Mixed Earnings Metrics on Chesapeake (CHK)

Chesapeake Energy Corporation (NYSE: CHK) has put to bed at least some of the concerns over how much lower natural gas prices seen earlier this year were going to affect its earnings performance.  But there is some data here for bulls and bears alike.  The company’s third quarter adjusted net income was $440 Million, or $0.70 EPS on Revenue of $1.8 billion.  Thomson Reuters had estimates pegged at $0.65 EPS and $1.96 billion in revenues.

Q3-production was 2.483 bcfe per day, up 1% over Q2-2009 and up 7% over Q3-2008.  Much of its production data and metrics were already shown last week. The guidance given for the years ahead is as follows for its full-year production growth:

• 5% to 6% in 2009,
• 8% to 10% in 2010
• 12% to 14% in 2011.

Operating cash flow was $1.118 billion and EBITDA was $707 million.  There is a gain in the figure as the company’s quarterly report does include a realized natural gas and oil hedging gain of $687 million.

Shares closed down 1.45% at $24.14 today and shares are trading down 0,5% at $24.01 in the after-hours session.  The gains in the hedging may be a part of the issue, and some will be highlighted in the company’s revenues being light.  Another issue we had made note of in the top 10 earnings to watch this week was the chart issue where shares had more than doubled from our ‘energy stocks to double’ call was how rapidly its chart eroded.

JON C. OGG