Chesapeake Energy Tops Wall Street Expectations, Launches Off Bottom

Shares of shale gas company Chesapeake Energy (NYSE:CHK) are roaring ahead in Thursday trading, making it a top gainer amongst all NYSE listed companies after easily beating analyst expectations on both the top and bottom lines for the fourth quarter of 2017.

Like so many in the energy space, Chesapeake stock was clobbered when oil prices collapsed in 2014 and has to this day struggled to recover, including nearly a 60% drop in the last year alone.

Slowly rising commodity prices, increased oil and gas production and ongoing belt tightening to contain costs and shave debt cumulatively contributed into a better than expected end to the year.

The Oklahoma City-based company reported adjusted net income of $314 million, or 30 cents per share, for the quarter, exceeding the 24 cents per share analysts forecast. Underscoring the profits was average daily production of about 593,200 barrels of oil equivalent per day, a gain of 15% over the year-prior quarter.

Meanwhile, production and general and administrative expenses were $3.84 per barrel of oil equivalent, a 10%improvement year-over-year. Gathering, processing, and transportation expenses were also cut by 10% per barrel.

Bolstered by higher prices for oil (average realized price rose to $56.47 per barrel from $47.37 last year) and natural gas (average realized price rose to $2.76 per mcf from $2.41 last year), revenue climbed to $2.5 billion, beating the $2.3 billion analysts predicted.

Looking ahead, Chesapeake management thinks total output will rise by 3% in 2018, led by a 5% advance in oil production. Furthermore, the company says it plans to cut capital expenditures by about 12% to further strengthen its balance sheet.

After perhaps overdoing the selloff, investors are jumping back in CHK in early Thursday action, driving shares ahead 23.2% to $3.24. That's still a far cry from $4.33 where they were about a month ago, but still the highest shares have been since February 5.