By February 25, 2016 Read More →

Chesapeake Energy loses $14.8 billion in 2015, cuts capex 57%

Chesapeake Energy’s 2015 daily production averaged 679,200 boe, year-over-year increase of 8%


Doug Lawler, Chesapeake Chief Executive Officer

Chesapeake Energy shares are tumbling after the company announced it lost $14.8 billion in 2015 and plans to cut its capex by 57 per cent for the current year.

For the 2015 full year, Chesapeake reported a net loss available to common stockholders of $14.856 billion, or $22.43 per fully diluted share, after writing down the value of its oil and gas fields. Chesapeake shares were trading at $2.59 mid-morning Wednesday, compared to $17.98 a year ago.

“In light of the challenging commodity price environment, our focus for 2016 is to improve our liquidity, further reduce our cost structure and address our near-term debt maturities to strengthen our balance sheet,” said Doug Lawler, Chesapeake CEO.

“Our tactical focus areas remain asset divestitures, of which we are pleased to have approximately $500 million in net proceeds closed or under signed sales agreements, liability management and open market purchases of our bonds.”

Chesapeake is budgeting total capital expenditures (including capitalized interest) of $1.3 to $1.8 billion for 2016. Using the midpoint of the range, this represents a 57 per cent reduction from the company’s 2015 total capital expenditures of $3.6 billion.

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In 2016, Chesapeake plans to place approximately 330 to 370 wells on production, resulting in total production that declines approximately 0 per cent to 5 per cent compared to 2015, after adjusting for asset sales.

Planned 2016 capital program will be dedicated to more completions and less drilling, with total completion spending representing approximately 70 per cent of the company’s total drilling and completion program.

At Feb. 23 the company had approximately $700 million in asset divestitures that had closed or that signed and are expected to close between now and the end of the 2016 second quarter.

The company expects that these asset sales will result in lower production of approximately 31,000 boe per day of production in 2016.

“We are also renegotiating gathering, transportation and processing contracts to better align with our current development plans and market conditions, aggressively working to minimize the decline of our base production and making shorter-cycle investments with our 2016 capital program,” said Lawler in a press release.

“We have set our initial capital program for the year at $1.3 to $1.8 billion, including capitalized interest, and will remain flexible to raise or lower based on commodity prices.”

Chesapeake’s daily production for the 2015 full year averaged 679,200 boe, a year-over-year increase of 8 per cent, adjusted for asset sales.  Average daily production consisted of approximately 114,000 barrels of oil, 2.9 billion cubic feet of natural gas and 76,700 bbls of NGL.

Adjusted for asset sales, 2015 full year average daily oil production increased 7 per cent, average daily natural gas production increased 7 per cent and average daily NGL production increased 14 per cent.

Posted in: Energy Financial

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