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Chesapeake Energy’s 2016 Guidance and Production Trends

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Updated

2016 production guidance

Following its Barnett Shale sale announcement, Chesapeake  Energy’s (CHK) 2016 production growth guidance range was updated to 611 Mboepd–638 Mboepd (thousand barrels of oil equivalent per day), as compared to the previous range of 625 Mboepd–650 Mboepd it had forecast in 2Q16. This new guidance represents a fall of 8% at the midpoint compared to CHK’s 2015 production levels.

By comparison, peer Antero Resources (AR) has provided growth guidance of 15% at the midpoint for 2016.

CHK’s September 2016 presentation noted that it has been able to hold its production relatively flat since 2012, despite spending only 10% of its 2012 capital in 2016, highlighting its capital efficiency.

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CHK’s 2Q16 production volumes

Chesapeake Energy’s (CHK) 2Q16 production volumes totaled 657.1 Mboepd, as compared its production volume of 703 Mboepd in 2Q15.

The majority of its 2Q16 production came in from the Utica Shale, the Marcellus Shale, and the Haynesville Shale.

CHK’s hedge position

To protect its cash flows against lower commodity prices, Chesapeake Energy has hedged 74% of its projected 2016 natural gas production volumes, 71% of its projected 2016 oil production volumes, and 32% of its projected 2016 natural gas liquids production volumes.

CHK’s September presentation noted that it had hedged 33% of its projected 2017 natural gas production volumes, and 23% of its projected 2016 oil production volumes.

Other companies that have hedged portions of their 2016 production include Newfield Exploration (NFX) and Cabot Oil & Gas (COG).

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