Chesapeake is executing its previously disclosed plan to defer completions and new well turn-in-lines (TILs), building short-cycle, capital-efficient productive capacity. This strategy allows the company to quickly activate production when supply and demand imbalances correct, ensuring readiness to meet consumer demand efficiently when market conditions improve.
Chesapeake Energy Reports Q2 2024 Results: Operational Efficiency Leads to Lowered Capital and Production Expenses
Financial Highlights:
- Net Cash Provided by Operating Activities: $209 million
- Net Loss: $227 million, or $1.73 per fully diluted share
- Adjusted Net Income: $1 million, or $0.01 per share
- Adjusted EBITDAX: $358 million
- Dividend: Quarterly base dividend of $0.575 per common share, marking the 14th consecutive quarter of dividend payments.
Operational Highlights:
- Production: Approximately 2.75 billion cubic feet equivalent per day (bcfe/d) of natural gas.
- DUCs and TILs: 75 combined Drilled but Uncompleted (DUCs) and deferred Turn In Lines (TILs) at the end of the quarter.
- Rigs and Wells: Utilized an average of eight rigs to drill 30 wells and placed four wells on production. Currently operating seven rigs and two completion crews.
- Capital and Production Expense Guidance: Lowered by approximately 4% and 8%, respectively, due to improved operational efficiency and year-over-year deflation.
Strategic Initiatives and Market Conditions:
- Operational Efficiency: Focus on longer laterals, optimized well designs, enhanced saltwater disposal techniques, and capturing market deflation.
- Deferred Completions and TILs: Executing a plan to build short-cycle, capital-efficient productive capacity to activate when market conditions improve.
- Full-Year Guidance: Expect to drill 95-115 wells and place 30-40 wells on production, consistent with previous guidance.
Shareholder Returns:
- Dividend Payment: $0.575 per share on September 5, 2024, to stockholders of record on August 15, 2024.
- Shareholder Returns Since 2021: Approximately $3.5 billion returned through dividends and share repurchases.
ESG Update:
- 2023 Sustainability Report: Released, marking the 12th consecutive year of reporting on environmental, social, and governance (ESG) performance. The report emphasizes transparency and enhanced disclosures, accessible on Chesapeake’s website under the sustainability section.
CEO Commentary: Nick Dell’Osso, Chesapeake’s President and CEO, highlighted the company’s efforts in managing current market conditions and preparing for the pending combination with Southwestern. The focus remains on operational improvements and enhancing capital efficiency, aiming to lower breakeven costs and build productive capacity for future demand recovery.
Additional Notes:
- Non-GAAP Financial Measures: Definitions and reconciliations are included at the end of the news release.
For further details, Chesapeake’s 2023 Sustainability Report can be accessed on their official website under the “sustainability” section.
