Chesapeake Energy Corp. (NYSE: CHK) reported second-quarter 2014 earnings before markets opened Wednesday. The oil and gas exploration and production company posted adjusted diluted earnings per share (EPS) of $0.36 on revenues of $5.15 billion. In the same period a year ago, the company reported adjusted EPS of $0.51 on revenues of $4.68 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.44 and $4.91 billion in revenues.

In the second quarter, total oil production decreased about 1.9% year-over-year and increased by about 4% sequentially, natural gas liquids (NGL) production increased 60% year-over-year and 1.3% sequentially, and natural gas production decreased 4% year-over-year and increased 1.4% sequentially.

Chesapeake’s average realized price per barrel of oil in the second quarter was $85.23, down from $93.81 in the second quarter a year ago. Natural gas prices per 1,000 cubic feet fell $0.17 year-over-year and $0.82 sequentially. NGL prices were down more than $3 a barrel year-over-year and more than $8 a barrel sequentially.

There’s the story on profits and revenues: production was up, but prices fell all around. Higher NGL production is good, but Chesapeake needs to sell at least four barrels of the stuff to make the same revenue as from one barrel of oil. New and expanded processing facilities in Texas and Louisiana may help boost NGL prices, but it will be a while before these come online.

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During the first quarter, Chesapeake completed the tax-free spin-off of its oilfield services business, Seventy Seven Energy Inc. (NYSE: SSE) and passed $1.1 billion in debt to the new firm. Chesapeake also received about $675 million from asset sales in the second quarter and expects to receive another $700 million in the second half of the year.

The company’s CEO said:

[W]e are increasing our 2014 production outlook while leaving our capital budget unchanged. In the 2014 second half, we plan to connect approximately 35% more wells to sales than we connected in the first half of the year. As our pace of well connections accelerates, we expect our production growth trajectory will increase accordingly and we anticipate our year-end 2014 exit rate will exceed 730,000 [barrels of oil equivalent] per day.

Of course Chesapeake can’t know what price it will get for all that new production, and therein lies the problem. Production in the second quarter totaled 695,000 barrels of oil equivalent. Oil production was up 12% year-over-year and natural gas production was up 7%. NGL production rose 72%. More of the cheap stuff will not boost Chesapeake’s profits or its revenues. At best this is mixed news.

Chesapeake did not provide an update to its financial outlook for the rest of the year. The consensus estimates call for third-quarter EPS of $0.45 on revenues of $4.86 billion. The full-year estimates call for EPS of $1.99 and revenues of $19.56 billion.

Chesapeake’s shares traded down about 2% in the premarket, at $25.54 in a 52-week range of $23.92 to $31.49. The consensus target price for the shares was around $28.20 before this report.

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