* Earnings per share match Wall Street estimate
* Oil output rises 23 percent
* Fewer wells, fewer rigs seen in fourth quarter
* Shares down more than 6 percent
By Anna Driver
Nov 6 Chesapeake Energy Corp, the No. 2
U.S. natural gas producer, reported a third-quarter profit on
Wednesday, but its shares fell more than 6 percent after it said
its oil production would be lower this quarter.
Chesapeake and other U.S. exploration and production
companies are trying increasingly to get more higher-priced
crude oil output from shale formations like the Eagle Ford in
South Texas as natural gas prices remain depressed.
Higher-than-expected oil production in the third quarter
helped Chesapeake's results meet analysts' expectations, but
weather disruptions and asset sales will cut output in the
fourth quarter by about 9,000 barrels per day, Chesapeake said
on a conference call with investors.
Analysts pointed to the lower oil forecast as a reason for
weakness in the stock, which had traded as much as 3 percent
higher before the market opened.
Under new Chief Executive Officer Doug Lawler, Chesapeake
has slashed 10 percent of its workforce and is spending less on
exploration and production. The company also expects to sell
more than $4 billion in assets this year to raise cash.
Lawler took the top job at Chesapeake in June after
investors pushed out CEO Aubrey McClendon in April following a
fiscal squeeze and governance practices that resulted in probes
at the state and federal level. Lawler has promised to cut costs
and reduce debt to improve returns.
"Although we have reduced our drilling and completion
activities in the second half of 2013 and we are planning for a
lower capital expenditure budget next year, we expect to
continue delivering organic production growth in 2014," Lawler
said in a statement.
The company will release its spending plan for 2014 early
next year, it said.
The expected growth in output, which will exclude the effect
of asset sales, will be fueled by a rise in oil production from
Eagle Ford and an increase in natural gas and natural gas
liquids output from the Utica shale in Ohio and Marcellus shale
in the U.S. Northeast, Lawler said.
Profit came to $156 million, or 24 cents per share, in the
third quarter, compared with a year-earlier loss of $2.1
billion, or $3.19 per share, that included write-downs of the
value of some natural gas assets.
Excluding asset sales and restructuring charges, earnings of
43 cents per share matched the analysts' average estimate,
according to Thomson Reuters I/B/E/S.
Daily production of oil and gas dipped 2 percent in the
third quarter due to asset sales, but daily oil output alone
rose 23 percent, the company said.
This quarter, Chesapeake plans to operate an average of 59
rigs and to complete about 14 fewer wells than in the third
quarter. Based on that plan, the company is reducing its 2013
full-year outlook for drilling and well completion costs to a
range of $5.5 billion to $5.8 billion from $5.7 billion to $6
Chesapeake operated an average of 67 rigs in the third
Shares of Chesapeake fell 6.3 percent to $26.36 in late
morning New York Stock Exchange trading.