Chesapeake Energy Corporation (NYSE:CHK) released operational and financial report for the FY2016 and 4Q2016 and other recent developments. The highlights comprise average FY2016 production of 635,400 boe a day, as against 2015 levels, in tune for asset sales. Total natural gas and oil proved reserves of almost 1.7 billion boe, a 14% growth compared to FY2015 levels.
The buzz
Chesapeake replaced 249% of production via discoveries and extensions compared to 93% in FY2015 discounting reserve revisions. It reduced production costs by almost $336 million compared to 2015. The firm reduced processing, transportation and gathering costs by almost $264 million compared to 2015. Financial flexibility improved with reduced leverage led by noncore asset sales, open market repurchases, exchanges of mid-term and near debt maturities and preferred stock, and refinancing.
Doug Lawler, the Chief Executive Officer of Chesapeake, commented that during FY2016, they recorded considerable development in improving capital efficiency, declining cash expenses and future midstream commitments while enhancing liquidity and leverage profile. It led in a much stronger base for company going forward.
In 2017, they are capitalizing on these enhancements across cost structure to improve shareholder returns from high-quality, diversified natural gas and oil portfolio. The rise in activity over FY2016 levels positions company to offer increased long-term value and profitability for its shareholders.
For the 4Q2016, Chesapeake’s revenues dropped by 24% YoY following a decline in the average realized commodity rates for its oil production, increased unrealized hedging losses and lower production volumes. Average daily production in 4Q2016 came at around 574,500 boe consisted of almost 90,400 bbls of oil, 57,100 bbls of NGL and 2.562 bcf of natural gas.
Average production costs during the reported quarter came at $2.98 per boe, while G&A costs were $1.28 per boe. Combined G&A and production expenses including stock-based compensation came at $4.26 per boe, a drop of 8% YoY.
