Chesapeake Energy Corp. (CHK), the U.S. natural gas producer that hired a new chief executive officer in June, posted a quarterly profit that trailed the year-earlier result as the pace of asset sales slowed.
Second-quarter net income was $580 million, or 66 cents a share, compared with $972 million, or $1.29, a year earlier, the Oklahoma City-based company said in a statement today. Excluding one-time gains and losses, per-share profit was 10 cents higher than the 41 cents average of 32 analysts’ estimates compiled by Bloomberg.
Chesapeake, producer of more U.S. gas than any explorer except Exxon Mobil Corp. (XOM), is under less pressure to raise cash through asset sales amid rising gas prices and a production shift to higher-margin gas byproducts such as propane. Under new CEO Robert “Doug” Lawler, Chesapeake is on track this year to limit capital spending to the company’s cash flow for the first time since 2001.
The statement was released before the opening of regular U.S. stock trading. Chesapeake rose 1.1 percent yesterday to $23.30 in New York. The shares have increased 40 percent this year.
Gas, which accounted for 84 percent of Chesapeake’s output during the first three months of this year, rose 71 percent to a second-quarter average of $4.018 per million British thermal units from the year-earlier period, according to data compiled by Bloomberg. The benefit of that rally to Chesapeake’s profit was overshadowed by gains in the year-earlier period of more than $1 billion from asset sales and unrealized, after-tax hedging gains.
Chesapeake has sold or arranged to divest $3.6 billion in oilfields, pipelines, real estate and other assets so far this year, after shedding about $11 billion in property in 2012, according to company filings and statements.
Lawler, a former Anadarko Petroleum Corp. (APC) executive, took the lead job at Chesapeake after company co-founder Aubrey McClendon stepped down as CEO April 1. Lawler said last month that the divestitures already announced this year, combined with projected proceeds from gas and oil sales, will allow the company to live within its cash flow. Any additional asset sales will be used to retire debt, Lawler said in a statement on July 3.
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