Chesapeake Swings to Loss on Impairments

Chesapeake Energy Corp. swung to a heavy loss in its third quarter as the U.S. shale driller took a big write-down on some of its oil and natural gas properties amid tumbling energy prices.

But shares of the company rose 4.7% 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.

In the third quarter, Chesapeake reduced its average operated rig count to 18, down 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, compared with a prior-year profit of $662 million.

On a per-share basis, which includes the impact of things like preferred dividends, Chesapeake reported a loss of $7.08, compared with a profit of 26 cents a year earlier.

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

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

Capital spending fell to $623 million from $1.52 billion in the prior-year period.

For the full year, the company is now forecasting capital spending of $3.4 billion to $3.9 billion.

Write to Chelsey Dulaney at [e-mail]

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(END) Dow Jones Newswires

November 04, 2015 08:35 ET (13:35 GMT)

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