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Behind Chesapeake Energy’s Revenues in 1Q16

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May. 9 2016, Published 1:23 p.m. ET

Chesapeake Energy’s 1Q16 Revenue

Chesapeake Energy (CHK) reported its 1Q16 earnings on May 5, 2016, before the markets opened. The company announced adjusted revenue of ~$1.95 billion. The Wall Street analyst consensus estimate for CHK’s revenue was ~$2.6 billion, and CHK’s 1Q16 revenue was ~29% lower than its 1Q15 revenue of ~$2.8 billion.

Behind Chesapeake Energy's Revenues in 1Q16

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Chesapeake Energy’s 1Q16 earnings

CHK’s 1Q16 adjusted EPS (earnings per share) came in at -$0.10, which was in line the analyst consensus estimate. CHK’s EPS in 1Q15 was $0.11.

By comparison, upstream peers Cabot Oil and Gas (COG), EQT (EQT), and Antero Resources (AR), reported 1Q16 adjusted EPS of -$0.13, $0.07, and $0.17, respectively. COG, CHK, and EQT make up ~7.6% of the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).

Chesapeake Energy’s 2015 earnings and revenue

For 2015, CHK reported adjusted EPS of -$0.20. Its comparable EPS in 2014 came in at $1.50. Chesapeake Energy’s lower earnings can be blamed on natural gas prices, which fell to 16-year lows in 4Q15. CHK’s 2015 revenue came in at ~$12.7 billion. Its comparable revenue in 2014 was ~$20.5 billion.

Key update

In its 1Q16 earnings release, CHK noted that it had agreed to sell a portion of its acreage in the STACK play in northern Oklahoma to Newfield Exploration (NFX) for ~$470 million. Assets sold include ~42,000 net acres and 400 producing wells.

So far in 2016, Chesapeake has closed or signed sales agreements amounting to approximately $950 million in net proceeds. As a result of these, the net impact to CHK’s production will amount to a reduction of ~35,000 boe per day, about 60% of which is natural gas.

Chesapeake Energy is planning asset sales worth $1.2 billion–$1.7 billion for 2016. But how will it pull this off? Continue to the next part for a closer look at Chesapeake Energy’s operations.

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