Chesapeake Tops On Oil Volume

Natural gas provider, Chesapeake Energy Corp. (NYSE:CHK) has reported sharper-than-expected adjusted second quarter 2011 earnings of 76 cents per share, striding ahead of the Zacks Consensus Estimate of 72 cents. The outperformance came on the back of a 62% expansion in liquid production volumes. The reported figure showed a modest improvement from the year-earlier profit of 75 cents.

Total revenue surged 65% year over year to $3,318 million from $2,012 million reported in the comparable period last year.

Operational Performance

Chesapeake’s average daily production in the quarter increased 9% year over year to 3.049 billion cubic feet equivalent (Bcfe), of which natural gas accounted for 84%. However, the volume dropped 2% sequentially due to the Fayetteville Shale
assets divestiture. The percentage of natural gas production to total volume decreased 6% on an annualized basis. However, natural gas production grew 3% and oil production expanded 62% from the year-ago level.

Natural gas equivalent realized price in the reported quarter was $6.07 per thousand cubic feet equivalent (Mcfe) versus $6.14 in the year-earlier quarter. Average realizations for natural gas were $5.19 per Mcf compared with $5.66 per Mcf in the year-earlier quarter. Liquids were sold at $65.23 per barrel, up from the year-ago price level of $61.43 per barrel.

Source: Daily Markets 

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Nat Gas Companies Moving In Different Directions in Arkansas

Oklahoma City-based Chesapeake closed on its sale of Arkansas assets to BHP Billiton, an Australian oil and gas conglomerate that acquired Chesapeake for $4.65 billion earlier this year.

Chesapeake reported a companywide loss of $205 million for its first quarter of 2011 on revenue of $1.61 billion. One year ago,Chesapeake reported first quarter profits of $732 million on revenue of $2.8 billion.


It blamed losses in its hedging division for this year's poor quarter, but the BHP deal will soften the landing. Because of its size, BHP could choose to ratchet down operations in Arkansas until market conditions in the natural gas industry improve their profit margins.

Chesapeake also disclosed a recapitalization of Frac Tech Services, LLC, raising its ownership in the drilling support services firm (with a major presence in Searcy) from 26% to 30%.


Source: Talk Business. Net


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PetroHawk Posts 1Q Loss on Charges

HOUSTON -(Dow Jones)- Petrohawk Energy Corp. (HK) swung to a first-quarter loss absent a large prior-year gain on natural gas derivatives, while the oil and gas producer on Thursday disclosed an $855 million sale of its stake in a joint venture with Kinder Morgan Energy Partners LP (KMP).

Petrohawk agreed to sell its 50% stake in KinderHawk Field Services, a natural gas service provider in Louisiana's Haynesville Shale field, to partner Kinder Morgan. Kinder Morgan also acquired a 25% stake in Petrohawk's gas-gathering and treatment business in the Eagle Ford Shale field in south Texas and agreed to assume $65 million debt.

The sale, along with an earlier $75 million sale of pipelines serving Arkansas' Fayetteville Shale field, brings Petrohawk's total divestiture this year to about a $1 billion.

Those proceeds, paired with a recent debt offering, will help the company plug a $1.6 billion gap in its 2011 spending plan, the Houston producer will still probably need to borrow $200 million from its credit line to completely fund its capital program, said Jefferies & Co. analyst Subash Chandra.

Meanwhile, the company said Thursday it had acquired or committed to acquire about 325,000 net acres in Texas' oil-rich Permian Basin at an average cost of about $1,400 an acre, the result of an effort it began in the second half of 2010. Earnings have improved for the natural-gas producer, but the company has set a goal to shift capital from areas yielding lower-priced natural gas to assets with more oil and condensates, the prices of which have climbed in recent months.

Source: The Wall Street Journal

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