Chesapeake Energy Profit Soars

Chesapeake Energy Corp. (CHK) said its first-quarter profit soared as the company reported a 47% surge in revenue and higher production.

The company raised its adjusted production growth outlook for 2014 to 9% to 12%, compared to its February forecast of 2% to 4% growth, citing higher-than-expected natural gas liquids volumes.

Earlier this year, the oil and natural-gas company filed for a possible spinoff of its oilfield services operations, a move the company had been considering. Chesapeake also said it would change the name of the division to Seventy Seven Energy Inc. from the current Chesapeake Oilfield Operating LLC. The division--which offers drilling, hydraulic fracturing and rig relocation, among other services--pulled in about $2.2 billion in revenue last year.

The company said Wednesday that it continues to review asset dispositions, and that its targeted asset dispositions will add to earnings and allow it to further reduce overall leverage.

"This was an important and defining quarter for Chesapeake, as our competitive capital allocation, cost leadership and capital efficiency initiatives are driving tangible improvements in the company's growth profile and financial performance," said Chief Executive Doug Lawler.

Chesapeake reported a profit of $425 million, up from year-earlier earnings of $102 million. On a per-share basis, which includes preferred dividend impacts, the profit was 54 cents, compared with earnings of 2 cents a year earlier. Excluding mark-to-mark impacts, asset-sale impacts, asset write-downs and other items, adjusted earnings jumped to 59 cents from 30 cents.

Revenue soared 47% to $5.05 billion.

Analysts polled by Thomson Reuters expected a per-share profit of 48 cents and revenue of $4.45 billion.

Average daily production climbed 11% to 675,200 barrels of oil equivalent.

The company has struggled to recover from years of aggressive spending under co-founder and former Chief Executive Aubrey McClendon. During his tenure, Chesapeake regularly out-spent the cash it brought in from operations as the company rapidly expanded its drilling program across the country, from Pennsylvania to Texas.

Chesapeake borrowed heavily to finance its growth, and the company had to start selling assets in 2012 to pay down its debts. Mr. McClendon left the company in April 2013, largely under pressure from Chesapeake shareholders.

Write to Erin McCarthy at [e-mail]

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