Chesapeake Energy Corporation (NYSE: CHK) is having an overwhelmingly strong start to the trading session in the pre-market hours this morning, and for good reason. The company reported its earnings for the fourth quarter, beating expectations and leading to excitement among investors. Today, we’ll talk about what we saw from the earnings report, what we’re seeing from the stock, and what we’ll be watching for with regard to CHK ahead.
CHK Reports Earnings
As mentioned above, Chesapeake Energy is having an overwhelmingly strong start to the trading session this morning after reporting its earnings for the fourth quarter. Here’s what we saw from the earnings report:
- Earnings Per Share – In terms of earnings per share, CHK definitely did not disappoint. During the quarter, it was expected that the company would generate $0.24 per share in earnings. However, the company actually reported earnings in the amount of $0.30 per share, blowing away expectations!
- Revenue – Revenue also proved to be a big hit for CHK. During the quarter, analysts expected that the company would generate revenue in the amount of $1.251 billion. However, the company actually reported revenue in the amount of $1.258 billion, once again beating expectations.
In a statement, Doug Lawler, CEO at CHK, had the following to offer:
I am very pleased with our fourth quarter and full year 2017 performance, as we made significant progress toward our goals of reducing our debt, increasing cash flow generation and margin enhancement. Fiscal year 2017 was a pivotal year for Chesapeake, as we restored our production and increased net cash provided by operations, increased our oil production, adjusted for asset sales, and significantly improved our cost structure by reducing our combined production, general and administrative and gathering, processing, and transportation expenses by approximately $510 million. We further demonstrated the depth of our portfolio by closing on approximately $1.3 billion in asset and property sales and signed additional asset sales for approximately $575 million that we expect to close by the end of the 2018 second quarter. We reduced our outstanding secured term debt by approximately $1.3 billion, or 32 percent, continued to remove legal obligations and recorded the best environmental and safety performance in our company’s history.
We are well-positioned to build on our 2017 accomplishments and progress our strategic goals, with our 2018 guidance highlighting improvements in our cost structure, increased oil production, adjusted for asset sales, and increased net cash and margins provided by operations. We expect to deliver production growth, adjusted for asset sales, of 1 percent to 5 percent on reduced capital expenditures. The expected improvements in our cost structure, as well as improved basis pricing differentials and higher NYMEX pricing, result in higher forecasted year-over-year cash flows.
Over the last four years, we have fundamentally transformed our business, removing financial and operational complexity, significantly improving our balance sheet, and addressing numerous legacy issues that have affected past performance. Chesapeake Energy continues to get stronger, and we believe we are well positioned to create meaningful shareholder value in the years ahead.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In this particular case, the news proved to be overwhelmingly positive. After all, the company performed far better in the fourth quarter than analysts expected to see. As a result, it’s no surprise that we’re seeing strong gains in the value of the stock. At the moment (8:41), CHK is trading at $2.81 per share after a gain of $0.18 per share (6.84%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CHK. In particular, we’re interested in following the company’s continued growth and excited to see further updates. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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