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Why Did Chesapeake Energy's Stock Rise after Its 4Q15 Miss?

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Part 2
Why Did Chesapeake Energy's Stock Rise after Its 4Q15 Miss? PART 2 OF 4

Chesapeake Energy’s 2015 Operational Highlights and 2016 Guidance

Chesapeake Energy’s 4Q15 and 2015 production

Chesapeake Energy’s (CHK) total production volumes in 2015 were 248 million barrels of oil equivalent (MMboe). This represents a ~4% year-over-year (or YoY) fall.

CHK’s 4Q15 production volumes were 61 MMboe, ~9% lower than its 4Q14 production levels.

Chesapeake Energy&#8217;s 2015 Operational Highlights and 2016 Guidance

As we can see in the graph above, CHK’s production levels have fallen significantly since 4Q14.

For 2016, Chesapeake Energy expects its annual production to decline in the range of 0%–5%, adjusted for asset sales.

CHK’s 4Q15 realized prices

CHK’s crude oil price realizations in 4Q15, including the effect of hedges, were $64.04 per barrel, 19% lower than 4Q14 realized prices. CHK’s natural gas price realizations in 4Q15, including the effect of hedges, were $2.35 per thousand cubic feet, 34% lower than 4Q14 realized prices.

CHK’s natural gas liquids price realizations in 4Q15, including the effect of hedges, were $14.07 per barrel, down ~38% from 4Q14.

CHK’s capex guidance

CHK provided a 2016 capex (capital expenditure) guidance range of $1.3–$1.8 billion. This represents a 57% YoY reduction.

CHK’s earnings release noted that its 2016 capex would focus more on completions and less on drilling. CHK’s completion spending is slated to be ~70% of its total drilling and completion capex budget.

Many upstream companies have been reducing their 2016 capex in response to lower energy prices. ConocoPhillips (COP) and Anadarko Petroleum (APC) have lowered their 2016 capex by 37% and 50%, respectively, versus 2015. Marathon Oil’s (MRO) 2016 capex is expected to be less than half of its 2015 capex. These companies make up ~7% of the Vanguard Energy ETF (VDE).

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