Chesapeake Energy Third-Quarter Profit Rises to $558 Million
Chesapeake Energy Corp., the second- largest U.S. natural-gas producer, said third-quarter profit rose as production increased.
Net income was $558 million, or 75 cents a share, compared with $192 million, or 30 cents, a year earlier, Oklahoma City- based Chesapeake said today in a statement on Business Wire. Gains from contracts used to lock in commodity prices added $687 million to Chesapeake’s income in the same period last year.
The company has sold about $3.3 billion in assets in the past year to buy leases and accelerate drilling in fields that produce oil and natural-gas liquids that are more valuable in current markets than natural gas. The benchmark gas price in New York fell 31 percent from year-end to Sept. 30, limiting producers’ ability to lock in higher prices.
“Less hedging affects the prices they actually realize,” Raymond Deacon, an analyst in Warren, Rhode Island, for Pritchard Capital Markets, said in an interview before results were released. He rates the shares “buy” and owns none.
Crude oil prices have been three times higher than natural gas on an energy-equivalent basis, according to a Bloomberg calculation.
Crude futures on the New York Mercantile Exchange rose 12 percent from a year earlier to average $76.21 a barrel during the quarter. Natural gas, which has accounted for more than 90 percent of Chesapeake’s production, rose 23 percent to average $4.24 per million British thermal units, equivalent to $25 for a barrel of oil.
Cnooc Funding
Cnooc, China’s biggest offshore oil explorer, agreed last month to pay $1.08 billion in cash and a commitment to fund 75 percent of Chesapeake’s drilling costs up to $1.08 billion in the liquids-rich Eagle Ford shale formation in south Texas.
Chesapeake’s shares have one sell, 17 buy, 13 hold recommendations from analysts.
Exxon Mobil Corp., based in Irving, Texas, was the largest U.S. natural-gas producer in the 2010 second quarter, according to the National Gas Supply Association, a Washington-based trade group.
To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.
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