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Chesapeake Energy’s 2017 Production and Capex Guidance

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Chesapeake Energy’s key operational highlights

Chesapeake Energy’s (CHK) 4Q16 production volumes totaled 574.5 Mboepd (thousand barrels of oil equivalent per day). In comparison, its 4Q15 production volumes were 661 Mboepd. Chesapeake Energy’s 3Q16 production volumes were 638 Mboepd.

The graph above shows how Chesapeake Energy expects to see a significant rise in its total production in 2018 compared to its 2016 levels. Most of this growth seems to be coming from oil (USO).

CHK expects its exit-to-exit total production to rise ~7%, adjusted for asset sales, in 4Q17 compared to 4Q16. This exit-to-exit rise in its oil production in 4Q17 is expected to be ~10% higher than in 4Q16.

For 2018, CHK has projected a rise of 15% in its total production in 4Q18 over 4Q17, driven by an exit-to-exit rise of 20% in its oil production in 4Q18 over 4Q17.

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4Q16 realized prices

Chesapeake Energy’s average realized price of crude oil (USO) fell from $64.04 per barrel in 4Q15 to $47.37 per barrel in 4Q16. Its average realized price for natural gas (UNG) rose from $2.35 per thousand cubic feet in 4Q15 to $2.41 per thousand cubic feet in 4Q16.

Chesapeake Energy’s average realized price for natural gas liquids rose from $14.07 per barrel in 4Q15 to $20.90 per barrel in 4Q16.

2017 production and capital guidance

Chesapeake’s 2017 production growth guidance range is -3%–2%. In its December 2016 presentation, CHK laid out projections for the five-year period ending in 2020. The company plans to grow its production 5%–15% annually by 2020.

Chesapeake Energy’s capital expenditure (capex) guidance for 2017 is $1.9 billion–$2.5 billion. Its capex in 2016 was $1.7 billion.

Chesapeake Energy’s hedges

To protect its cash flows against lower commodity prices, Chesapeake Energy hedged 71% of its projected 2017 natural gas production volumes, 68% of its projected 2017 oil production volumes, and 7% of its projected 2017 natural gas liquids production volumes.

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