Chesapeake Energy Takes $4 Billion Write-Down Amid Weak Oil Prices

By Ezequiel Minaya 

Chesapeake Energy Corp. posted a deep loss in the second quarter as the U.S. shale driller took a $4.02 billion write-down on some properties following tumbling energy prices.

"While we strive to remain flexible in the face of lower commodity prices, we continue to focus on driving our costs lower," said Doug Lawler, Chesapeake's chief executive.

Earlier this week, the world's benchmark oil price fell to less than $50 a barrel for the first time in six months signaling a renewed slide of crude markets brought on as record U.S. production has touched off an international price war.

Amid the swoon in oil prices, Chesapeake has reduced rig operations and cut capital expenditures after failing to offset the plunge with higher production.

Average operated rig count during the latest quarter fell 50% from the previous quarter to 26, a far cry from the 65 rigs in operation during the same three-month period in 2014. Drilling and completion costs were slashed 40% from both the previous quarter and the same quarter in 2014 to $787 million.

Chesapeake's daily production averaged around 703,000 barrels of oil equivalent, an increase of 13% over the same period in 2014. The company also reported its average realized oil price for the quarter was down to $67.91 from $85.23 in 2014.

Overall, for the quarter ended in June, Chesapeake reported losses of $4.15 billion, or $6.27 a share, compared with a prior-year profit of $145 million or 22 cents a share. Excluding certain items, Chesapeake posted a per-share loss of 11 cents, down from earnings of 36 cents a share a year earlier.

Revenue fell 41% to $3.03 billion.

Analysts surveyed by Thomson Reuters expected the company to post a loss of 11 cents per share on revenue of $2.76 billion.

Write to Ezequiel Minaya at [e-mail]

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