Chesapeake Energy Corp. (NYSE: CHK) reported first-quarter 2015 earnings before markets opened Wednesday. The oil and gas exploration and production company posted adjusted diluted earnings per share (EPS) of $0.11 on revenues of $2.76 billion. In the same period a year ago, the company reported adjusted EPS of $0.54 on revenues of $5.05 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.04 and $3.68 billion in revenues.

The company’s took a $4.976 billion impairment charge on its oil and gas properties, largely resulting from significant decreases in the trailing 12-month average first-day-of-the-month oil and natural gas prices as of March 31, 2015, compared to December 31, 2014. After offsetting items, the company’s total net loss amounted to $3.78 billion, or $5.72 per share.

In the first quarter, daily production averaged 686,000 barrels of oil equivalent per day, up 14% year-over-year after adjusting for asset sales. Daily oil production rose 17% year-over-year in the quarter to 121,900 barrels a day, natural gas liquid (NGL) production rose 19% to 75,800 barrels per day, and natural gas production rose 12% to 2.9 billion cubic feet per day.

Chesapeake’s average realized price per barrel of oil in the fourth quarter was $62.57, down from $85.08 in the first quarter a year ago and down from $76.40 in the fourth quarter. Natural gas prices per 1,000 cubic feet fell $0.90 year over year and $0.65 sequentially. NGL prices were down $22.46 a barrel year over year and down $6.12 a barrel sequentially.

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Drilling and completion costs for the quarter rose from $729 million a year ago to $1.3 billion this year. Average production costs in the quarter totaled $4.84 per barrel of oil equivalent, a 5% decrease sequentially and down 2% year over year.

The company’s CEO said:

Chesapeake is meeting the challenge of low commodity prices head-on and delivered a very strong first quarter. Adjusted for asset sales, our production in the 2015 first quarter grew by 14% compared to the 2014 first quarter. Our cash costs remain at industry-low levels and we expect our assets to continue delivering greater efficiencies even as we reduce our activity levels throughout 2015.

Chesapeake has cut its capital spending budget for 2015 from a prior range of $4.0 billion to $4.5 billion to a new range of $3.0 billion to $3.5 billion. The company is also targeting daily production to rise 1% to 3% above 2014 production of 644,000 barrels of oil equivalent a day.

Chesapeake operated 54 rigs in the first quarter, down from 60 sequentially and 67 in the year-ago quarter. The company said at the end of the fourth quarter that it expects to finish 2015 with 35 to 45 rigs, down 38% from an average of 64 rigs in 2014 and the lowest total since 2004.

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Shortly after Chesapeake reported earnings Wednesday morning, two analyst firms issued flash notes on the quarterly results.

Wells Fargo maintains a Market Perform rating on the stock with a valuation range of $13 to $19. Although commodity prices remain low, the firm believes exploration and production company shares will be valued based on higher commodity prices, which Wells Fargo has estimated at $75 a barrel for oil and $4.00 per million BTUs for natural gas during the next six to 12 months. The analysts go on:

Overall operations report looks in line with the exception of declining Eagle Ford per well rates …. [W]e expect management commentary [during conference call] to focus not only on cost reductions, but enhanced completion and well design which are driving better well results across the portfolio. Bigger picture for shares remains the acquisition hangover and questions if [Chesapeake] management can truly get something done. We think the answer is yes (which includes an assumption of capital market activity), but until that happens, shares likely trade with the macro.

Sterne Agee CRT is much more cautious. The firm has an Underperform rating on the Stock and price target of $15.86. Calling the first quarter’s results a “much-needed show of execution,” the analysts noted that Chesapeake “handily” beat their estimates on production (by 6%), natural gas realizations (by 17%) and general and administration per unit expense of $0.91 per barrel of oil equivalent (47% below Sterne Agee CRT’s estimate).

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The company did not offer financial guidance, but consensus estimates are calling for a second quarter net loss of $0.14 on revenues of $3.5 billion. For the full 2015 fiscal year. Chesapeake is expected to post a net loss of $0.16 on revenues of $14.5 billion.

Chesapeake’s shares closed down about 3.23% on Tuesday at $15.86 and traded down about 2.6% early Wednesday at $15.44. The stock’s 52-week range is $13.38 to $29.92. The consensus target price for the shares was around $17.00 before its report. The highest price target had been $25 a share.

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