After CEO Shame, Chesapeake Stricken With Losses
Chesapeake Energy’s (NYSE:CHK) bad day continues. After announcing under-fire chairman Aubrey McClendon will step down from that position for a controversial personal loans program, the company has reported a first-quarter net loss worth $71 million, or 11 cents per share. After accounting for a $167 million loss from its hedging positions and other exclusions, adjusted earnings per share came in at 18 cents and still missed the expected 29-cent estimate by a wide margin. The adjusted earnings of $94 million were down from $518 million in the same quarter last year.
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McClendon, who stays on as chief executive, had been criticized after reports he used his interests in the company’s oil wells to receive millions of dollars in personal loans. Chesapeake also announced on Tuesday that it had halted the incentive program.
The quarter’s losses came despite a 50 percent increase in first-quarter revenue, which grew to $2.5 billion from $1.61 billion in the same quarter last year. It, too, missed consensus estimates of $2.75 billion. The company has managed to raise daily production by 18 percent to 3.658 billion cubic feet equivalent.
Energy companies that focused on natural gas have struggled as demand fallen after the discovery of massive fields of shale gas. Average prices of natural gas have fallen to $2.35 from $5.31 a year ago. Chesapeake has been trying hard to diversify, making investments in oilfields to produce more crude, which trades for eight times more than gas. “We are focused on executing our transformation to a more balanced asset base between liquids and natural gas and believe our business has strong momentum despite a challenging environment with natural gas prices at 10-year lows,” McClendon said in a statement.
However, the company increased its 2012 budget to $7.5-$8 billion from $7-$7.5 billion.
Shares are down 4.5 percent in late trading at $18.72.