Chesapeake Energy Corporation (NYSE: CHK) today reported financial and operational results for the 2013 full year and fourth quarter. Key information related to the 2013 full year is as follows:
- Adjusted net income per fully diluted share increases to $1.50 in the 2013 full year from $0.61 in the 2012 full year
- Adjusted ebitda increases 34% year over year to $5.016 billion
- Average daily production rises 3% year over year to 669,600 boe per day
- Average daily production, adjusted for asset sales, increases 11% year over year
- Combined 2013 per unit production and G&A expenses decline 15% year over year
- 2013 year-end proved reserves increase to 2.7 bboe
- 2013 asset sales total $4.4 billion; 2014 asset sales already completed or anticipated total approximately $1 billion, excluding possible oilfield services division and other strategic asset dispositions
Doug Lawler, Chesapeake’s Chief Executive Officer, said, "2013 was a foundational year in which we focused on optimizing our business processes, implementing a disciplined capital budget, decreasing per unit cash costs, selling noncore assets and reducing liabilities. We believe that the impact of these efforts on our capital efficiency and returns will become even more evident in 2014 as we continue to drive well performance up and well costs and per unit cash costs down. In 2014 we plan to reduce drilling and completion costs, before drilling carry credits, by nearly $900 million, while still generating comparable production growth year over year."
For the 2013 full year Chesapeake reported net income available to common stockholders of $474 million, or $0.73 per fully diluted share. These results include the after-tax impact of the following items typically excluded by securities analysts in their earnings estimates:
- a charge of $341 million for the impairment of certain of the company’s property and equipment and other assets;
- a $154 million charge for restructuring and other termination costs;
- charges of $120 million for the purchase of debt and the extinguishment of a lease obligation in the Fort Worth, Texas area;
- net losses of $95 million on certain investments, primarily related to our proportionate share of an estimated impairment recorded by FTS International, Inc. on its non-depreciable assets;
- a net gain of $187 million on sales of certain of the company’s fixed assets; and
- noncash unrealized gains of $100 million from the company’s derivative instruments.
In total, these items reduced net income available to common stockholders for the 2013 full year by approximately $422 million on an after-tax basis. Adjusting for these items, 2013 full-year net income available to common stockholders was $896 million, or $1.50 per fully diluted share, which compares to adjusted net income available to common stockholders of $285 million, or $0.61 per fully diluted share, in the 2012 full year. This increase is primarily the result of substantially higher year-over-year oil production, higher realized oil, natural gas and natural gas liquids (NGL) prices, and lower per unit production and general and administrative (G&A) expenses.
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