On the profits side, Chesapeake was hot. Net income was $15 million, or 2 cents per share. This compares favorably to last year's net loss of $71 million, or 11 cents per share. When excluding some one-time items, profits soared impressively to 30 cents per share, burning estimates by 5 cents.
It's hard not to be impressed by these numbers given the embarrassment this company suffered through thanks to its former CEO, Aubrey McClendon, whose tenure ended abruptly for legal reasons. It's worth noting here that it was McClendon's vision of the shale basins and their growth potential that is still paying off handsomely for Chesapeake today.
Nevertheless, there's a new sheriff in town -- albeit on an interim basis. Steven Dixon is now serving as acting CEO until a permanent replacement is found. Given how well Chesapeake performed this quarter, Dixon deserves plenty of credit, especially from the standpoint of profitability, helped (in part) by aggressive expense controls this quarter where costs fell almost 20% year over year.
Here's something else to consider: The fact that the company uses techniques like drilling multiple wells from a single drilling pad to increase efficiency demonstrates the commitment Chesapeake now has towards profitability. But I wonder how long the company can look at efficiency strategies such as this while also maintaining a healthy balance of increasing output.To say it more plainly -- although I appreciate the company has heavy debt burdens to the extent of more than $13 billion in long term maturities, production growth can only come from spending. Perhaps this is what the Street has realized given the 16% decline that the stock has suffered since peaking at just under $23 per share.