Summary
Chesapeake Energy Corporation (EXE) reported its second quarter 2016 financial results, revealing significant impairments and a substantial reduction in revenue compared to the prior year. The company experienced a net loss of $1.75 billion for the quarter, largely driven by a $1.045 billion impairment of oil and natural gas properties. Total revenues plummeted to $1.62 billion from $3.52 billion in the same period last year, reflecting the continued impact of low commodity prices. Despite the substantial net loss, the company has focused on improving liquidity and financial flexibility. This includes efforts to reduce debt through repurchases and exchanges, amendments to its revolving credit facility to provide covenant relief and postpone redeterminations, and a significant reduction in capital expenditures. While the company's cash position has dwindled to $4 million, management expects to fund its operations and capital expenditures for the next 12 months through operating cash flow, available credit, and asset sales.
Financial Highlights
45 data points| Revenue | $1.62B |
| Operating Expenses | $3.40B |
| Operating Income | -$1.78B |
| Interest Expense | $62.00M |
| Net Income | -$1.78B |
| EPS (Basic) | $-2.51 |
| EPS (Diluted) | $-2.51 |
| Shares Outstanding (Basic) | 724.00M |
| Shares Outstanding (Diluted) | 724.00M |
Key Highlights
- 1Net Loss: Reported a net loss of $1.75 billion ($2.48 per diluted share) for the three months ended June 30, 2016, compared to a net loss of $4.09 billion ($6.27 per diluted share) in the prior year period.
- 2Revenue Decline: Total revenues decreased significantly to $1.62 billion from $3.52 billion in the comparable prior year period, primarily due to lower commodity prices and unrealized hedging losses.
- 3Asset Impairment: Recorded an impairment charge of $1.045 billion for oil and natural gas properties in the current quarter, with prior year impairments also being substantial.
- 4Reduced Capital Expenditures: Capital expenditures for drilling and completion were $337 million in the current quarter, a significant decrease from $787 million in the prior year quarter, reflecting efforts to conserve cash.
- 5Debt Management: The company repurchased and exchanged approximately $181 million and $290 million of senior notes, respectively, and $118 million and $287 million of contingent convertible senior notes for cash and stock, resulting in a $168 million gain.
- 6Liquidity Concerns: Cash and cash equivalents decreased sharply to $4 million from $825 million at the end of the prior year. The company highlighted its reliance on operating cash flow, asset sales, and its revolving credit facility to fund operations.
- 7Credit Facility Amendment: Amended its revolving credit facility to reaffirm borrowing base, postpone redetermination, and modify/suspend certain financial covenants, including granting liens on assets.