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Chesapeake Energy Releases 2014 Results; Earnings Down 60%
OKLAHOMA CITY--(BUSINESS WIRE)--Feb. 25, 2015-- Chesapeake Energy Corporation (NYSE:CHK) today reported financial and operational results for the 2014 full year and fourth quarter and announced details of its 2015 Outlook and capital expenditure program. Highlights include:
2014 adjusted net income of $1.49 per fully diluted share and 2014 adjusted ebitda of $4.945 billion
Average 2014 production of approximately 706,000 boe per day, an increase of 9% year over year, adjusted for asset sales
Planned 2015 total capital expenditures ranging from $4.0 to $4.5 billion
Projected 2015 production growth of 3 – 5%, adjusted for asset sales
Doug Lawler, Chesapeake’s Chief Executive Officer, said, “2014 was a year of accomplishments for Chesapeake. Because of these accomplishments and the progress we have made as a company in 2014, Chesapeake is well positioned to remain strong and flexible in 2015. We have taken and continue to take appropriate steps not only to weather the current difficult commodity price environment we face today, but to thrive in it. Chesapeake became a much stronger company in 2014, and we are looking forward to becoming even stronger in 2015.”
2015 Capital Program and Production Outlook
Chesapeake is budgeting total capital expenditures (including capitalized interest) of $4.0 – $4.5 billion for 2015. Using the midpoint of the range, this represents a 26% reduction from the company's 2014 capital expenditures before acquisitions of $5.8 billion, and a 37% reduction from the company’s 2014 total capital expenditures of approximately $6.7 billion (reconciled in the "Capital Spending and Cost Overview" section below). The company is targeting 2015 production of 235 – 240 million barrels of oil equivalent (mmboe), or average daily production of 645 – 655 thousand barrels of oil equivalent (mboe), which represents 3 – 5% production growth after adjusting for 2014 asset sales. Of the 2015 projected production, approximately 39 – 40 mmboe is estimated to be crude oil, 1,035 – 1,055 billion cubic feet (bcf) natural gas and 23 – 24 mmboe natural gas liquids (NGL).
Chesapeake plans to operate 35 – 45 rigs in 2015, which represents the company's lowest operated rig activity level since 2004 and a decrease of approximately 38% (using the midpoint of the range) from an average of 64 rigs in 2014. The company intends to spud approximately 790 gross operated wells and connect to sales approximately 800 gross operated wells in 2015, a decrease from approximately 1,175 and 1,150 wells, respectively, in 2014. The table below compares the capital and rig counts allocated to the company’s operating areas for 2015 and 2014:
Chesapeake Energy continues to see its legal battles compound over its royalty-payment practices. Already facing lawsuits in several different states and having been subpoenaed by the U.S. Department of Justice, StateImpact Pennsylvania reports that another government outfit is taking a legal interest in the company's royalty payment strategies: Chesapeake Energy has been subpoenaed by the U.S. Postal service, seeking information on its royalty practices, according to a regulatory filing. As StateImpact Pennsylvania has previously reported , the Oklahoma City-based driller faces a slew of disputes and complaints over how it pays royalties. We've posted articles in the past that looked at some of the questionable practices that Chesapeake has employed to reduce the amount of royalties it pays out to landowners. As a quick refresher, note how ProPublica reporter Abrahm Lustgarten shared some of the details in an article which we shared here on The Daily Digger in March
In the United States, there are seven main Shales (Bakken, Niobrara, Permian, Eagle Ford, Haynesville, Marcellus, and Utica). The Permian and Eagle Ford Shale, located in Texas, are the highest producing Shales in the United States. Among all of them, the Utica Shale seems to be the one with less popularity despite bringing many investments and job opportunities for Ohio. In today's post, we will discuss why the Utica Shale is under-appreciated and how it has benefited Ohio. Marcellus Shale Perhaps one reason why the Utica Shale is under-appreciated is that it's located right next to the Marcellus Shale. The latest report estimates that the Marcellus Shale yields about 14.4 billion cubic feet of natural gas per day. In 2015, it was the source for over 36% of the shale gas produced in the United States and 18% of the total dry gas production of the United States. Of course, the Utica Shale is small in comparison to the Marcellus Shale. Despite that, the Utica Shale still holds s