Chesapeake Energy Corp. (NYSE: CHK) reported second-quarter 2016 earnings before markets opened Thursday. The oil and gas exploration and production company posted an adjusted net loss per share of $0.14 on revenues of $1.62 billion. In the same period a year ago, the company reported a loss per share of $0.13 on revenues of $3.52 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for a net loss per share of $0.11 and $1.93 billion in revenues.

On a GAAP basis, the company reported a quarterly net loss of $1.79 billion ($2.28 per diluted share). The primary cause of the loss was a $1.05 billion noncash drop in the carrying value of Chesapeake’s oil and gas assets due to the low prices for oil and natural gas. The company also reported an unrealized hedging loss of $544 million.

Chesapeake reported a debt balance of $8.7 billion at the end of the second quarter, down from $11.7 billion last year. In the first six months of 2016, the company has divested assets valued at $964 million. Chesapeake also plans to continue divesting assets and raised its guidance for total gross asset divestitures from a prior range of $1.2 billion to $1.7 billion to a new total of “more than $2.0 billion.”

The company maintained its capital spending forecast of $1.3 to $1.8 billion, a year-over-year drop of 57% at the midpoint of the range from the 2015 capex total of $3.6 billion. Chesapeake now says that it expects its total capex to be at the higher end of that range. Second-quarter capex totaled $456 million, down from $957 million in the year-ago quarter and up from $356 million in the first quarter of this year. About 74% of second-quarter spending was targeted for well drilling and completion costs.

Analysts are calling for a third-quarter net loss of $0.03 per share on revenues of $2 billion, as well as a net loss of $0.32 per share on revenues of $7.86 billion for the full year.

CEO Doug Lawler said:

Financial discipline remains our top priority, and we continue to work toward additional solutions to improve our liquidity, reduce our midstream commitments and enhance our margins. With continued improvements in our operating expenses and the disposition of non-core properties, we have refined our portfolio to provide a more competitive foundation for Chesapeake. In addition, the application of new technologies, including longer laterals and enhanced completion techniques, to our extensive undeveloped acreage position provides us with a robust portfolio of development opportunities.

As a result of our portfolio’s strong performance to date in 2016, we have increased our total production guidance for the remainder of the year. As for an initial look into 2017, we believe our oil production will be relatively flat in 2017 as compared to 2016, while total production volumes are projected to be down approximately 5% compared to 2016 levels. With the breadth and depth of our large acreage position, the evolution of technologies being applied to our portfolio and the reduction in our leverage and complexity, we believe that the next few months will be a very exciting time for Chesapeake.

Investors may not be seeing the forest for the trees. Getting Chesapeake’s financial house in order with oil and gas prices at their current low levels is a difficult but crucial task for the company, and shareholders must be willing to ride it out. Of course in today’s energy business there are no guarantees that a big turnaround in prices is on its way, even over the next year or two, so who can blame investors for looking elsewhere for profits?

Chesapeake’s shares traded down about 2.7% in Thursday’s premarket at $5.15. Chesapeake’s stock closed up nearly 8% on Wednesday, at $5.29 in a 52-week range of $1.50 to $9.55. The consensus target price for the shares was $4.66 before this report. The highest price target prior was $8 a share.

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