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Chesapeake Energy Corporation First Quarter 2023 Results
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Chesapeake Energy Corporation announced first quarter 2023 results.
Highlights
- Net cash provided by operating activities of $889 million
- Net income totaled $1,389 million, or $9.60 per diluted share; adjusted net income(1) totaling $270 million, or $1.87 per diluted share
- Delivered adjusted EBITDAX(1) of $774 million and $241 million in adjusted free cash flow(1)
- Announced total quarterly dividend of $1.18 per common share to be paid in June 2023
- Returned more than $250 million to shareholders YTD in the form of dividends and share repurchases
- Closed more than $2.8 billion in Eagle Ford asset sales YTD; company remains actively engaged with other parties regarding the rest of its Eagle Ford position
- Cash on hand of approximately $1.2 billion as of April 30, 2023
- Produced approximately 4,069 mmcfe per day net
- Entered into HOA with Gunvor on long-term LNG supply indexed to the Japan Korea Marker ("JKM")
- Upgraded to BB+ credit rating with Positive Outlook by Fitch Ratings
Financial and Shareholder Return Update
Through April 30, 2023, Chesapeake repurchased approximately one million shares of its common stock for approximately $80 million at an average price of $76.02 per share. Chesapeake has approximately $850 million remaining under its share repurchase program and, in total, has repurchased approximately 12.7 million shares of its common stock at a cost of approximately $1.15 billion under its current $2 billion authorization.
On April 13, 2023 Fitch Ratings upgraded Chesapeake's IDR to 'BB+' while maintaining a positive outlook. The agency attributed strengths of scale, conservative financial policy, and cash optionality as fundamental to the company's continued rating improvement. Chesapeake now sits one notch below investment grade at the agency.
Operational Results
First quarter net production was approximately 4,069 mmcfe per day (90% natural gas and 10% total liquids), utilizing an average of 14 rigs to drill 60 wells and placed 53 wells on production.
Chesapeake is currently operating 13 rigs including five in the Marcellus, six in the Haynesville, and two in the Eagle Ford. As previously announced, the company plans to release both rigs in the Eagle Ford in the second quarter as well as releasing one rig from the Haynesville and the Marcellus in the third quarter. The company is currently operating four frac crews including one in the Marcellus, two in the Haynesville and one in the Eagle Ford. As previously announced, the company will drop one frac crew from the Haynesville in the second quarter. The company expects to drill 35 to 45 wells and place 30 to 35 wells on production in the second quarter of 2023. The company's operating plan remains flexible and is prepared for further adjustments, higher or lower, based on market conditions.
On its continued path to Be LNG Ready, the company entered into a Heads of Agreement (HOA) with Gunvor Group Limited. Under the agreement, Chesapeake will supply up to 2 million tonnes of LNG per annum to Gunvor with the purchase price indexed to the JKM. Chesapeake and Gunvor are working to jointly select the most optimal liquefaction facility in the United States to liquify the gas produced by Chesapeake and deliver LNG to Gunvor on a Free-on-Board basis with a target start date in 2027.
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