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Forum List » Business News and Headlines SEC Filings, Earing Reports, Press Releases  
Chesapeake Energy Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2012 05:33PM
Chesapeake Energy Corp. (CHK) filed Quarterly Report for the period ended 2012-06-30. Highlight of Business Operations:Natural Gas, Oil and NGL Sales. During the Current Quarter, natural gas, oil and NGL sales were $2.117 billion compared to $1.792 billion in the Prior Quarter. In the Current Quarter, Chesapeake produced and sold 346.5 bcfe at a weighted average price of $3.77 per mcfe, compared to 277.5 bcfe produced and sold in the Prior Quarter at a weighted average price of $6.07 per mcfe (weighted average prices exclude the effect of unrealized gains on derivatives of $810 million and $107 million in the Current Quarter and the Prior Quarter, respectively). In the Current Quarter, the decrease in prices resulted in a decrease in revenues of $799 million and increased production resulted in a $420 million increase, for a total decrease in revenues of $379 million (excluding unrealized gains or losses on natural gas, oil and NGL derivatives). The increase in production from the Prior Quarter to the Current Quarter was primarily generated through the drillbit.For the Current Quarter, we realized an average price per mcf of natural gas of $1.88, compared to $5.19 in the Prior Quarter (weighted average prices exclude the effect of unrealized gains or losses on derivatives). In the Prior Quarter, realized prices of natural gas include gains related to swaps that had an above-market fixed price on the origination date. We obtained these above-market swaps by selling out-year call options on a portion of our projected natural gas and oil production. Oil prices realized per barrel (excluding unrealized gains or losses on derivatives) were $91.58 and $87.99 in the Current Quarter and Prior Quarter, respectively. NGL prices realized per barrel (excluding unrealized gains or losses on derivatives) were $25.94 and $38.37 in the Current Quarter and the Prior Quarter, respectively. Realized gains or losses from our natural gas, oil and NGL derivatives resulted in a net increase in natural gas, oil and NGL revenues of $195 million, or $0.56 per mcfe, in the Current Quarter and a net increase of $407 million, or $1.46 per mcfe, in the Prior Quarter. See Part I, Item 3 of this report for a complete listing of all of our derivative instruments as of June 30, 2012. Production Taxes. Production taxes were $41 million in the Current Quarter compared to $46 million in the Prior Quarter. On a unit-of-production basis, production taxes were $0.12 per mcfe in the Current Quarter compared to $0.17 per mcfe in the Prior Quarter. In general, production taxes are calculated using value-based formulas that produce higher per unit costs when natural gas and oil prices are higher. The $5 million decrease in production taxes in the Current Quarter was primarily due to a decrease in the average realized sales price of natural gas and liquids of $1.40 per mcfe (excluding gains or losses on derivatives), which was offset by an increase in production of 69 bcfe. Production taxes in the Current Quarter and Prior Quarter included approximately $5 million and $8 million, or $0.01 and $0.03 per mcfe, respectively, associated with VPP production volumes. For the Current Period, we realized an average price per mcf of natural gas of $2.11, compared to $5.25 in the Prior Period (weighted average prices exclude the effect of unrealized gains or losses on derivatives). In the Prior Period, realized prices of natural gas included gains related to swaps that had an above-market fixed price on the origination date. We obtained these above-market swaps by selling out-year call options on a portion of our projected natural gas and oil production. Oil prices realized per barrel (excluding unrealized gains or losses on derivatives) were $92.06 and $87.39 in the Current Period and Prior Period, respectively. NGL prices realized per barrel (excluding unrealized gains or losses on derivatives) were $29.68 and $37.74 in the Current Period and the Prior Period, respectively. Realized gains or losses from our natural gas, oil and NGL derivatives resulted in a net increase in natural gas, oil and NGL revenues of $311 million, or $0.46 per mcfe, in the Current Period and a net increase of $896 million, or $1.60 per mcfe, in the Prior Period. See Part I, Item 3 of this report for a complete listing of all of our derivative instruments as of June 30, 2012. Production Taxes. Production taxes were $89 million in the Current Period compared to $91 million in the Prior Period. On a unit-of-production basis, production taxes were $0.13 per mcfe in the Current Period compared to $0.16 per mcfe in the Prior Period. In general, production taxes are calculated using value-based formulas that produce higher per unit costs when natural gas and oil prices are higher. The $2 million decrease in production taxes in the Current Period was primarily due to a decrease in the average realized sales price of natural gas and liquids of $1.00 per mcfe (excluding gains or losses on derivatives), which was offset by an increase in production of 122 bcfe. Production taxes in the Current Period and Prior Period included approximately $11 million and $15 million, or $0.02 and $0.03 per mcfe, respectively, associated with Current Period and Prior Period VPP production volumes.
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