USA: Chesapeake Profit Dips

Chesapeake Energy announced financial and operational results for the 2012 fourth quarter and full year.

For the 2012 fourth quarter, Chesapeake reported net income available to common stockholders of $257 million ($0.39 per fully diluted common share), ebitda of $1.299 billion (defined as net income (loss) before income taxes, interest expense and depreciation, depletion and amortization), operating cash flow of $1.146 billion (defined as cash flow from operating activities before changes in assets and liabilities) and production of 362 billion cubic feet of natural gas equivalent (bcfe).

For the 2012 full year, Chesapeake reported a net loss available to common stockholders of $940 million, or a loss of $1.46 per fully diluted common share, ebitda of $1.914 billion, operating cash flow of $4.069 billion and production of 1.422 trillion cubic feet of natural gas equivalent (tcfe).

The company’s 2012 fourth quarter and full year results include various items that are generally not included in published estimates of the company’s financial results by securities analysts. Excluding such items, Chesapeake reported adjusted net income available to common stockholders of $153 million, or $0.26 per fully diluted common share, and adjusted ebitda of $1.089 billion for the 2012 fourth quarter and adjusted net income available to common stockholders of $285 million, or $0.61 per fully diluted common share, and adjusted ebitda of $3.754 billion for the 2012 full year. The primary excluded items from the 2012 fourth quarter and full year reported results are the following:

• a noncash after-tax impairment charge of $2.022 billion for the full year related to the carrying value of natural gas and oil properties;
• an after-tax charge of $122 million related to the full repayment of the company’s May 2012 term loans for the fourth quarter and full year;
• net unrealized noncash after-tax mark-to-market gains of $78 million for the fourth quarter and $347 million for the full year resulting from the company’s natural gas, oil and natural gas liquids (NGL) and interest rate hedging programs;
• net after-tax gains of $166 million for the fourth quarter and $163 million for the full year related to gains and losses on sales, including a $176 million after-tax gain on the sale of the company’s midstream subsidiary for the fourth quarter and full year;
• noncash after-tax charges of $36 million for the fourth quarter and $208 million for the full year related to the impairment of certain fixed assets; and
• net after-tax gains of $19 million for the fourth quarter and $622 million for the full year related to certain investments, including a $629 million gain for the full year related to the sale of all of the company’s interests in Access Midstream Partners, L.P. (NYSE:ACMP).

A reconciliation of operating cash flow, ebitda, adjusted ebitda and adjusted net income to comparable financial measures calculated in accordance with generally accepted accounting principles is provided on pages 18 – 21 of this release.

Steven C. Dixon, Chesapeake’s Chief Operating Officer, said, “We continue to deliver on our liquids growth targets, led by a year-over-year increase of nearly 40,000 barrels per day in oil production. We achieved this despite the sale of nearly 18,000 barrels per day of oil production associated with our exit from the Permian Basin during the 2012 third and fourth quarters. We believe this performance ranks Chesapeake among the top three organic oil growth stories in the industry for 2012. I am very proud of what our team has accomplished thus far and look forward to driving further liquids production growth and capital efficiencies in 2013.”

Domenic J. Dell’Osso, Jr., Chesapeake’s Chief Financial Officer, added, “Chesapeake delivered strong results during the 2012 fourth quarter. I am pleased to reaffirm our 2013 guidance for liquids production growth and drilling and completion capital expenditures, while at the same time reducing our cost guidance for many significant categories. Additionally, we are reaffirming the commitment of management and the Board of Directors to reducing financial leverage of the company through asset sales. I would also like to note we have protected a substantial portion of our projected operating cash flows in 2013 through downside hedge protection on approximately 85% of our projected oil production at an average price of $95.45 per barrel and approximately 50% of our projected natural gas production at an average price of $3.62 per mcf. This equates to approximately 72% of our projected 2013 natural gas, oil and NGL revenue, after differentials.”

[mappress]

LNG World News Staff, February 21, 2013