Chesapeake Energy Corp. (CHK, Financial) filed Quarterly Report for the period ended 2012-03-31.
Chesapeake Engy has a market cap of $11.64 billion; its shares were traded at around $14.74 with a P/E ratio of 6.3 and P/S ratio of 1. The dividend yield of Chesapeake Engy stocks is 2%. Chesapeake Engy had an annual average earning growth of 8% over the past 10 years.
Our business strategy is to continue our reserves and production growth and transition to increased liquids production. As part of this strategy, we plan to make capital expenditures in 2012 that will significantly exceed our projected cash flow from operations. During the Current Quarter, the combination of high front-end capital expenditures and reduced cash flow as a result of low natural gas prices required that we increase our long-term debt, net of unrestricted cash, by approximately $2.4 billion to $12.6 billion to fund our capital expenditure needs. As of March 31, 2012, we had approximately $2.4 billion in cash availability compared to $3.1 billion as of December 31, 2011; however, our working capital deficit improved during the Current Quarter, and we expect this deficit to continue to decrease based on our projected capital expenditures and cash flow. For the remainder of 2012, we plan to fund capital expenditures with operating cash flow and various asset monetization transactions, potentially including joint ventures, volumetric production payments and other property and investment dispositions, including sales of a portion of our midstream and oilfield services assets. In addition, since early 2011, it has been our plan, which we call the 25/25 Plan, to reduce our net long-term debt to no more than $9.5 billion by December 31, 2012, a 25% reduction from year-end 2010, and increase our production by 25% during the two years ended December 31, 2012.
Natural Gas and Oil Sales. During the Current Quarter, natural gas and oil sales were $1.068 billion compared to $494 million in the Prior Quarter. In the Current Quarter, Chesapeake produced and sold 332.8 bcfe at a weighted average price of $4.02 per mcfe, compared to 279.6 bcfe produced and sold in the Prior Quarter at a weighted average price of $5.99 per mcfe (weighted average prices exclude the effect of unrealized gains or (losses) on derivatives of ($270) million and ($1.182) billion in the Current Quarter and the Prior Quarter, respectively). In the Current Quarter, the decrease in prices resulted in a decrease in revenue of $656 million and increased production resulted in a $319 million increase, for a total decrease in revenues of $337 million (excluding unrealized gains or losses on natural gas and oil 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 $2.35, compared to $5.31 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. See Item 3 of Part I of this report for a complete listing of all of our derivative instruments as of March 31, 2012. Oil prices realized per barrel (excluding unrealized gains or losses on derivatives) were $67.92 and $63.20 in the Current Quarter and Prior Quarter, respectively. Realized gains or losses from our natural gas and oil derivatives resulted in a net increase in natural gas and oil revenues of $117 million, or $0.35 per mcfe, in the Current Quarter and a net increase of $488 million, or $1.74 per mcfe, in the Prior Quarter.
Our average daily production of 3.658 bcfe for the Current Quarter consisted of 2.976 bcf of natural gas (81% on a natural gas equivalent basis) and approximately 113,600 bbls of liquids (19% on a natural gas equivalent basis). Our year-over-year growth rate of natural gas production was 10% and our year-over-year growth rate of liquids production was 69%. Our percentage of revenue from liquids in the Current Quarter was 61% of unhedged natural gas and oil revenue compared to 34% in the Prior Quarter.
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Chesapeake Engy has a market cap of $11.64 billion; its shares were traded at around $14.74 with a P/E ratio of 6.3 and P/S ratio of 1. The dividend yield of Chesapeake Engy stocks is 2%. Chesapeake Engy had an annual average earning growth of 8% over the past 10 years.
Highlight of Business Operations:
Chesapeake Midstream Partners, L.P. We have an approximate 46% interest in CHKM through our ownership of common, general partner and subordinated units. CHKM focuses on unregulated business activities in service to both Chesapeake and third-party natural gas producers and its revenues are generated from gathering, compression, dehydration and treating services. Certain Chesapeake employees provide services to CHKM through an employee secondment agreement and CHKM utilizes various support functions within Chesapeake, including accounting, human resources and information technology in return for certain cost reimbursements. As of March 31, 2012, common units owned by public security holders represented 30.5% of all outstanding limited partner interests, and Chesapeake and GIP held 46.1% and 23.4%, respectively, of all outstanding limited partner interests. Of the limited partner units, approximately 51% and 100% of the units were subordinated for Chesapeake and GIP, respectively. The limited partners, collectively, have a 98% limited partner interest in CHKM, and Chesapeake and GIP each own 50% of the remaining 2% general partner interest.Our business strategy is to continue our reserves and production growth and transition to increased liquids production. As part of this strategy, we plan to make capital expenditures in 2012 that will significantly exceed our projected cash flow from operations. During the Current Quarter, the combination of high front-end capital expenditures and reduced cash flow as a result of low natural gas prices required that we increase our long-term debt, net of unrestricted cash, by approximately $2.4 billion to $12.6 billion to fund our capital expenditure needs. As of March 31, 2012, we had approximately $2.4 billion in cash availability compared to $3.1 billion as of December 31, 2011; however, our working capital deficit improved during the Current Quarter, and we expect this deficit to continue to decrease based on our projected capital expenditures and cash flow. For the remainder of 2012, we plan to fund capital expenditures with operating cash flow and various asset monetization transactions, potentially including joint ventures, volumetric production payments and other property and investment dispositions, including sales of a portion of our midstream and oilfield services assets. In addition, since early 2011, it has been our plan, which we call the 25/25 Plan, to reduce our net long-term debt to no more than $9.5 billion by December 31, 2012, a 25% reduction from year-end 2010, and increase our production by 25% during the two years ended December 31, 2012.
Natural Gas and Oil Sales. During the Current Quarter, natural gas and oil sales were $1.068 billion compared to $494 million in the Prior Quarter. In the Current Quarter, Chesapeake produced and sold 332.8 bcfe at a weighted average price of $4.02 per mcfe, compared to 279.6 bcfe produced and sold in the Prior Quarter at a weighted average price of $5.99 per mcfe (weighted average prices exclude the effect of unrealized gains or (losses) on derivatives of ($270) million and ($1.182) billion in the Current Quarter and the Prior Quarter, respectively). In the Current Quarter, the decrease in prices resulted in a decrease in revenue of $656 million and increased production resulted in a $319 million increase, for a total decrease in revenues of $337 million (excluding unrealized gains or losses on natural gas and oil 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 $2.35, compared to $5.31 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. See Item 3 of Part I of this report for a complete listing of all of our derivative instruments as of March 31, 2012. Oil prices realized per barrel (excluding unrealized gains or losses on derivatives) were $67.92 and $63.20 in the Current Quarter and Prior Quarter, respectively. Realized gains or losses from our natural gas and oil derivatives resulted in a net increase in natural gas and oil revenues of $117 million, or $0.35 per mcfe, in the Current Quarter and a net increase of $488 million, or $1.74 per mcfe, in the Prior Quarter.
Our average daily production of 3.658 bcfe for the Current Quarter consisted of 2.976 bcf of natural gas (81% on a natural gas equivalent basis) and approximately 113,600 bbls of liquids (19% on a natural gas equivalent basis). Our year-over-year growth rate of natural gas production was 10% and our year-over-year growth rate of liquids production was 69%. Our percentage of revenue from liquids in the Current Quarter was 61% of unhedged natural gas and oil revenue compared to 34% in the Prior Quarter.
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