OREANDA-NEWS.  February 28, 2013. Chesapeake Energy Corporation (NYSE:CHK) announced financial and operational results for the 2012 fourth quarter and full year. 

For the 2012 fourth quarter, Chesapeake reported net income available to common stockholders of USD 257 million (0.39 per fully diluted common share), ebitda of USD 1.299 billion (defined as net income (loss) before income taxes, interest expense and depreciation, depletion and amortization), operating cash flow of USD 1.146 billion (defined as cash flow from operating activities before changes in assets and liabilities) and production of 362 billion cubic feet of natural gas equivalent (bcfe).  For the 2012 full year, Chesapeake reported a net loss available to common stockholders of USD 940 million, or a loss of USD 1.46 per fully diluted common share, ebitda of USD 1.914 billion, operating cash flow of USD 4.069 billion and production of 1.422 trillion cubic feet of natural gas equivalent (tcfe). 

The company’s 2012 fourth quarter and full year results include various items that are generally not included in published estimates of the company’s financial results by securities analysts.  Excluding such items, Chesapeake reported adjusted net income available to common stockholders of USD 153 million, or USD 0.26 per fully diluted common share, and adjusted ebitda of USD 1.089 billion for the 2012 fourth quarter and adjusted net income available to common stockholders of USD 285 million, or USD 0.61 per fully diluted common share, and adjusted ebitda of USD 3.754 billion for the 2012 full year.  The primary excluded items from the 2012 fourth quarter and full year reported results are the following:

a noncash after-tax impairment charge of USD 2.022 billion for the full year related to the carrying value of natural gas and oil properties;

an after-tax charge of USD 122 million related to the full repayment of the company’s May 2012 term loans for the fourth quarter and full year;

net unrealized noncash after-tax mark-to-market gains of USD 78 million for the fourth quarter and USD 347 million for the full year resulting from the company’s natural gas, oil and natural gas liquids (NGL) and interest rate hedging programs;

net after-tax gains of USD 166 million for the fourth quarter and USD 163 million for the full year related to gains and losses on sales, including a USD 176 million after-tax gain on the sale of the company’s midstream subsidiary for the fourth quarter and full year;

noncash after-tax charges of USD 36 million for the fourth quarter and USD 208 million for the full year related to the impairment of certain fixed assets; and

net after-tax gains of USD 19 million for the fourth quarter and USD 622 million for the full year related to certain investments, including a USD 629 million gain for the full year related to the sale of all of the company’s interests in Access Midstream Partners, L.P. (NYSE:ACMP).

Management Comments
Steven C. Dixon, Chesapeake’s Chief Operating Officer, said, “We continue to deliver on our liquids growth targets, led by a year-over-year increase of nearly 40,000 barrels per day in oil production. We achieved this despite the sale of nearly 18,000 barrels per day of oil production associated with our exit from the Permian Basin during the 2012 third and fourth quarters. We believe this performance ranks Chesapeake among the top three organic oil growth stories in the industry for 2012. I am very proud of what our team has accomplished thus far and look forward to driving further liquids production growth and capital efficiencies in 2013.”
 
Domenic J. Dell’Osso, Jr., Chesapeake’s Chief Financial Officer, added, “Chesapeake delivered strong results during the 2012 fourth quarter. I am pleased to reaffirm our 2013 guidance for liquids production growth and drilling and completion capital expenditures, while at the same time reducing our cost guidance for many significant categories. Additionally, we are reaffirming the commitment of management and the Board of Directors to reducing financial leverage of the company through asset sales. I would also like to note we have protected a substantial portion of our projected operating cash flows in 2013 through downside hedge protection on approximately 85% of our projected oil production at an average price of \\$95.45 per barrel and approximately 50% of our projected natural gas production at an average price of \\$3.62 per mcf. This equates to approximately 72% of our projected 2013 natural gas, oil and NGL revenue, after differentials.”