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Chesapeake Energy Loses $71M in First Quarter
YOUNGSTOWN, Ohio – A combination of depressed natural gas prices and a $167 million loss attributed to its hedging program led Chesapeake Energy Corp. to report a $71 million net loss for the quarter ending March 31, the company announced after the close of the markets Tuesday.
Chesapeake reported a first quarter net loss to shareholders of $71 million, or $0.11 a share, on revenues of $2.4 billion. The results include a $167 million non-cash loss resulting from the company's natural gas, liquids and interest rate hedging programs. Absent this charge, adjusted net income for the quarter was $94 million, or $0.18, per diluted share.
Chesapeake revenues stood at $2.4 billion for the first quarter, compared to $1.6 billion during the same period last year.
Overall natural gas production of 3.6 billion cubic feet equivalent per day represented an increase of 18% during the first quarter versus a year ago, Chesapeake said.
The company also reported that it plans to continue to concentrate developing its holdings in the liquids-rich areas of unconventional shale plays such as the Utica shale in eastern Ohio. Conversely, Chesapeake is projecting a 12% decline in natural gas production by 2013.
Natural gas prices during the quarter averaged $2.35 per thousand cubic feet compared to $5.31 per thousand cubic feet during the first quarter of 2011.
Daily liquids production increased 69% during the first quarter versus the same period a year ago, Chesapeake said.
Chesapeake is the largest leaseholder in eastern Ohio's Utica shale with 1.35 million acres. The company is most active in Carroll County and Columbiana County, an area where the company believes contains vast reserves of natural gas liquids.
Chesapeake also said it expects $11.5 billion to $14 billion in asset monetizations this year in order to reduce the company's debt to $9.5 billion by the end of 2012.
"We are focused on executing our transformation to a more balanced asset base between liquids and natural gas and believe our business has strong momentum despite a challenging environment with natural gas prices at 10-year lows," said Chesapeake Chairman and CEO Aubrey McClendon.
McClendon, under fire from shareholders because of an incentives program that allowed him to purchase 2.5% interest in wells Chesapeake drilled, and then used those shares as collateral to obtain $1.1 billion in personal loans, agreed to step down as chairman of the board Tuesday.
CLICK TO READ RELATED STORY: McClendon to Step Down as Chesapeake Chairman.
Copyright 2012 The Business Journal, Youngstown, Ohio.