Chesapeake Energy Corp. reported an unexpected first-quarter loss, cut cash flow estimates, reduced its drilling budget and said it may run out of money next year under the weight of the lowest natural-gas prices in a decade.
Chesapeake’s net loss narrowed to $71 million, or 11 cents a share, from $205 million, or 32 cents, a year earlier, the Oklahoma City-based company said in a statement today. Excluding one-time costs such as a net unrealized non-cash loss on hedging contracts, per-share profit was 10 cents below the average of 34 analysts’ estimates compiled by Bloomberg.
The company slashed its full-year 2012 and 2013 operating cash flow estimates by as much as 48 percent, and increased the amount of assets it plans to sell. This year’s cash flow estimate was lowered to $2.7 billion to $3 billion, from a February forecast of $4.5 billion to $5.2 billion.
Chesapeake 2013 cash flow will be $4.4 billion to $5.3 billion, down from the previous estimate of $7.5 billion to $8.5 billion.
The company now is targeting asset sales of as much as $20.5 billion by the end of 2013, compared with an earlier top estimate of $17.5 billion.
Chesapeake raised production of oil and natural-gas liquids such as propane by 71 percent during the quarter to 113,560 barrels a day, the statement said. Natural-gas production of 2.98 billion cubic feet a day was 10 percent higher than a year earlier.
During February and March, the company curtailed 54 billion cubic feet of gas output, or the equivalent of 900 million cubic feet a day. That fell short of the 1 billion-cubic-feet a day reduction target announced on Jan. 23.
The statement was released after the close of regular U.S. stock trading. Chesapeake fell 6 percent at 5:26 p.m. in after-hours trading.
Before first-quarter results were announced, the shares jumped 6.3 percent after the company announced plans to strip Chief Executive Officer Aubrey McClendon of the chairman’s job and end an executive perk that allowed him to buy personal stakes in every well the company drilled.
McClendon’s plans to slash debt and return Chesapeake to investment-grade ratings were overshadowed by news reports that he borrowed hundreds of millions of dollars against personal stakes in company wells.
The company began curtailing some gas output in January and focusing investments on oilfields to produce more crude, which trades for eight times more than gas, on an energy-equivalent basis.
(Chesapeake scheduled a conference call to discuss first-quarter results at 9 a.m. New York time tomorrow. To access the call, go to http://www.chk.com.)