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Chesapeake Energy’s 2Q16 Earnings Missed Analysts’ Estimates

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Chesapeake Energy’s 2Q16 revenue

Chesapeake Energy (CHK) reported its 2Q16 earnings on August 4, 2016. Its 2Q16 revenue was ~$1.6 billion versus an estimate of ~$2 billion. Revenue in 2Q15 was ~$3 billion. In 1Q16, it was ~$2 billion.

CHK’s net adjusted loss in 2Q16 was $103 million. Its net adjusted loss in the corresponding period in 2015 was $83 million.

The company reported adjusted EPS (earnings per share) of -$0.14. Wall Street analysts’ consensus estimate for EPS was about -$0.11.

As you can see in the graph above, Chesapeake Energy’s 2Q16 earnings and revenues came in worse than expected.

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Peer comparison

QEP Resources (QEP) announced its 2Q16 earnings of $-0.23 per share, while EQT (EQT) reported its 2Q16 earnings of $0.35 per share. Cabot Oil and Gas (COG) reported its 2Q16 earnings of -$0.07 per share.

Key highlights

In its 2Q16 earnings release, CHK noted that it had reduced its total debt by more than $1 billion year-to-date. Chesapeake has been focusing on reducing its debt load through debt exchange, open market repurchases, and equity-for-debt exchanges.

On April 11, 2016, Chesapeake Energy (CHK) announced that it had amended its $4 billion secured revolving credit facility. The borrowing base was reaffirmed at $4 billion.

Finally, asset sales through 2Q16 totaled ~$964 million. Asset sales are another key strategy CHK is deploying to reduce its debt. CHK noted in its 2Q16 earnings release that it now expects asset divestitures in 2016 to total more than $2 billion, compared to its previous guidance range of $1.2 billion to $1.7 billion.

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