Summary
Chesapeake Energy Corporation (EXE) reported a significant net loss of $1.971 billion for the third quarter of 2012, a stark contrast to the $922 million net income in the same period last year. This downturn was primarily driven by a substantial $3.315 billion impairment charge related to natural gas and oil properties, largely due to a sharp decline in natural gas prices. Total revenues also decreased to $2.970 billion from $3.977 billion year-over-year. Despite the quarterly loss, Chesapeake's production increased year-over-year for both natural gas and liquids. The company is strategically shifting its focus towards liquids-rich plays, with liquids production up 61% and constituting 63% of unhedged revenues. The company continued its asset sales program, aiming to reduce debt and fund capital expenditures, with $8.4 billion in completed sales year-to-date and plans for further divestitures. Liquidity remains a concern, as the company's capital expenditures significantly exceeded operating cash flow, necessitating increased debt. However, management believes it has adequate liquidity and covenant compliance through 2013, supported by ongoing asset sales and reduced capital spending plans.
Financial Highlights
47 data points| Revenue | $2.97B |
| Operating Expenses | $6.16B |
| Operating Income | -$3.19B |
| Interest Expense | $187.00M |
| Net Income | -$2.01B |
| EPS (Basic) | $-3.19 |
| EPS (Diluted) | $-3.19 |
| Shares Outstanding (Basic) | 644.00M |
| Shares Outstanding (Diluted) | 644.00M |
Key Highlights
- 1Significant net loss of $1.971 billion for the quarter, compared to net income of $922 million in the prior year period.
- 2Recorded a substantial $3.315 billion impairment charge on natural gas and oil properties due to lower natural gas prices.
- 3Total revenues decreased to $2.970 billion from $3.977 billion year-over-year.
- 4Production increased year-over-year for both natural gas and liquids.
- 5Strategic shift towards liquids production continues, with liquids revenue making up 63% of unhedged revenues.
- 6Completed asset sales of $8.4 billion year-to-date and plans further divestitures to reduce debt and fund capital expenditures.
- 7Capital expenditures significantly exceeded operating cash flow, leading to increased debt, but the company expects covenant compliance through 2013.