analysts' expectations, although the adjusted profit exceeded their estimates.

The second-largest U.S. natural-gas producer, after Exxon Mobil Corp. (XOM), has said it expects the market, which has seen prices struggle due to oversupply, will recover through a combination of higher demand and lower production. Prices have been unable to stage a rally as natural-gas producers unlocked new reserves from unconventional shale gas drilling in the U.S.

Meanwhile, Chesapeake has said it intends to shift its capital spending toward finding and producing oil, and plans to increase its output to 250,000 barrels a day in 2015 from the 30,000 it produced daily in 2009. The company also agreed to acquire Bronco Drilling Co. (BRNC) for about $315 million as it looks to increase its rig count.

Chesapeake reported a loss of $162 million, or 32 cents a share, compared with a prior-year profit of $738 million, or $1.14 a share. Excluding derivative impacts and other items, earnings fell to 75 cents from 82 cents. Revenue slid 42% to $1.61 billion.

Analysts polled by Thomson Reuters had expected a profit of 70 cents on revenue of $2.68 billion.

The average realized price fell 16% for gas and was down 6.6% for oil and natural-gas liquids. Natural-gas production climbed 16%.

   -By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]