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Chesapeake Energy’s 2016 Production and Capex Guidance

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Nov. 7 2016, Published 1:19 p.m. ET

Chesapeake Energy’s key operational highlights

Chesapeake Energy’s (CHK) 3Q16 production volumes totaled 638 Mboepd (thousand barrels of oil equivalent per day). In comparison, its 3Q15 production volumes were 667 Mboepd. Chesapeake Energy’s 2Q16 production volumes were 657 Mboepd.

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3Q16 realized prices

Chesapeake Energy’s average realized price of crude oil (OIL) fell from $66.04 per barrel in 3Q15 to $45.24 per barrel in 3Q16. Its average realized price for natural gas (UNG) fell from $2.51 per thousand cubic feet in 3Q15 to $2.13 per thousand cubic feet in 3Q16.

Chesapeake Energy’s average realized price for natural gas liquids rose from $10.90 per barrel in 3Q15 to $13.70 per barrel in 3Q16.

2016 production and capital guidance

Chesapeake’s 2016 production growth guidance range is 0%–3%. It expects production to be 617 Mboepd–637 Mboepd.

The company’s 4Q16 production is expected to be 550 Mboepd–570 Mboepd. As you can see in the above chart, Chesapeake Energy expects its production to grow significantly over the next two years, primarily driven by its oil production.

Chesapeake Energy’s capex guidance for 2016 is $1.6 billion–1.8 billion. Its previous capex guidance range was $1.3 billion–$1.8 billion.

Chesapeake Energy’s hedges

To protect its cash flows against lower commodity prices, Chesapeake Energy hedged 79% of its projected 2016 natural gas production volumes, 67% of its projected 2016 oil production volumes, and 18% of its projected 2016 natural gas liquids production volumes.

Chesapeake Energy’s November presentation noted that it hedged 63% of its projected 2017 natural gas production volumes and 52% of its projected 2017 oil production volumes.

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