Chesapeake Energy Shares Slump on Revenue Miss, Reverse-Split Plan

Chesapeake Energy shares dropped sharply after the oil and natural gas exploration and production company missed Wall Street's fourth-quarter revenue expectations and said it planned a reverse stock split.
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Chesapeake Energy (CHK) - Get Report shares dropped sharply after the oil and natural gas exploration and production company missed Wall Street's fourth-quarter revenue expectations and said it planned a reverse stock split.

At last check the Oklahoma City company's shares were off 22% at 35 cents.

Chesapeake swung to a net loss of $346 million, or 18 cents a share, from earnings of $576 million, or 57 cents, in the year-earlier period. 

The adjusted loss came to 4 cents a share, better than the FactSet consensus of a 6-cent loss.

Revenue fell 31% to $1.93 billion, missing FactSet's call for $2.02 billion. 

Revenue from oil, natural gas and natural gas liquids totaled $969 million, down 44% from a year ago.

During a conference call with analysts, Doug Lawler, president and CEO, said the company was making plans for a reverse split in response to the lower stock price.

In a reverse stock split, a company consolidates its share base to create a smaller number of proportionally more valuable shares

"[W]hile we have stock prices fall into very low levels, we will commence actions to reverse split the number of shares with the filing of the proxy in a few weeks," Lawler said, according to a FactSet transcript.

He added that "the challenging macro pricing environment" has "further deteriorated" in recent weeks, causing "a much softer commodity-price outlook in 2020."

Overall, fourth-quarter oil production grew about 45% from the 2018 fourth quarter, accounting for about 26% of total production, the highest oil mix in Chesapeake's history, the company said. The 26% figure compared with 19% in the year-earlier quarter.

Chesapeake's production rose to 477,000 barrels of oil equivalent per day from 464,000.

"These results, combined with certain lower cash costs, yielded adjusted Ebitdax growth of 19%, or 15% per barrel of oil equivalent, compared to the 2018 fourth quarter, when we had significantly higher commodity prices," Lawler said in a statement.

Ebitdax, a metric used by energy exploration companies, is earnings before interest, taxes, depreciation, amortization and exploration expense.