Summary
Chesapeake Energy Corporation (EXE) reported mixed financial results for the second quarter of 2019. The company saw a significant increase in total assets, largely driven by the acquisition of WildHorse Resource Development Corporation. While revenues slightly decreased year-over-year for the quarter, driven by lower marketing revenue and commodity prices, the company achieved positive net income attributable to Chesapeake of $98 million, a substantial improvement from a net loss of $249 million in the prior year's quarter. This turnaround was significantly influenced by the change in accounting principle from full cost to successful efforts, which positively impacted earnings, and a substantial income tax benefit related to the WildHorse acquisition. Liquidity remains a key focus, with significant borrowings under both the Chesapeake and BVL revolving credit facilities. The company's strategy emphasizes debt reduction and margin improvement through operational efficiencies. While capital expenditures are projected to remain robust, the company's ability to manage its debt and maintain compliance with financial covenants will be critical for future financial health.
Financial Highlights
45 data points| Revenue | $2.39B |
| Operating Expenses | $2.11B |
| Operating Income | $278.00M |
| Interest Expense | $175.00M |
| Net Income | $98.00M |
| EPS (Basic) | $9.21 |
| EPS (Diluted) | $9.21 |
| Shares Outstanding (Basic) | 8.14M |
| Shares Outstanding (Diluted) | 8.14M |
Key Highlights
- 1Chesapeake Energy completed the acquisition of WildHorse Resource Development Corporation for approximately 717.4 million shares of common stock and $381 million in cash, significantly increasing its oil production mix and projected cost savings.
- 2The company reported a net income of $98 million for the three months ended June 30, 2019, a substantial improvement from a net loss of $249 million in the prior year quarter.
- 3A change in accounting principle from the full cost method to the successful efforts method for oil and natural gas exploration and development activities was adopted, with prior periods recast.
- 4Total assets increased significantly to $16,540 million as of June 30, 2019, up from $12,735 million at the end of 2018, primarily due to the WildHorse acquisition.
- 5Long-term debt increased to $9,701 million as of June 30, 2019, from $7,341 million at the end of 2018, largely attributed to debt assumed in the WildHorse acquisition.
- 6Cash provided by operating activities was $853 million for the six months ended June 30, 2019, a slight decrease from $951 million in the prior year period, impacted by lower commodity prices and one-time acquisition-related costs.
- 7The company remains committed to reducing total leverage and improving margins through operational efficiencies, with projected 2019 capital expenditures between $2.1 billion and $2.3 billion.