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What’s in Store for Chesapeake Energy in 3Q17?

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Nov. 20 2020, Updated 12:33 p.m. ET

Revenue estimates for 3Q17

Chesapeake Energy (CHK) will release its earnings on November 2, 2017, before the market opens. Its 3Q17 revenue estimate is ~$2.1 billion, which is lower than $2.28 billion in 2Q17. In 3Q16, it had revenue of $2.27 billion. CHK’s 3Q17 revenue is expected to be lower on a YoY (year-over-year) as well as sequential basis.

CHK’s revenues are expected to fall YoY due to a YoY expected fall in 3Q17 production, which will likely offset the impact of higher natural gas prices in 3Q17 compared to 3Q16. Natural gas prices in 3Q17 averaged $2.95 per MMBtu (million British thermal unit) compared to $2.79 per MMBtu in 3Q16.

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Sequentially, 3Q17 revenues are expected to fall due to lower natural gas prices, which would likely offset the impact of higher production expectations in 3Q17 compared to 2Q17 volumes. We’ll look at CHK’s production expectations in the following part of this series. Average realized natural gas prices in 2Q17 were $3.13 per MMBtu.

3Q17 EPS estimates

Chesapeake Energy’s EPS (earnings per share) estimate for 3Q17 is $0.11. The company reported higher EPS in the previous quarter at $0.18. This again stems from the fact that revenue in 3Q17 is expected to fall compared to 2Q17, resulting in lower expected earnings in 3Q17.

On a YoY basis, 3Q17 earnings are expected to be higher. EPS in 3Q16 was $0.09, most likely due to lower expected operating expenses in 3Q17 compared to 3Q16. While the company didn’t provide exact 3Q17 operating expenses guidance, fiscal 2017 guidance for production expense as of August 2, 2017, was $2.60 per boe (barrels of oil equivalent) at the midpoint. For gathering, processing, and transportation expenses, it was $7.25 per boe (at the midpoint). For context, production expenses in 3Q16 were $2.80 per boe, while gathering, processing, and transportation expenses in 3Q16 were $8.07 per boe.

CHK’s peers Noble Energy (NBL), Cabot Oil & Gas (COG), and EQT (EQT) are expected to report 3Q17 EPS of -$0.13, $0.08, and -$0.05, respectively, in 3Q17 compared to 3Q16 EPS of -$0.07, -$0.04, and -$0.26, respectively.

To know more about EQT’s 3Q17 earnings expectations, check out How Will EQT Corporation’s Revenue and Earnings Fare In 3Q17?

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