What Drove Chesapeake Energy’s Production in Q1 2018?

Chesapeake’s Q1 2018 production

Chesapeake Energy’s (CHK) production in Q1 2018 was 540 Mboed (thousand barrels of oil equivalent per day), which was ~11.3% higher than Chesapeake Energy’s reported production of 485 Mboed in Q1 2017.

What Drove Chesapeake Energy’s Production in Q1 2018?

CHK’s increase in Q1 2018 production levels was mostly due to higher oil and natural gas volumes, partially offset by lower natural gas liquids volumes compared to Q1 2017. Much of the growth came from the Marcellus, Haynesville, Eagle Ford, and the Utica shale plays.

The company noted that its Q1 2018 results were primarily driven by stronger oil production and higher commodity prices with better differentials for both oil and gas prices.

CHK’s 2018 production guidance

For 2018, Chesapeake’s production growth guidance range, adjusted for asset sales, is approximately 3% year-over-year and it expects its oil volumes to grow approximately 5% compared to 2017 levels.

In the Q1 2018 earnings conference, CHK management had commented that the low point for production for this year would be during Q2 2018 following the stabilization of flush production from its Q4 2017 turn-in-line well program in the Eagle Ford as well as due to the reduction in volumes from its Mid-Continent asset sales.

Commenting on the company’s strategic decision to focus on oil-weighted growth, CHK management commented, “From this point forward, we forecast a modest decline in gas volumes, replaced in the total with oil volume growth, accelerating as we approach the end of the year.” Management added, “Our investments are focused on increased margins and returns.”

Finally, we’ll look at CHK’s stock performance in the next part of this series.