Chesapeake Energy Posts 1Q $6B Loss
The Associated Press
05/04/09 - 04:14 PM EDT
MARK WILLIAMS
COLUMBUS, Ohio (AP) Chesapeake Energy on Monday posted a nearly $6 billion loss for the first quarter as tumbling natural gas prices forced one of the nation's largest gas producers to write down the value of its gas and oil properties.
Oklahoma City-based Chesapeake said it lost $5.7 billion, or $9.63 per share, for the quarter ended March 31 compared with a loss of $132 million, or 29 cents a share, in the year-ago quarter.
Excluding special charges, Chesapeake recorded profit of $277 million, or 46 cents, a share for the quarter. Excluding a $704 million charge in the year-ago quarter, Chesapeake would have been made $561 million, or $1.09 per share.
Analysts surveyed by Thomson Reuters expected Chesapeake to report profit of 49 cents a share. Those estimates typically exclude charges.
Revenue rose 25 percent to $2 billion in the quarter from $1.6 billion a year ago.
Chesapeake recorded a charge of $6 billion for writing down the value of its natural gas and oil properties. The charge reflects a 36 percent decline in natural gas prices to $3.63 per 1,000 cubic feet on March 31 from $5.71 per 1,000 cubic feet on Dec. 31.
Along with oil prices and other commodities, gas prices have fallen 73 percent since peaking last June as the country fell into a recession and demand plummeted, especially as auto companies and steelmakers cut production, as new sources of gas came online.
Chesapeake and other energy companies have been slashing drilling and production. Chesapeake said Monday that it would reduce its 2009 and 2010 drilling budget by another $500 million.
Thursday, Houston-based Apache Corp. posted a first-quarter loss due to a $1.98 billion write-down on oil and gas properties because of falling gas prices.
Chesapeake said last month that it will cut production by 13 percent, double what it previously announced in March. Still, Chesapeake said Monday that daily production was up 5 percent in the quarter over a year ago and 2 percent above fourth quarter production. Chesapeake said last week that
Chesapeake, which sold stakes in some of its projects in the past year to generate proceeds of $10.3 billion, said it plans further sales this year to raise $1.5 billion to $2 billion.
The report was released after the stock market closed Monday. Shares rose $1.93, or 9 percent, to $22.82 during the regular session, but fell $1, or 4.4 percent, in afterhours trading.
Chesapeake shares hit $74 last summer as prices rose, but then tumbled all the way to $9.84 in December, the lowest level in more than five years.
Chesapeake Energy Chief Executive Aubrey McClendon received the fattest pay package of any CEO in the U.S. in 2008, $112.5 million, according to an Associated Press analysis of his compensation. McClendon's total was inflated by a $75 million bonus he received on Dec. 31 as part of a new employment contract. He owns a stake in some of the company's wells, and the company said his bonus payment will go toward his portion of the cost of developing and maintaining them.
The bonus came two months after McClendon was forced to sell more than 31 million shares of Chesapeake stock valued at $550 million and down from a peak of $2.2 billion only three months earlier to cover bank demands for repayment of loans. The huge sale helped further drive down the stock price last fall.
The pay package has angered some shareholders. New Orleans Employees' Retirement System has claimed in legal action that the board failed in its duties when it awarded the compensation to McClendon. A second group, the Louisiana Municipal Police Employee Retirement System, has taken court action to demand more information from the company about how the compensation was awarded.
