Chesapeake Energy Corporation (NYSE:CHK)’s Core Assets Delivered Growth
Northern, WI 05/21/2014 (gdpwatch) – Chesapeake Energy Corporation (NYSE:CHK) reported first quarter results of 2014 with higher net income of $466 million due to increasing production of across all businesses.
Core assets increased the production capacity
During 1Q2014, Chesapeake Energy Corporation (NYSE:CHK) increased the overall production capacity with 20% YoY in average daily oil production, 63% YoY increase in average daily NGL production and 4% YoY increase in natural gas production. In addition, higher realized natural gas price increased the overall revenue by 47% to $5 billion from $3.4 billion in 1Q2013.
Lower per unit production costs and decreasing operating expenses improved the adjusted EBITDA by 34% to $1.52 billion compared to $1.13 billion in 1Q2013. Despite the higher interest expenses, Chesapeake reported adjusted net income of was $405 million and adjusted EPS of $0.59 during the period (1Q2013: $183 million with adjusted EPS).
Cash flow growth and Capital efficiency
During the period, Chesapeake Energy Corporation (NYSE:CHK) posted 37% YoY increase in operating cash flow to $1.614 billion and total capital expenditures of $850 million, which includes drilling and completion capital spending of ~$729 million. So, Chesapeake’s free cash flow for the period was ~$764 million. Lower cash used in investing and financing activities improved the Company’s ending cash balance to $1 billion.
Chesapeake also has strong liquidity position with total debt of $12 billion and shareholder’s equity of $13.3 billion as of March 31, 2014. So, the debt to capitalization ratio for the period was 39%.
Chesapeake continues to pursue growth opportunities while focusing on high-grade assets that will provide profitable growth with increasing cash flow and will reduce the financial complexity while lowering the leverage.
So, Chesapeake Energy Corporation (NYSE:CHK) increased the capital expenditure to $5-$5.4 billion to meet the 9-12% increase in total production and will generate an operating cash flow of $5.5-$5.7 billion in FY2014.