In "Stellar" Earnings Report, Chesapeake Announces Utica Shale Push
Chesapeake Energy reported its earnings today, and according to Barron’s, they were “stellar.”
Chesapeake reported second-quarter net income of $528 million, or 76 cents per diluted share before special items including a loss on currency derivatives. The result was 5 cents better than Street expectations. Second-quarter revenue of $3.3 billion was 65% above the year-ago period. Chesapeake also reported that after two years of drilling, it had success in the Utica Shale, and acres it leases there — its third largest position in land mass — could add $15 to $20 billion in value to the company.
The Oklahoma-based company is doubling down on the Utica Shale, and has snatched up thousands of acres of leases in Ohio. More on that from Bloomberg:
Chesapeake, based in Oklahoma City, has leased 1.25 million acres in the Utica Shale, a formation that stretches beneath the Eastern U.S. from Tennessee into Canada. Chesapeake said its acreage in the Utica, which is concentrated in Ohio, may be worth as much as $20 billion. It is seeking to sign a contract with a joint venture partner by the end of the year.
The Utica is “likely most analogous, but economically superior to, the Eagle Ford Shale in South Texas,” according to the statement.
“They’re saying it’s as good as or better than the Eagle Ford,” Biju Perincheril, a New York-based analyst for Jefferies & Co. said today in an interview.
Perincheril, who rates the shares “buy,” and owns none, said results for the quarter were 2 cents better than his estimate, apparently on higher production of oil and petroleum liquids.
Chesapeake holds more than a thousand Marcellus permits in Pennsylvania, and operates about 30 rigs drilling for Marcellus gas.