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Chesapeake Energy’s 3Q16 Earnings and Revenue Beat Estimates

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Chesapeake Energy’s 3Q16 revenue

Chesapeake Energy (CHK) reported its 3Q16 earnings on November 3, 2016. Its 3Q16 revenue was ~$2.3 billion—compared to an estimate of ~$2.2 billion. Its revenue was ~$3.4 billion in 3Q15 and ~$1.6 billion in 2Q16.

Chesapeake Energy’s net adjusted income in 3Q16 was $27 million. Its net adjusted loss during the same period in 2015 was $145 million.

The company reported adjusted EPS (earnings per share) of $0.09. Wall Street analysts’ consensus EPS estimate was -$0.03.

As you can see in the above graph, Chesapeake Energy’s 3Q16 earnings and revenue were better than analysts’ expectations.

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Peer comparison

In comparison, Chesapeake Energy’s upstream peer EQT (EQT) reported 3Q16 earnings of -$0.26 per share. Cabot Oil & Gas (COG) had 3Q16 earnings of -$0.04 per share.

Management’s commentary in 3Q16

Chesapeake’s CEO, Doug Lawler, commented in the 3Q16 earnings, “We continue to make progress in reducing leverage, decreasing total cash costs and improving future midstream expenses. Our achievements in these areas, particularly in regard to our balance sheet, provide a stronger foundation for improving profitability and enhanced returns from our capital program in 2017 and beyond. As we have previously stated, our large resource base and significant inventory of high-return drilling opportunities offer long-term growth and flexibility for our shareholders.”

Initially, Chesapeake Energy focused on reducing its debt load through a combination of debt exchanges, open market repurchases, and equity-for-debt exchanges. Asset sales are another key strategy that Chesapeake Energy uses to reduce its debt.

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