By August 3, 2017 Read More →

Chesapeake Energy Q2 revenue up, but company cutting rig count in 2017

Chesapeake Energy

Chesapeake Energy expects to exceed its goal of 100,000 b/d by year-end. Reuters file photo by Steve Sisney.

Chesapeake Energy to cut rig count by four by year’s end

In its second quarter results, Chesapeake Energy Corp showed the US natural gas producer beat quarterly profit estimates, but the company says it plans to cut its rig count and bring fewer wells into production this year.

Chesapeake operates in a number of US shale plays, including Eagle Ford, Utica Shale and Anadarko Basin.  The Oklahoma City-based company said it will end the year with 14 rigs, down from its current 18.

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Reuters reports Barclays analysts said in a note “We suspect Chesapeake may cut back activity in the relatively gassy North Eastern Appalachia, Haynesville and (to a lesser extent) Midcontinent regions.” .

In July, Halliburton warned that the growth in the North American rig count was “showing signs of plateauing” as only 10 rigs were added last month, the fewest in any month since May 2016.

Sluggish oil prices and the stubborn global glut of crude are factors in the slowdown.

Next year, Chesapeake Energy is considering budgeting less money to rigs, but CEO Doug Lawler says it may spend more on other assets.  The company is also hoping to use new technology to improve production and reduce costs.

Despite the drop in the number of rigs, Lawler said “We expect to exceed our goal of 100,000 barrels of oil per day prior to (the) year-end.”

According to Reuters, Chesapeake produced about 88,400 barrels per day in the second quarter, up 6 per cent from Q1.

Excluding items, the company earned 18 cents per share in the reported quarter, higher than analysts’ expectation of 14 cents, according to Thomson Reuters.  Total revenue was up by 41 per cent to $2.28 billion.

Shares in Chesapeake fell by as much as 2.5 per cent to $4.50 in trading on Thursday.


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